Chubb Ltd - FORM 8-K - EX-99.2 - FIRST QUARTER 2011 FINANCIAL SUPPLEMENT

Attached files

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EX-99.1 - PRESS RELEASE - Chubb Ltd	dex991.htm
8-K - FORM 8-K - Chubb Ltd	d8k.htm

Exhibit 99.2

LOGO


Investor Contact

Helen M. Wilson Phone: (441) 299-9283 Fax: (441) 292-8675		This report is for informational purposes only. It should be read in conjunction with documents filed by ACE Limited with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

email: investorrelations@acegroup.com		Cautionary Statement Regarding Forward-Looking Statements:

		Any forward-looking statements made in this financial supplement reflect ACE’s current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause actual results to differ materially from those set forth in these statements. For example, our forward-looking statements, such as statements concerning exposures, reserves and recoverables, could be affected by the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance receivable and credit developments among reinsurers.

		Our forward-looking statements could also be affected by competition, pricing and policy term trends, market acceptance, changes in demand, actual market developments, rating agency action, possible terrorism or the outbreak and effects of war. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

ACE Limited

Financial Supplement Table of Contents


		Page
I.	Financial Highlights
	- Consolidated Financial Highlights		1

II.	Consolidated Results
	- Consolidated Results - Consecutive Quarters		2
	- Summary Consolidated Balance Sheets		3
	- Consolidated Premiums and Income Excluding Net Realized Gains (Losses) by Line of Business		4
	- Consolidating Statement of Operations		5
	- Catastrophe Losses		6

III.	Segment Results
	- Insurance - North American		7
	- Insurance - Overseas General		8
	- Global Reinsurance		9
	- Life		10

IV.	Balance Sheet Details
	- Loss Reserve Rollforward		11
	- Reinsurance Recoverable Analysis		12
	- Investment Portfolio		13 - 19
	- Net Realized and Unrealized Gains (Losses)		20
	- Capital Structure		21 - 22
	- Computation of Basic and Diluted Earnings Per Share		23

V.	Other Disclosures
	- Non-GAAP Financial Measures		24
	- Book Value and Book Value per Common Share		25
	- Comprehensive Income		26
	- Glossary		27


		ACE Limited
		Consolidated Financial Highlights
		(in millions of U.S. dollars, except share, per share data, and ratios) (Unaudited)


	Three months ended March 31						% Change 1Q-11 vs. 1Q-10
	2011			2010			% Change 1Q-11 vs. 1Q-10

Gross premiums written	$	4,644		$	4,790			-3	%

Net premiums written	$	3,446		$	3,571			-4	%

Adjusted net premiums written*	$	3,520		$	3,500			1	%

Net premiums earned	$	3,309		$	3,277			1	%

Net investment income	$	544		$	504			8	%

Net income	$	259		$	755			-66	%

Income excluding net realized gains (losses) ⁽¹⁾	$	268		$	579			-54	%

Comprehensive income	$	447		$	1,058			-58	%

Operating cash flow	$	1,003		$	823			22	%

P&C combined ratio
Loss and loss expense ratio		73.4	%		61.9	%
Underwriting and administrative expense ratio		31.6	%		30.9	%

Combined ratio		105.0	%		92.8	%

Annualized ROE**		4.9	%		12.0	%

Annualized ROE on net income		4.5	%		15.0	%

Effective tax rate on income excluding net realized gains (losses)		27.0	%		17.4	%

Diluted earnings per share
Income excluding net realized gains (losses)⁽¹⁾	$	0.79		$	1.70			-54	%
Net income	$	0.76		$	2.22			-66	%

Book value per common share	$	69.33		$	60.94			14	%
Tangible book value per common share	$	55.31		$	49.48			12	%
Weighted average basic common shares outstanding		337.1			338.5
Weighted average diluted common shares outstanding		339.7			339.9
Debt/total capitalization		16.7	%		13.6	%

(1)	See Non-GAAP Financial Measures.

*	Adjusted net premiums written is net premiums written adjusted for reinstatement premiums and large risk management contracts.

**	Calculated using income excluding net realized gains (losses) divided by average shareholders’ equity for the period excluding unrealized gains (losses) on investments and the deferred tax component included in shareholders’ equity. To annualize a quarterly rate, multiply by four.


Financial Highlights		Page 1


		ACE Limited
		Consolidated Results - Consecutive Quarters
		(in millions of U.S. dollars) (Unaudited)

ACE Limited Consolidated


	1Q-11			4Q-10			3Q-10			2Q-10			1Q-10			Full Year 2010
Consolidated Results Excluding Life Segment
Gross premiums written	$	4,228		$	4,152		$	4,624		$	4,756		$	4,400		$	17,932
Net premiums written		3,037			3,015			2,922			3,029			3,186			12,152
Net premiums earned		2,910			3,184			3,036			2,845			2,897			11,962
Losses and loss expenses		2,135			1,854			1,768			1,671			1,790			7,083
Policy benefits		—			—			—			1			3			4
Policy acquisition costs		494			575			542			470			493			2,080
Administrative expenses		426			445			374			409			402			1,630

Underwriting income (loss) excluding Life segment		(145	)		310			352			294			209			1,165
Life underwriting income excluding investment income		51			59			50			53			46			208
Net investment income		544			532			516			518			504			2,070
Net realized gains (losses)		(45	)		305			(50	)		9			168			432
Interest expense		63			62			58			52			52			224
Other income (expense) ⁽¹⁾		14			(10	)		25			(3	)		4			16
Income tax expense		97			133			160			142			124			559

Net income		259			1,001			675			677			755			3,108
Net realized gains (losses)		(45	)		305			(50	)		9			168			432
Net realized gains (losses) in other income (expense)⁽¹⁾		34			17			39			3			10			69
Tax expense (benefit) on net realized gains (losses)		(2	)		23			2			23			2			50

Income excluding net realized gains (losses) ⁽²⁾	$	268		$	702		$	688		$	688		$	579		$	2,657

% Change versus prior year period⁽³⁾
Net premiums written		-5	%		3	%		5	%		-1	%		4	%		3	%
Adjusted net premiums written (Excluding Life)		0	%
Net premiums earned		0	%		6	%		0	%		-2	%		1	%		1	%

Other ratios
Net premiums written/gross premiums written		72	%		73	%		63	%		64	%		72	%		68	%
Effective tax rate on income excluding net realized gains (losses)		27.0	%		13.5	%		18.7	%		14.7	%		17.4	%		16.1	%

P&C combined ratio ⁽³⁾
Loss and loss expense ratio		73.4	%		58.2	%		58.2	%		58.8	%		61.9	%		59.2	%
Policy acquisition cost ratio		16.9	%		18.1	%		17.9	%		16.5	%		17.0	%		17.4	%
Administrative expense ratio		14.7	%		14.0	%		12.3	%		14.4	%		13.9	%		13.6	%

Combined ratio		105.0	%		90.3	%		88.4	%		89.7	%		92.8	%		90.2	%

P&C expense ratio		31.6	%		32.1	%		30.2	%		30.9	%		30.9	%		31.0	%
P&C expense ratio excluding A&H		27.3	%		28.2	%		25.7	%		26.5	%		26.9	%		26.8	%
P&C expense ratio excluding reinstatement premiums		30.8	%

Large losses and other items (before tax) ⁽³⁾
Reinstatement premiums (expensed) collected	$	(74	)	$	1		$	(6	)	$	(5	)	$	(25	)	$	(35	)
Catastrophe losses	$	415		$	51		$	91		$	76		$	148		$	366
Prior period development excluding Life - unfavorable (favorable) ⁽⁴⁾	$	(93	)	$	(57	)	$	(201	)	$	(149	)	$	(96	)	$	(503	)
Loss and loss expense ratio excluding catastophe losses and prior period development		60.8	%		58.5	%		61.7	%		61.2	%		61.1	%		60.6	%

(1)	Net realized investment and derivative losses related to unconsolidated entities.

(2)	See Non-GAAP Financial Measures.

(3)	Presented excluding the Life segment to allow for comparison and analysis with earnings guidance. This is a non-GAAP measure.

(4)	For Q1 2010, prior period favorable development is net of $45 million for the annual crop insurance profit-sharing commission that is included in the expense ratio.


Consolidated Results		Page 2

ACE Limited

Summary Consolidated Balance Sheets

(in millions of U.S. dollars, except per share data)


	March 31 2011			December 31 2010
	(Unaudited)			(Audited)
Assets
Fixed maturities available for sale, at fair value	$	38,718		$	37,539
Fixed maturities held to maturity, at amortized cost		9,270			9,501
Equity securities, at fair value		537			692
Short-term investments, at fair value		2,375			1,983
Other investments		1,839			1,692

Total investments		52,739			51,407
Cash		1,115			772
Securities lending collateral		1,326			1,495
Insurance and reinsurance balances receivable		4,102			4,233
Reinsurance recoverable on losses and loss expenses		13,749			12,871
Deferred policy acquisition costs		1,725			1,641
Value of business acquired		745			634
Prepaid reinsurance premiums		1,540			1,511
Goodwill and other intangible assets		4,729			4,664
Deferred tax assets		703			769
Investments in partially owned insurance companies		348			360
Other assets		3,399			2,998

Total assets	$	86,220		$	83,355


Liabilities
Unpaid losses and loss expenses	$	38,843		$	37,391
Unearned premiums		6,533			6,330
Future policy benefits		3,480			3,106
Insurance and reinsurance balances payable		3,277			3,282
Securities lending payable		1,346			1,518
Payable for securities purchased		613			292
Accounts payable, accrued expenses, and other liabilities		3,684			3,495
Short-term debt		1,401			1,300
Long-term debt		3,358			3,358
Trust preferred securities		309			309

Total liabilities		62,844			60,381

Shareholders’ equity
Total shareholders’ equity, excl. AOCI		21,594			21,380
Accumulated other comprehensive income (AOCI)		1,782			1,594

Total shareholders’ equity		23,376			22,974

Total liabilities and shareholders’ equity	$	86,220		$	83,355

Book value per common share ⁽¹⁾	$	69.33		$	68.59
% change over prior quarter		1	%		2	%
Tangible book value per common share ⁽¹⁾	$	55.31		$	54.66
% change over prior quarter		1	%		-2	%

(1)	See Non-GAAP Financial Measures.


Consol Bal Sheet		Page 3

ACE Limited

Consolidated Premiums and Income Excluding Net Realized Gains (Losses) by Line of Business

(in millions of U.S. dollars)

(Unaudited)

ACE Limited Consolidated


	1Q-11		% of Total Consolidated			1Q-10		% of Total Consolidated			% Change 1Q-11 vs. 1Q-10			% Change 1Q-11 vs. 1Q-10 Adjusted ⁽³⁾
Net premiums written
Property and all other	$	1,087		31	%	$	1,082		30	%		0	%		5	%
Casualty		1,307		38	%		1,516		42	%		-14	%		-8	%

Subtotal		2,394		69	%		2,598		72	%		-8	%		-2	%
Personal accident (A&H) ⁽¹⁾		891		26	%		845		24	%		5	%		5	%
Life ⁽²⁾		161		5	%		128		4	%		26	%		26	%

Total consolidated	$	3,446		100	%	$	3,571		100	%		-4	%		1	%

Add: Life deposits on investment contracts		117					55					113	%		113	%

Non-GAAP total net premium written	$	3,563				$	3,626					-2	%		2	%

Net premiums earned
Property and all other	$	921		28	%	$	916		28	%		1	%
Casualty		1,380		42	%		1,427		44	%		-3	%

Subtotal		2,301		70	%		2,343		72	%		-2	%
Personal accident (A&H) ⁽¹⁾		855		26	%		810		25	%		6	%
Life ⁽²⁾		153		4	%		124		3	%		23	%

Total consolidated	$	3,309		100	%	$	3,277		100	%		1	%


Income excluding net realized gains (losses)
Property, casualty, and all other	$	117		44	%	$	443		77	%		-74	%
Personal accident (A&H) ⁽¹⁾		113		42	%		101		17	%		12	%
Life ⁽²⁾		38		14	%		35		6	%		9	%

Total consolidated	$	268		100	%	$	579		100	%		-54	%

(1)	Consolidated A&H includes Combined Insurance which is reported in the Insurance - Overseas General and Life segments.

(2)	Excludes the North America A&H business from Combined Insurance which is included in the Life segment.

(3)	Adjusted for reinstatement premiums and large risk management contracts.


Line of Business		Page 4

ACE Limited

Consolidating Statement of Operations

Three months ended March 31, 2011 and 2010

(in millions of U.S. dollars)

(Unaudited)


	Insurance - North American			Insurance - Overseas General			Global Reinsurance			Corporate & Other			Consolidated Excluding Life Segment			Life			ACE Consolidated
March 31, 2011
Gross premiums written	$	1,958		$	1,940		$	330		$	—		$	4,228		$	416		$	4,644
Net premiums written		1,285			1,437			315			—			3,037			409			3,446
Net premiums earned		1,346			1,304			260			—			2,910			399			3,309
Losses and loss expenses		994			862			279			—			2,135			128			2,263
Policy benefits		—			—			—			—			—			91			91
Policy acquisition costs		136			312			46			—			494			61			555
Administrative expenses		148			224			12			42			426			68			494

Underwriting income (loss)		68			(94	)		(77	)		(42	)		(145	)		51			(94	)
Net investment income		295			131			72			—			498			46			544
Net realized gains (losses)		(11	)		(9	)		(13	)		1			(32	)		(13	)		(45	)
Interest expense		4			1			—			55			60			3			63
Other income (expense)		16			2			6			(5	)		19			(5	)		14
Income tax expense (benefit)		89			19			10			(34	)		84			13			97

Net income (loss)		275			10			(22	)		(67	)		196			63			259
Net realized gains (losses)		(11	)		(9	)		(13	)		1			(32	)		(13	)		(45	)
Net realized gains (losses) in other income (expense)		24			5			4			—			33			1			34
Tax expense (benefit) on net realized gains (losses)		1			(3	)		—			—			(2	)		—			(2	)

Income (loss) excluding net realized gains (losses) ⁽¹⁾	$	263		$	11		$	(13	)	$	(68	)	$	193		$	75		$	268

March 31, 2010
Gross premiums written	$	2,130		$	1,871		$	399		$	—		$	4,400		$	390		$	4,790
Net premiums written		1,395			1,420			371			—			3,186			385			3,571
Net premiums earned		1,370			1,251			276			—			2,897			380			3,277
Losses and loss expenses		938			701			151			—			1,790			131			1,921
Policy benefits		—			3			—			—			3			84			87
Policy acquisition costs		156			283			54			—			493			61			554
Administrative expenses		148			202			12			40			402			58			460

Underwriting income (loss)		128			62			59			(40	)		209			46			255
Net investment income		278			114			69			—			461			43			504
Net realized gains (losses)		80			22			31			(8	)		125			43			168
Interest expense		—			—			—			52			52			—			52
Other income (expense)		5			(2	)		4			—			7			(3	)		4
Income tax expense (benefit)		104			14			10			(18	)		110			14			124

Net income (loss)		387			182			153			(82	)		640			115			755
Net realized gains (losses)		80			22			31			(8	)		125			43			168
Net realized gains (losses) in other income (expense)		—			5			4			—			9			1			10
Tax expense (benefit) on net realized gains (losses)		2			1			—			(2	)		1			1			2

Income (loss) excluding net realized gains (losses) ⁽¹⁾	$	309		$	156		$	118		$	(76	)	$	507		$	72		$	579

(1)	See Non-GAAP Financial Measures.


Segment 2011 Qtr		Page 5

ACE Limited

Segment Results - First Quarter Catastrophe Loss Charges

(in millions of U.S. dollars)

(Unaudited)

First Quarter Catastrophe Loss Charges - 2011


Catastrophe Loss Charges- By Event	Insurance - North American			Insurance - Overseas General			Global Reinsurance		Total			Total impact after reinstatement premiums and income tax

Gross loss									$	1,495
Net loss
Japan earthquake	$	52		$	62		$	101	$	215		$	213
New Zealand earthquake		—			62			35		97			119
Australian storms⁽¹⁾		3			63			16		82			96
U.S. winter storms		21			—			—		21			15

Total		76			187			152		415			443


Reinstatement premiums (expensed) collected		(12	)		(63	)		1		(74	)

Net premium earned (expensed)		(12	)		(63	)		1		(74	)


Total impact before income tax	$	88		$	250		$	151	$	489

(1)	There was $15 million of after-tax favorable prior period development in the first quarter related to the fourth quarter Australian storms that is not netted in the $96 million.


Catastrophe Losses		Page 6

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Insurance - North American


	1Q-11			4Q-10			3Q-10			2Q-10			1Q-10			Full Year 2010
Gross premiums written	$	1,958		$	2,256		$	2,759		$	2,649		$	2,130		$	9,794
Net premiums written		1,285			1,519			1,445			1,438			1,395			5,797
Net premiums earned		1,346			1,511			1,444			1,326			1,370			5,651
Losses and loss expenses		994			1,030			1,026			924			938			3,918
Policy acquisition costs		136			178			165			126			156			625
Administrative expenses		148			154			112			147			148			561

Underwriting income		68			149			141			129			128			547
Net investment income		295			286			287			287			278			1,138
Net realized gains (losses)		(11	)		254			(2	)		85			80			417
Interest expense		4			3			6			—			—			9
Other income (expense)		16			1			20			(4	)		5			22
Income tax expense		89			114			108			110			104			436

Net income		275			573			332			387			387			1,679
Net realized gains (losses)		(11	)		254			(2	)		85			80			417
Net realized gains (losses) in other income (expense)		24			3			20			1			—			24
Tax expense (benefit) on net realized gains (losses)		1			14			(2	)		12			2			26

Income excluding net realized gains (losses) ⁽¹⁾	$	263		$	330		$	312		$	313		$	309		$	1,264


Combined ratio
Loss and loss expense ratio		73.8	%		68.1	%		71.0	%		69.7	%		68.5	%		69.3	%
Policy acquisition cost ratio		10.1	%		11.8	%		11.4	%		9.5	%		11.4	%		11.1	%
Administrative expense ratio		11.1	%		10.2	%		7.8	%		11.1	%		10.8	%		9.9	%

Combined ratio		95.0	%		90.1	%		90.2	%		90.3	%		90.7	%		90.3	%


Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	(12	)	$	1		$	1		$	(3	)	$	(3	)	$	(4	)
Catastrophe losses	$	76		$	21		$	17		$	53		$	52		$	143
Prior period development - unfavorable (favorable)⁽²⁾	$	(35	)	$	46		$	(35	)	$	(73	)	$	(45	)	$	(107	)
Loss and loss expense ratio excluding catastophe losses and prior period development		70.2	%		63.7	%		72.4	%		71.0	%		71.1	%		69.4	%

% Change versus prior year period
Net premiums written		-8	%		7	%		5	%		-1	%		0	%		3	%
Adjusted net premiums written ⁽³⁾		0	%
Net premiums earned		-2	%		11	%		-2	%		-6	%		-5	%		-1	%

Other ratios
Net premiums written/gross premiums written		66	%		67	%		52	%		54	%		65	%		59	%

(1)	See Non-GAAP Financial Measures.

(2)	For Q1 2010, prior period favorable development is net of $45 million for the annual crop insurance profit-sharing commission that is included in the expense ratio.

(3)	Adjusted net premiums written is net premiums written adjusted for reinstatement premiums and large risk management contracts.


Insurance-North American		Page 7

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Insurance - Overseas General


	1Q-11			4Q-10			3Q-10			2Q-10			1Q-10			Full Year 2010
Gross premiums written	$	1,940		$	1,750		$	1,584		$	1,787		$	1,871		$	6,992
Net premiums written		1,437			1,353			1,205			1,302			1,420			5,280
Net premiums earned		1,304			1,405			1,321			1,263			1,251			5,240
Losses and loss expenses		862			697			605			644			701			2,647
Policy benefits		—			—			—			1			3			4
Policy acquisition costs		312			346			326			296			283			1,251
Administrative expenses		224			227			204			207			202			840

Underwriting income		(94	)		135			186			115			62			498
Net investment income		131			128			118			115			114			475
Net realized gains (losses)		(9	)		21			32			48			22			123
Interest expense		1			1			—			—			—			1
Other income (expense)		2			8			4			3			(2	)		13
Income tax expense		19			37			63			59			14			173

Net income		10			254			277			222			182			935
Net realized gains (losses)		(9	)		21			32			48			22			123
Net realized gains (losses) in other income (expense)		5			7			9			1			5			22
Tax expense (benefit) on net realized gains (losses)		(3	)		3			6			13			1			23

Income excluding net realized gains (losses) ⁽¹⁾	$	11		$	229		$	242		$	186		$	156		$	813


Combined ratio
Loss and loss expense ratio		66.1	%		49.6	%		45.8	%		51.0	%		56.3	%		50.6	%
Policy acquisition cost ratio		23.9	%		24.6	%		24.7	%		23.5	%		22.6	%		23.9	%
Administrative expense ratio		17.2	%		16.1	%		15.5	%		16.4	%		16.1	%		16.0	%

Combined ratio		107.2	%		90.3	%		86.0	%		90.9	%		95.0	%		90.5	%


Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	(63	)	$	—		$	(7	)	$	(2	)	$	(24	)	$	(33	)
Catastrophe losses	$	187		$	25		$	25		$	18		$	64		$	132
Prior period development - unfavorable (favorable)	$	(44	)	$	(91	)	$	(117	)	$	(45	)	$	(37	)	$	(290	)
Loss and loss expense ratio excluding catastophe losses and prior period development		52.8	%		54.4	%		52.5	%		53.0	%		53.1	%		53.3	%

% Change versus prior year period
Net premiums written		1	%		0	%		0	%		3	%		7	%		3	%
Adjusted net premiums written ⁽²⁾		4	%
Net premiums earned		4	%		0	%		0	%		1	%		6	%		2	%

Other ratios
Net premiums written/gross premiums written		74	%		77	%		76	%		73	%		76	%		76	%

(1)	See Non-GAAP Financial Measures.

(2)	Adjusted net premiums written is net premiums written adjusted for reinstatement premiums.


Insurance-Overseas General		Page 8

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Global Reinsurance


	1Q-11			4Q-10			3Q-10			2Q-10			1Q-10			Full Year 2010
Gross premiums written	$	330		$	146		$	281		$	320		$	399		$	1,146
Net premiums written		315			143			272			289			371			1,075
Net premiums earned		260			268			271			256			276			1,071
Losses and loss expenses		279			127			137			103			151			518
Policy acquisition costs		46			51			51			48			54			204
Administrative expenses		12			14			14			15			12			55

Underwriting income		(77	)		76			69			90			59			294
Net investment income		72			75			71			73			69			288
Net realized gains (losses)		(13	)		24			10			28			31			93
Other income (expense)		6			7			10			2			4			23
Income tax expense		10			11			12			9			10			42

Net income		(22	)		171			148			184			153			656
Net realized gains (losses)		(13	)		24			10			28			31			93
Net realized gains (losses) in other income (expense)		4			6			10			1			4			21
Tax expense on net realized gains (losses)		—			—			1			—			—			1

Income excluding net realized gains (losses) ⁽¹⁾	$	(13	)	$	141		$	129		$	155		$	118		$	543


Combined ratio
Loss and loss expense ratio		107.3	%		47.5	%		50.4	%		40.4	%		54.7	%		48.4	%
Policy acquisition cost ratio		17.8	%		19.0	%		19.0	%		18.5	%		19.6	%		19.0	%
Administrative expense ratio		4.6	%		5.2	%		4.9	%		5.8	%		4.5	%		5.1	%

Combined ratio		129.7	%		71.7	%		74.3	%		64.7	%		78.8	%		72.5	%


Large losses and other items (before tax)
Reinstatement premiums collected	$	1		$	—		$	—		$	—		$	2		$	2
Catastrophe losses	$	152		$	5		$	49		$	5		$	32		$	91
Prior period development - unfavorable (favorable)	$	(14	)	$	(12	)	$	(49	)	$	(31	)	$	(14	)	$	(106	)
Loss and loss expense ratio excluding catastophe losses and prior period development		54.4	%		50.3	%		50.2	%		50.9	%		48.4	%		50.0	%

% Change versus prior year period
Net premiums written		-15	%		-1	%		32	%		-12	%		3	%		4	%
Net premiums earned		-6	%		6	%		10	%		6	%		16	%		9	%

Other ratios
Net premiums written/gross premiums written		95	%		98	%		97	%		90	%		93	%		94	%

(1)	See Non-GAAP Financial Measures.


Global Reinsurance		Page 9

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Life


	1Q-11			4Q-10			3Q-10			2Q-10			1Q-10			Full Year 2010
Gross premiums written⁽¹⁾	$	416		$	413		$	378		$	398		$	390		$	1,579
Net premiums written		409			407			373			391			385			1,556
Net premiums earned		399			388			386			388			380			1,542
Losses and loss expenses		128			117			119			129			131			496
Policy benefits		91			90			93			86			84			353
Policy acquisition costs		61			65			65			66			61			257
Administrative expenses		68			57			59			54			58			228
Net investment income		46			43			43			43			43			172

Life underwriting income ⁽²⁾		97			102			93			96			89			380

Net realized gains (losses)		(13	)		5			(85	)		(155	)		43			(192	)
Interest expense		3			3			—			—			—			3
Other income (expense)		(5	)		(9	)		(5	)		(3	)		(3	)		(20	)
Income tax expense		13			16			16			16			14			62

Net income (loss)		63			79			(13	)		(78	)		115			103

Net realized gains (losses)		(13	)		5			(85	)		(155	)		43			(192	)
Net realized gains (losses) in other income (expense)		1			1			—			—			1			2
Tax expense (benefit) on net realized gains (losses)		—			5			—			1			1			7

Income excluding net realized gains (losses) ⁽³⁾	$	75		$	78		$	72		$	78		$	72		$	300


Prior period development - unfavorable (favorable)	$	—		$	(2	)	$	(4	)	$	(3	)	$	—			(9	)
Deposits collected on universal life and investment contracts⁽¹⁾	$	117		$	93		$	51		$	58		$	55		$	257
Fees on universal life and investment contracts ⁽¹⁾	$	11		$	14		$	10		$	11		$	7		$	42

% Change versus prior year period
Net premiums written		6	%		4	%		0	%		7	%		11	%		5	%
Net premiums earned		5	%		5	%		7	%		7	%		13	%		8	%

(1)	Consistent with GAAP, premiums collected on universal life and investment contracts are considered deposits and excluded from revenues. Fees on universal life and investment contracts are revenue for GAAP and have been classified as gross premiums written.

(2)	We assess the performance of our Life business based on life underwriting income which includes net investment income.

(3)	See Non-GAAP Financial Measures.


Life		Page 10

ACE Limited

Loss Reserve Rollforward

(in millions of U.S. dollars)

(Unaudited)


	Unpaid Losses									Net Paid to Incurred Ratio
	Gross			Ceded			Net			Net Paid to Incurred Ratio
Balance at December 31, 2009	$	37,783		$	12,745		$	25,038

Losses and loss expenses incurred		2,544			623			1,921
Losses and loss expenses paid		(2,491	)		(729	)		(1,762	)		92	%
Other (incl. foreign exch. revaluation)		(285	)		(79	)		(206	)

Balance at March 31, 2010	$	37,551		$	12,560		$	24,991

Losses and loss expenses incurred		2,725			925			1,800
Losses and loss expenses paid		(2,824	)		(976	)		(1,848	)		103	%
Other (incl. foreign exch. revaluation)		(390	)		(135	)		(255	)

Balance at June 30, 2010	$	37,062		$	12,374		$	24,688

Losses and loss expenses incurred		3,236			1,349			1,887
Losses and loss expenses paid		(3,010	)		(1,139	)		(1,871	)		99	%
Other (incl. foreign exch. revaluation)		454			166			288

Balance at September 30, 2010	$	37,742		$	12,750		$	24,992

Losses and loss expenses incurred		2,350			379			1,971
Losses and loss expenses paid		(2,954	)		(1,022	)		(1,932	)		98	%
Other (incl. foreign exch. revaluation)		253			42			211

Balance at December 31, 2010	$	37,391		$	12,149		$	25,242

Losses and loss expenses incurred		3,820			1,557			2,263
Losses and loss expenses paid		(2,847	)		(884	)		(1,963	)		87	%
Other (incl. foreign exch. revaluation)		479			161			318

Balance at March 31, 2011	$	38,843		$	12,983		$	25,860


Add net recoverable on paid losses		—			766			(766	)

Balance including net recoverable on paid losses	$	38,843		$	13,749		$	25,094


Loss Reserve Rollforward		Page 11

ACE Limited

Reinsurance Recoverable Analysis

(in millions of U.S. dollars)

(Unaudited)

Net Reinsurance Recoverable by Division


	March 31 2011			December 31 2010
Reinsurance recoverable on paid losses and loss expenses
Active operations	$	595		$	579
Brandywine		313			281
Westchester Run-off		26			26
Other Run-off		12			12

Total	$	946		$	898

Reinsurance recoverable on unpaid losses and loss expenses
Active operations	$	10,893		$	9,956
Brandywine		1,931			2,024
Westchester Run-off		463			468
Other Run-off		40			55

Total	$	13,327		$	12,503

Gross reinsurance recoverable
Active operations	$	11,488		$	10,535
Brandywine		2,244			2,305
Westchester Run-off		489			494
Other Run-off		52			67

Total	$	14,273		$	13,401

Provision for uncollectible reinsurance
Active operations	$	(323	)	$	(324	)
Brandywine		(172	)		(175	)
Westchester Run-off		(21	)		(21	)
Other Run-off		(8	)		(10	)

Total	$	(524	)	$	(530	)

Net reinsurance recoverable
Active operations	$	11,165		$	10,211
Brandywine		2,072			2,130
Westchester Run-off		468			473
Other Run-off		44			57

Total	$	13,749		$	12,871


Reinsurance Recoverable		Page 12

ACE Limited

Investment Portfolio

(in millions of U.S. dollars)

(Unaudited)


	March 31 2011					December 31 2010
Market Value
Fixed maturities available for sale	$	38,718				$	37,539
Fixed maturities held to maturity		9,202					9,461
Short-term investments		2,375					1,983

Total	$	50,295				$	48,983

Asset Allocation by Market Value
Treasury	$	1,880		4	%	$	2,075		4	%
Agency		1,946		4	%		2,015		4	%
Corporate and asset-backed		15,818		31	%		15,900		33	%
Mortgage-backed		12,880		25	%		12,362		25	%
Municipal ⁽¹⁾		2,453		5	%		2,449		5	%
Non-U.S.		12,943		26	%		12,199		25	%
Short-term investments		2,375		5	%		1,983		4	%

Total	$	50,295		100	%	$	48,983		100	%


Note: Insured municipal bonds represent $695 million, or 28% of our municipal bond holdings.

Credit Quality by Market Value
AAA	$	24,636		49	%	$	23,718		48	%
AA		4,543		9	%		4,714		10	%
A		8,847		18	%		8,482		17	%
BBB		5,583		11	%		5,487		11	%
BB		3,473		7	%		3,357		7	%
B		2,500		5	%		2,393		5	%
Other		713		1	%		832		2	%

Total	$	50,295		100	%	$	48,983		100	%

Cost/Amortized Cost
Fixed maturities available for sale	$	37,750				$	36,542
Fixed maturities held to maturity		9,270					9,501
Short-term investments		2,375					1,983

Subtotal		49,395					48,026
Equity securities		510					666
Other investments		1,613					1,511

Total	$	51,518				$	50,203

Avg. duration of fixed maturities		3.8 years					3.7 years
Avg. market yield of fixed maturities ⁽²⁾		3.5	%				3.6	%
Avg. credit quality		AA					AA
Avg. yield on invested assets⁽³⁾		4.3	%				4.3	%

(1)	The natural rating of the municipal portfolio is AA with 16% of our holdings pre-funded with AAA Federal securities. The portfolio is highly diversified predominantly in State general obligation bonds and essential service revenue bonds (education, utilities, water, power, sewers).

(2)	Weighted average yield to maturity of our fixed income portfolio based on the market prices of the holdings as of that date.

(3)	Net investment income divided by average cost of fixed maturities and other investments, and average market value of equity securities.


Investments		Page 13

ACE Limited

Investment Portfolio - 2

(in millions of U.S. dollars)

(Unaudited)

Mortgage-backed Fixed Income Portfolio

Market Value at March 31, 2011


	S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
Mortgage-backed securities
Residential mortgage-backed (RMBS)
GNMA	$	743	$	—	$	—	$	—	$	—	$	743
FNMA		6,646		—		—		—		—		6,646
Freddie Mac		2,998		—		—		—		—		2,998

Total agency RMBS		10,387		—		—		—		—		10,387
Non-agency RMBS		325		17		21		37		707		1,107

Total residential mortgage-backed		10,712		17		21		37		707		11,494
Commercial mortgage-backed		1,342		25		16		3		—		1,386

Total mortgage-backed securities	$	12,054	$	42	$	37	$	40	$	707	$	12,880

Mortgage-backed securities total $12.9 billion, are rated predominantly AAA and comprise 26% of the fixed income portfolio. This compares to a 35% mortgage-backed weighting in representative indices of the U.S. fixed income market. The minimum rating for initial purchases of mortgage-backed securities is AAA.

Securities issued by Federal agencies with implied or explicit government guarantees total $10.4 billion and represent 90% of the residential mortgage-backed portfolio.

Non-agency residential mortgage-backed securities are backed by prime collateral, and broadly diversified in over 190,000 loans. The portfolio’s loan-to-value ratio is approximately 70% with an average FICO score of 730. With this conservative loan-to-value ratio and subordinated collateral of 10%, the cumulative 5-year foreclosure rate would have to rise to 15% and real estate values would have to fall 15% from their current levels before principal is impaired. The current foreclosure rate of ACE’s non-agency RMBS portfolio is 9%.

Commercial mortgage-backed securities of $1.4 billion are rated predominantly AAA, broadly diversified with over 17,000 loans and seasoned with 76% of the portfolio issued before 2006. The average loan-to-value ratio is approximately 69% with a debt service coverage ratio in excess of 1.7 and weighted average subordinated collateral of 33%. The cumulative foreclosure rate would have to rise to 42% before principal is impaired. The current foreclosure rate of the portfolio is about 2.7%.


Investments 2		Page 14

ACE Limited

Investment Portfolio - 3

(in millions of U.S. dollars)

(Unaudited)

Mortgage-backed Fixed Income Portfolio

Amortized Cost at March 31, 2011


	S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
Mortgage-backed securities
Residential mortgage-backed (RMBS)
GNMA	$	727	$	—	$	—	$	—	$	—	$	727
FNMA		6,604		—		—		—		—		6,604
Freddie Mac		2,974		—		—		—		—		2,974

Total agency RMBS		10,305		—		—		—		—		10,305
Non-agency RMBS		333		19		23		42		817		1,234

Total residential mortgage-backed		10,638		19		23		42		817		11,539
Commercial mortgage-backed		1,283		24		15		3		—		1,325

Total mortgage-backed securities	$	11,921	$	43	$	38	$	45	$	817	$	12,864


Investments 3		Page 15

ACE Limited

Investment Portfolio - 4

(in millions of U.S. dollars)

(Unaudited)

U.S. Investment Grade Corporate and Asset-backed Fixed Income Portfolio

Market Value at March 31, 2011


	S&P Credit Rating
	AAA		AA		A		BBB		Total
Asset-backed	$	210	$	4	$	11	$	6	$	231
Banks		483		255		2,108		251		3,097
Basic Materials		—		—		64		170		234
Communications		—		—		628		672		1,300
Consumer, Cyclical		—		61		201		179		441
Consumer, Non-Cyclical		53		471		367		572		1,463
Diversified Financial Services		43		53		149		209		454
Energy		77		14		182		499		772
Industrial		93		377		322		139		931
Utilities		7		—		398		525		930
All Others		113		69		369		337		888

Total	$	1,079	$	1,304	$	4,799	$	3,559	$	10,741

U.S. Investment Grade Corporate Fixed Income Portfolio

The average credit quality of ACE’s US investment grade bond portfolio is high at A.

ACE prohibits investments in complex structured securities (e.g. CDOs, CLOs) and over-the-counter derivatives and does not permit the use of portfolio leverage.

Corporate bond holdings are highly diversified across industries and geographies. Issuer limits are based on credit rating (AA 2%, A 1%, BBB 0.5% of total portfolio) and are monitored on a daily basis by ACE via an internal compliance system.


Investments 4		Page 16

ACE Limited

Investment Portfolio - 5

(in millions of U.S. dollars)

(Unaudited)

Below Investment Grade Corporate and Asset-backed Fixed Income Portfolio

Market Value at March 31, 2011


	S&P Credit Rating
	BB		B		CCC		Total
Asset-backed	$	1	$	15	$	6	$	22
Banks		35		34		—		69
Basic Materials		232		100		15		347
Communications		414		418		14		846
Consumer, Cyclical		321		319		25		665
Consumer, Non-Cyclical		585		433		5		1,023
Diversified Financial Services		24		22		7		53
Energy		693		187		9		889
Industrial		289		234		14		537
Utilities		230		100		—		330
All Others		150		141		5		296

Total	$	2,974	$	2,003	$	100	$	5,077

Below Investment Grade Corporate Fixed Income Portfolio

ACE manages high yield bonds as a distinct and separate asset class from investment grade bonds. ACE’s allocation to high yield bonds is explicitly set by internal management and is targeted to securities in the upper tier of credit quality (BB/B). Our minimum rating for initial purchase is BB/B.

Six external investment managers are responsible for high yield security selection and portfolio construction.

ACE’s high yield managers have a conservative approach to credit selection and very low historical default experience.

Securities holdings are highly diversified across industries and are subject to a 1.5% issuer limit as a percentage of high yield allocation. The portfolio comprises over 700 issuers with our largest current issuer exposure at $79 million. ACE monitors position limits on a daily basis through an internal compliance system.

Derivative and structured securities (e.g. credit default swaps, CLOs) are not permitted in high yield portfolios.


Investments 5		Page 17

ACE Limited

Investment Portfolio - 6

(in millions of U.S. dollars)

(Unaudited)

Non-U.S. Fixed Income Portfolio

Market Value at March 31, 2011


	S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
United Kingdom	$	1,052	$	—	$	—	$	—	$	—	$	1,052
Canada		903		—		—		—		—		903
Japan		—		387		—		—		—		387
Republic of Korea		—		13		345		—		—		358
Germany		350		—		—		—		—		350
Federative Republic of Brazil		—		—		—		231		—		231
Province of Ontario		—		199		—		—		—		199
France		165		—		—		—		—		165
Swiss Confederation		151		—		—		—		—		151
Province of Quebec		—		—		140		—		—		140
State of Queensland		70		41		—		—		—		111
Kingdom of Thailand		5		—		77		21		—		103
United Mexican States		—		—		27		51		—		78
Commonwealth of Australia		65		9		—		—		—		74
State of New South Wales		63		—		—		—		—		63
Taiwan		—		58		—		—		—		58
Dominion of New Zealand		55		—		—		—		—		55
People’s Republic of China		15		35		—		—		—		50
State of Victoria		49		—		—		—		—		49
Republic of Austria		47		—		—		—		—		47
Federation of Malaysia		12		—		32		—		—		44
Arab Republic of Egypt		22		—		—		—		21		43
State of Western Australia		37		—		—		—		—		37
State of Qatar		—		36		—		—		—		36
Province of Manitoba		—		33		—		—		—		33
Other Non-U.S. Government		189		109		65		31		36		430

Non-U.S. Government Securities	$	3,250	$	920	$	686	$	334	$	57	$	5,247
Non-U.S. Corporate		1,686		1,079		2,618		1,481		832		7,696

	$	4,936	$	1,999	$	3,304	$	1,815	$	889	$	12,943

Non-U.S. Fixed Income Portfolio

ACE’s non-U.S. investment grade fixed income portfolios are currency-matched with the insurance liabilities of ACE’s non-U.S. operations.

83% of ACE’s non-U.S. fixed income is denominated in G7 currencies.

Average credit quality of non-U.S. fixed income securities is very high at AA and 54% of holdings are rated AAA or guaranteed by governments or quasi-government agencies.


Investments 6		Page 18

ACE Limited

Investment Portfolio - 7

(in millions of U.S. dollars)

(Unaudited)

Investment portfolio

Top 25 Exposures - Fixed Maturity Investments


March 31, 2011					Rating
	1	General Electric Co	$	467		AA+
	2	JP Morgan Chase & Co		441		A+
	3	Bank of America Corp		427		A
	4	Citigroup Inc		327		A
	5	Goldman Sachs Group Inc/The		316		A
	6	Verizon Communications Inc		308		A-
	7	Wells Fargo & Co		287		AA-
	8	Morgan Stanley		281		A
	9	AT&T INC		239		A-
	10	HSBC Holdings Plc		234		AA-
	11	Credit Suisse Group		176		A
	12	Royal Bank of Scotland Group Plc		171		A
	13	Lloyds Banking Group Plc		170		A
	14	Comcast Corp		162		BBB+
	15	Barclays PLC		162		A+
	16	Kraft Foods Inc		158		BBB
	17	ConocoPhillips		124		A
	18	American Express		124		BBB+
	19	UBS AG		121		A+
	20	Time Warner Cable Inc		120		BBB
	21	Banco Santander SA		119		AA
	22	Pfizer Inc		106		AA
	23	Anheuser-Busch InBev NV		105		BBB+
	24	Dominion Resources Inc/VA		104		A-
	25	BP PLC		102		A


Investments 7		Page 19

ACE Limited

Net Realized and Unrealized Gains (Losses)

(in millions of U.S. dollars)

(Unaudited)


	Three months ended March 31, 2011
	Net Realized Gains (Losses) ⁽¹⁾			Net Unrealized Gains (Losses)			Net Impact
Fixed maturities	$	49		$	(39	)	$	10
Equity securities		7			2			9
Equity and fixed income derivatives		(20	)		—			(20	)
Foreign exchange gains (losses)		(79	)		—			(79	)
Other		(1	)		47			46

Sub-total		(44	)		10			(34	)
Mark-to-market gains (losses) from derivative transactions ⁽²⁾		(1	)		—			(1	)

Total gains (losses)		(45	)		10			(35	)
Partially-owned entities and private equity investments ⁽³⁾		34			—			34
Income tax expense (benefit)		(2	)		(14	)		(16	)

Net gains (losses)	$	(9	)	$	24		$	15

(1)	Other-than-temporary impairments for the quarter include $4 million for fixed maturities.

(2)	The quarter includes no net realized gains or losses on the life reinsurance operations. A $71 million gain on guaranteed living benefit derivatives was offset by $71 million of losses on other derivatives, including S&P put options and futures.

(3)	Partially-owned entities are investments where we hold more than an insignificant percentage of the investee’s shares. The net income or loss is included in other income (expense).


	Three months ended March 31, 2010
	Net Realized Gains (Losses)⁽⁴⁾			Net Unrealized Gains (Losses)			Net Impact
Fixed maturities	$	81		$	423		$	504
Equity securities		45			(24	)		21
Equity and fixed income derivatives		19			—			19
Foreign exchange gains (losses)		(9	)		—			(9	)
Other		4			55			59

Sub-total		140			454			594
Mark-to-market gains (losses) from derivative transactions ⁽⁵⁾		28			—			28

Total gains (losses)		168			454			622
Partially-owned entities and private equity investments ⁽⁶⁾		10			—			10
Income tax expense (benefit)		2			105			107

Net gains (losses)	$	176		$	349		$	525

(4)	Other-than-temporary impairments for the quarter include $18 million for fixed maturities.

(5)	Includes $37 million of realized gains on the life reinsurance operations which comprises a $96 million gain on guaranteed minimum income benefit derivatives and $59 million of losses on other derivatives, including S&P put options and futures.

(6)	Partially-owned entities are investments where we hold more than an insignificant percentage of the investee’s shares. The net income or loss is included in other income (expense).


Investments Gains (Losses)		Page 20

ACE Limited

Capital Structure

(in millions of U.S. dollars)

(Unaudited)


	March 31			December 31			December 31
	2011			2010			2009
Total short-term debt	$	1,401		$	1,300		$	161
Total long-term debt		3,358			3,358			3,158

Total debt	$	4,759		$	4,658		$	3,319

Total trust preferred securities	$	309		$	309		$	309

Total shareholders’ equity	$	23,376		$	22,974		$	19,667

Total capitalization	$	28,444		$	27,941		$	23,295

Tangible capital ⁽¹⁾	$	23,715		$	23,277		$	19,364

Leverage ratios
Debt/ total capitalization		16.7	%		16.7	%		14.2	%
Debt plus trust preferred securities/ total capitalization		17.8	%		17.8	%		15.6	%
Debt/ tangible capital		20.1	%		20.0	%		17.1	%
Debt plus trust preferred securities/ tangible capital		21.4	%		21.3	%		18.7	%

(1)	Tangible capital is equal to total capitalization less goodwill and other intangible assets.


Capital Structure		Page 21

ACE Limited

Debt, Trust Preferred, and Credit Facilities

(in millions of U.S. dollars)

(Unaudited)

March 31, 2011


	Par Amount Outstanding		Carrying value		Coupon		Maturity Date
Debt and Trust Preferred
Repurchase Agreements ⁽¹⁾	$	300	$	300		0.24%	April 7, 2011
Repurchase Agreements	$	100	$	100		0.23%	May 4, 2011
Repurchase Agreements	$	300	$	300		0.27%	May 12, 2011
Repurchase Agreements	$	701	$	701		0.23%	June 6, 2011
ACE INA Holdings Inc. Senior Notes	$	500	$	500		5.88%	June 15, 2014
ACE INA Holdings Inc. Senior Notes	$	450	$	447		5.60%	May 15, 2015
ACE INA Holdings Inc. Senior Notes	$	700	$	699		2.60%	November 23, 2015
ACE INA Holdings Inc. Senior Notes	$	500	$	500		5.70%	February 15, 2017
ACE INA Holdings Inc. Senior Notes	$	300	$	300		5.80%	March 15, 2018
ACE INA Holdings Inc. Senior Notes	$	500	$	500		5.90%	June 15, 2019
ACE INA Holdings Inc. Debentures	$	100	$	100		8.88%	August 15, 2029
ACE Capital Trust II Preferred Securities	$	309	$	309		9.70%	April 1, 2030
ACE INA Holdings Inc. Senior Notes	$	300	$	299		6.70%	May 15, 2036
Other	$	13	$	13

	$	5,073	$	5,068


	Commitment		Usage				Maturity Date
Credit Facilities
Syndicated Letter of Credit Facility	$	1,000	$	526			November 8, 2012
Revolving Credit / LOC Facility	$	500	$	69			November 8, 2012
Bilateral Letter of Credit Facility	$	500	$	500			September 20, 2014
Funds at Lloyds Capital Facilities	$	400	$	340			December 31, 2015

	$	2,400	$	1,435

(1)	Subsequent to March 31, 2011, these repurchase agreements were rolled-over for additional 30 and 60-day terms.


Capital Structure 2		Page 22

ACE Limited

Computation of Basic and Diluted Earnings Per Share

(in millions of U.S. dollars, except share and per share data)

(Unaudited)


	Three months ended March 31
	2011			2010
Numerator
Income to common shares, excl. net realized gains (losses) ⁽¹⁾	$	268		$	579
Net realized gains (losses), net of income tax		(9	)		176

Net income available to the holders of common shares	$	259		$	755

Rollforward of Common Shares Outstanding
Shares - beginning of period		334,942,852			336,524,657
Issued under employee stock purchase plan		96,279			118,172
Shares granted		1,260,467			1,786,925
Issued for option exercises		874,266			180,964

Shares - end of period		337,173,864			338,610,718

Denominator
Weighted average shares outstanding		337,088,217			338,478,484
Effect of other dilutive securities		2,572,982			1,386,992

Adj. wtd. avg. shares outstanding and assumed conversions		339,661,199			339,865,476

Basic earnings per share
Income excluding net realized gains (losses) ⁽¹⁾	$	0.80		$	1.71
Net realized gains (losses), net of income tax		(0.03	)		0.52

Net income	$	0.77		$	2.23

Diluted earnings per share
Income excluding net realized gains (losses) ⁽¹⁾	$	0.79		$	1.70
Net realized gains (losses), net of income tax		(0.03	)		0.52

Net income	$	0.76		$	2.22

(1)	See Non-GAAP Financial Measures.


Earnings per share		Page 23

ACE Limited

Non-GAAP Financial Measures

(in millions of U.S. dollars)

(Unaudited)

Regulation G - Non-GAAP Financial Measures

In presenting our results, we have included and discussed certain non-GAAP measures. These non-GAAP measures, which may be defined differently by other companies, are important for an understanding of our overall results of operations. However, they should not be viewed as a substitute for measures determined in accordance with generally accepted accounting principles (GAAP). A reconciliation of book value per common share is provided on the next page.

In presenting our segment operating results, we have shown our performance with reference to underwriting results. Underwriting results are calculated by subtracting losses and loss expenses, policy benefits, policy acquisition costs, and administrative expenses from net premiums earned. We use underwriting results and operating ratios to monitor the results of our operations without the impact of certain factors, including investment income, other income and expenses, interest and income tax expense, and net realized gains (losses).

Income excluding net realized gains (losses) and the related tax expense (benefit) is a common performance measurement and non-GAAP measure. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude net realized gains (losses) and net realized gains (losses) included in other income (expense) related to partially owned entities because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the availability of market opportunities.

In addition, income excluding net realized gains (losses), catastrophe losses and prior period development is also a non-GAAP measure. We present income excluding net realized gains (losses), catastrophe losses and prior period development in order that users of our financial information can view and assess the specific impact of catastrophe losses and prior period development on the relevant periods and because of the variance in those amounts in the comparable periods. Income excluding net realized gains (losses) and income excluding net realized gains (losses), catastrophe losses and prior period development should not be viewed as substitutes for net income determined in accordance with GAAP.

The following table presents the reconciliation of Net income to Income excluding net realized gains (losses), catastrophe losses, and prior period development:


	1Q-11			4Q-10			3Q-10			2Q-10			1Q-10			Full Year 2010
Net income, as reported	$	259		$	1,001		$	675		$	677		$	755		$	3,108
Net realized gains (losses)		(45	)		305			(50	)		9			168			432
Net realized gains (losses) in other income (expense) ⁽¹⁾		34			17			39			3			10			69
Income tax expense (benefit) on net realized gains (losses)		(2	)		23			2			23			2			50

Income excluding net realized gains (losses)		268			702			688			688			579			2,657
Catastrophe losses, net of tax		443			42			86			62			149			339
Prior period development, net of tax ⁽²⁾		(74	)		(63	)		(154	)		(118	)		(108	)		(443	)

Income excluding net realized gains (losses), catastrophe losses and prior period development, net of tax	$	637		$	681		$	620		$	632		$	620		$	2,553

(1)	Realized gains (losses) on partially-owned entities, which are investments where we hold more than an insignificant percentage of the investee’s shares. The net income or loss is included in other income (expense).

(2)	For Q1 2010, prior period favorable development is net of $31 million, after-tax, for the annual crop insurance profit-sharing commission.


Reconciliation Non-GAAP		Page 24

ACE Limited

Book Value and Book Value per Common Share

(in millions of U.S. dollars, except share and per share data)

(Unaudited)

Reconciliation of Book Value per Common Share


	March 31 2011			December 31 2010			March 31 2010
Shareholders’ equity	$	23,376		$	22,974		$	20,636
Less: goodwill and other intangible assets		4,729			4,664			3,883

Numerator for tangible book value per share	$	18,647		$	18,310		$	16,753

Denominator		337,173,864			334,942,852			338,610,718

Book value per common share	$	69.33		$	68.59		$	60.94
Tangible book value per common share	$	55.31		$	54.66		$	49.48

Reconciliation of Book Value

Shareholders’ equity, beginning of quarter	$	22,974		$	22,845		$	19,667
Income excluding net realized gains (losses)		268			702			579
Net realized gains (losses), net of tax		(9	)		299			176
Net unrealized gains (losses), net of tax		24			(569	)		349
Repurchase of shares		—			(303	)		—
Dividend declared on common shares		(113	)		(113	)		(105	)
Cumulative translation, net of tax		168			47			(50	)
Pension liability		(4	)		6			4
Other⁽¹⁾		68			60			16

	$	23,376		$	22,974		$	20,636

(1)	Other includes proceeds from exercise of stock options and stock compensation.


Reconciliation Book Value		Page 25

ACE Limited

Comprehensive Income

(in millions of U.S. dollars)

(Unaudited)

Consolidated Statement of Comprehensive Income


	1Q-11			4Q-10			3Q-10			2Q-10			1Q-10			Full Year 2010
Net income	$	259		$	1,001		$	675		$	677		$	755		$	3,108

Net unrealized appreciation (depreciation) on investments
Unrealized appreciation (depreciation) on investments		66			(497	)		953			487			583			1,526
Reclassification adjustment for net realized (gains) losses included in net income		(56	)		(286	)		(120	)		(97	)		(129	)		(632	)
Change in cumulative translation adjustments		232			66			186			(169	)		(90	)		(7	)
Change in minimum pension liability		(6	)		9			(6	)		2			6			11
Income tax (expense) benefit related to other comprehensive income items		(48	)		192			(197	)		(55	)		(67	)		(127	)

Other comprehensive income		188			(516	)		816			168			303			771

Comprehensive income	$	447		$	485		$	1,491		$	845		$	1,058		$	3,879


Comprehensive Income		Page 26

ACE Limited

Glossary

Annualized return on ordinary shareholders’ equity (ROE): Income excluding net realized gains (losses) divided by average shareholders’ equity for the period excluding unrealized gains (losses) on investments and the deferred tax component included in shareholders’ equity. To annualize a quarterly rate multiply by four.

Book value per common share: Shareholders’ equity divided by the shares outstanding.

Combined Insurance: Combined Insurance Company of America, acquired April 1, 2008.

Combined ratio: The sum of the loss and loss expense ratio, acquisition cost ratio and the administrative expense ratio excluding life business. Calculated on a GAAP basis.

Effective tax rate: Income tax expense divided by the sum of income tax expense and income excluding net realized gains (losses).

G7: A group of seven industrialized nations including Canada, France, Germany, Italy, Japan, United Kingdom, and the United States.

Life underwriting income: Net premiums earned and net investment income less policy benefits, acquisition costs, and administrative expenses.

NM: Not meaningful.

Tangible book value per common share: Shareholders’ equity less goodwill and other intangible assets divided by the shares outstanding.

Tangible capital: Total capitalization less goodwill and other intangible assets.

Total capitalization: Short-term debt, long-term debt, trust preferreds, and shareholders’ equity.


Glossary		Page 27

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