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

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

LOGO

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 - 5
	- Consolidating Statement of Operations		6 - 7
	- Catastrophe Losses		8

III.	Segment Results
	- Insurance - North American		9
	- Insurance - Overseas General		10
	- Global Reinsurance		11
	- Life		12

IV.	Balance Sheet Details
	- Loss Reserve Rollforward		13
	- Reinsurance Recoverable Analysis		14
	- Investment Portfolio		15 - 22
	- Net Realized and Unrealized Gains (Losses)		23
	- Capital Structure		24 - 25
	- Computation of Basic and Diluted Earnings Per Share		26

V.	Other Disclosures
	- Non-GAAP Financial Measures		27
	- Book Value and Book Value per Common Share		28
	- Comprehensive Income		29
	- Glossary		30


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


							% Change					% Change									% Change					% Change
	Three months ended June 30						2Q-11 vs.			Constant $		2Q-11 vs.			Six months ended June 30						YTD-11 vs.			Constant $		YTD-11 vs.
	2011			2010			2Q-10			2010 ⁽²⁾		2Q-10 ⁽²⁾			2011			2010			YTD-10			2010 ⁽²⁾		YTD-10 ⁽²⁾

Gross premiums written	$	5,423		$	5,154			5	%	$	5,318		2	%	$	10,067		$	9,944			1	%	$	10,116		0	%

Net premiums written	$	3,953		$	3,420			16	%	$	3,544		12	%	$	7,399		$	6,991			6	%	$	7,121		4	%

Net premiums earned	$	3,757		$	3,233			16	%	$	3,355		12	%	$	7,066		$	6,510			9	%	$	6,662		6	%

Net investment income	$	569		$	518			10	%						$	1,113		$	1,022			9	%

Net income	$	607		$	677			-10	%						$	866		$	1,432			-40	%

Income excluding net realized gains (losses) ⁽¹⁾	$	686		$	688			0	%						$	954		$	1,267			-25	%

Comprehensive income	$	814		$	845			-4	%						$	1,261		$	1,903			-34	%

Operating cash flow⁽³⁾	$	1,060		$	868			22	%						$	2,063		$	1,691			22	%

P&C combined ratio
Loss and loss expense ratio		62.9	%		58.8	%										67.8	%		60.3	%
Underwriting and administrative expense ratio		29.7	%		30.9	%										30.6	%		30.9	%

Combined ratio		92.6	%		89.7	%										98.4	%		91.2	%

Annualized ROE*		12.3	%		13.8	%										8.7	%		12.9	%

Annualized ROE on net income		10.2	%		12.9	%										7.4	%		13.9	%

Effective tax rate on income excluding net realized gains (losses)		14.3	%		14.7	%										18.3	%		16.0	%

Diluted earnings per share
Income excluding net realized gains (losses)⁽¹⁾	$	2.01		$	2.01			0	%						$	2.80		$	3.72			-25	%
Net income	$	1.77		$	1.98			-11	%						$	2.54		$	4.21			-40	%

Book value per common share															$	71.36		$	63.20			13	%
Tangible book value per common share															$	56.98		$	51.88			10	%
Weighted average basic common shares outstanding		338.9			340.0											338.0			339.2
Weighted average diluted common shares outstanding		341.7			341.2											340.6			340.4
Debt/total capitalization		16.3	%		13.2	%										16.3	%		13.2	%

(1)	See Non-GAAP Financial Measures.

(2)	Prior periods on a constant dollar basis.

(3)	Cash flow from operations in the second quarter of 2011 includes $312 million of cash collateral related to a one-off transaction.

*	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


	2Q-11			1Q-11			4Q-10			3Q-10			2Q-10			YTD 2011			YTD 2010			Full Year 2010
Consolidated Results Excluding Life Segment
Gross premiums written	$	4,949		$	4,228		$	4,152		$	4,624		$	4,756		$	9,177		$	9,156		$	17,932
Net premiums written		3,494			3,037			3,015			2,922			3,029			6,531			6,215			12,152
Net premiums earned		3,305			2,910			3,184			3,036			2,845			6,215			5,742			11,962
Losses and loss expenses		2,079			2,135			1,854			1,768			1,671			4,214			3,461			7,083
Policy benefits		—			—			—			—			1			—			4			4
Policy acquisition costs		538			494			575			542			470			1,032			963			2,080
Administrative expenses		443			426			445			374			409			869			811			1,630

Underwriting income (loss) excluding Life segment		245			(145	)		310			352			294			100			503			1,165
Life underwriting income excluding investment income		59			51			59			50			53			110			99			208
Net investment income		569			544			532			516			518			1,113			1,022			2,070
Net realized gains (losses)		(73	)		(45	)		305			(50	)		9			(118	)		177			432
Interest expense		62			63			62			58			52			125			104			224
Other income (expense)		(9	)		14			(10	)		25			(3	)		5			1			16
Income tax expense		122			97			133			160			142			219			266			559

Net income		607			259			1,001			675			677			866			1,432			3,108
Net realized gains (losses)		(73	)		(45	)		305			(50	)		9			(118	)		177			432
Net realized gains (losses) in other income (expense)⁽¹⁾		2			34			17			39			3			36			13			69
Tax expense (benefit) on net realized gains (losses)		8			(2	)		23			2			23			6			25			50

Income excluding net realized gains (losses) ⁽²⁾	$	686		$	268		$	702		$	688		$	688		$	954		$	1,267		$	2,657

% Change versus prior year period⁽³⁾
Net premiums written		15	%		-5	%		3	%		5	%		-1	%		5	%		1	%		3	%
Net premiums earned		16	%		0	%		6	%		0	%		-2	%		8	%		0	%		1	%
Net premiums written constant $		11	%		-5	%		4	%		5	%		-3	%		5	%		-2	%		1	%
Net premiums earned constant $		12	%		0	%		6	%		1	%		-4	%		8	%		-3	%		0	%

Other ratios
Net premiums written/gross premiums written		71	%		72	%		73	%		63	%		64	%		71	%		68	%		68	%
Effective tax rate on income excluding net realized gains (losses)		14.3	%		27.0	%		13.5	%		18.7	%		14.7	%		18.3	%		16.0	%		16.1	%

P&C combined ratio ⁽³⁾
Loss and loss expense ratio		62.9	%		73.4	%		58.2	%		58.2	%		58.8	%		67.8	%		60.3	%		59.2	%
Policy acquisition cost ratio		16.3	%		16.9	%		18.1	%		17.9	%		16.5	%		16.6	%		16.8	%		17.4	%
Administrative expense ratio		13.4	%		14.7	%		14.0	%		12.3	%		14.4	%		14.0	%		14.1	%		13.6	%

Combined ratio		92.6	%		105.0	%		90.3	%		88.4	%		89.7	%		98.4	%		91.2	%		90.2	%

P&C expense ratio		29.7	%		31.6	%		32.1	%		30.2	%		30.9	%		30.6	%		30.9	%		31.0	%
P&C expense ratio excluding A&H		25.1	%		27.3	%		28.2	%		25.7	%		26.5	%		26.6	%		26.6	%		26.8	%

Large losses and other items (before tax) ⁽³⁾
Reinstatement premiums (expensed) collected	$	8		$	(74	)	$	1		$	(6	)	$	(5	)	$	(66	)	$	(30	)	$	(35	)
Catastrophe losses	$	142		$	415		$	51		$	91		$	76		$	557		$	224		$	366
Prior period development - unfavorable (favorable)	$	(146	)	$	(93	)	$	(57	)	$	(201	)	$	(149	)	$	(239	)	$	(245	)	$	(503	)
Loss and loss expense ratio excluding catastrophe losses and prior period development		63.2	%		60.8	%		58.5	%		61.7	%		61.2	%		62.0	%		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.


Consolidated Results		Page 2


		ACE Limited
		Summary Consolidated Balance Sheets
		(in millions of U.S. dollars, except per share data)


	June 30 2011			March 31 2011			December 31 2010
	(Unaudited)			(Unaudited)			(Audited)
Assets
Fixed maturities available for sale, at fair value	$	41,038		$	38,718		$	37,539
Fixed maturities held to maturity, at amortized cost		9,033			9,270			9,501
Equity securities, at fair value		582			537			692
Short-term investments, at fair value		2,380			2,375			1,983
Other investments		2,156			1,839			1,692

Total investments		55,189			52,739			51,407
Cash		833			1,115			772
Securities lending collateral		1,593			1,326			1,495
Insurance and reinsurance balances receivable		4,923			4,102			4,233
Reinsurance recoverable on losses and loss expenses		13,375			13,749			12,871
Deferred policy acquisition costs		1,821			1,725			1,641
Value of business acquired		796			745			634
Prepaid reinsurance premiums		1,711			1,540			1,511
Goodwill and other intangible assets		4,858			4,729			4,664
Deferred tax assets		586			703			769
Investments in partially owned insurance companies		353			348			360
Other assets		3,216			3,399			2,998

Total assets	$	89,254		$	86,220		$	83,355


Liabilities
Unpaid losses and loss expenses	$	38,951		$	38,843		$	37,391
Unearned premiums		6,913			6,533			6,330
Future policy benefits		4,384			3,480			3,106
Insurance and reinsurance balances payable		3,785			3,277			3,282
Securities lending payable		1,610			1,346			1,518
Payable for securities purchased		418			613			292
Accounts payable, accrued expenses, and other liabilities		4,011			3,684			3,495
Short-term debt		1,400			1,401			1,300
Long-term debt		3,360			3,358			3,358
Trust preferred securities		309			309			309

Total liabilities		65,141			62,844			60,381

Shareholders’ equity
Total shareholders’ equity, excl. AOCI		22,124			21,594			21,380
Accumulated other comprehensive income (AOCI)		1,989			1,782			1,594

Total shareholders’ equity		24,113			23,376			22,974

Total liabilities and shareholders’ equity	$	89,254		$	86,220		$	83,355

Book value per common share ⁽¹⁾	$	71.36		$	69.33		$	68.59
% change over prior quarter		3	%		1	%		2	%
Tangible book value per common share ⁽¹⁾	$	56.98		$	55.31		$	54.66
% change over prior quarter		3	%		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


	2Q-11		% of Total Consolidated			2Q-10		% of Total Consolidated			% Change 2Q-11 vs. 2Q-10			YTD 2011		% of Total Consolidated			YTD 2010		% of Total Consolidated			% Change YTD-11 vs. YTD-10
Net premiums written
Property and all other	$	1,596		41	%	$	1,064		31	%		50	%	$	2,683		37	%	$	2,146		31	%		25	%
Casualty		1,240		31	%		1,388		41	%		-11	%		2,547		34	%		2,904		41	%		-12	%

Subtotal		2,836		72	%		2,452		72	%		16	%		5,230		71	%		5,050		72	%		4	%
Personal accident (A&H) ⁽¹⁾		907		23	%		833		24	%		9	%		1,798		24	%		1,678		24	%		7	%
Life ⁽²⁾		210		5	%		135		4	%		56	%		371		5	%		263		4	%		41	%

Total consolidated	$	3,953		100	%	$	3,420		100	%		16	%	$	7,399		100	%	$	6,991		100	%		6	%

Add: Life deposits on investment contracts		94					58					62	%		211					113					87	%

Non-GAAP total net premium written	$	4,047				$	3,478					16	%	$	7,610				$	7,104					7	%

Net premiums earned
Property and all other	$	1,305		35	%	$	899		28	%		45	%	$	2,226		32	%	$	1,815		28	%		23	%
Casualty		1,352		36	%		1,380		43	%		-2	%		2,732		38	%		2,807		43	%		-3	%

Subtotal		2,657		71	%		2,279		71	%		17	%		4,958		70	%		4,622		71	%		7	%
Personal accident (A&H) ⁽¹⁾		901		24	%		827		26	%		9	%		1,756		25	%		1,637		25	%		7	%
Life ⁽²⁾		199		5	%		127		3	%		57	%		352		5	%		251		4	%		40	%

Total consolidated	$	3,757		100	%	$	3,233		100	%		16	%	$	7,066		100	%	$	6,510		100	%		9	%


Income excluding net realized gains (losses)
Property, casualty, and all other	$	513		75	%	$	551		80	%		-7	%	$	630		66	%	$	994		78	%		-37	%
Personal accident (A&H) ⁽¹⁾		124		18	%		100		15	%		24	%		237		25	%		201		16	%		18	%
Life ⁽²⁾		49		7	%		37		5	%		32	%		87		9	%		72		6	%		21	%

Total consolidated	$	686		100	%	$	688		100	%		0	%	$	954		100	%	$	1,267		100	%		-25	%

(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.


Line of Business		Page 4

ACE Limited

Consolidated Premiums and Income Excluding Net Realized Gains (Losses) by Line of Business,
Adjusted for Foreign Exchange

(in millions of U.S. dollars)

(Unaudited)

ACE Limited Consolidated Constant Dollar


	2Q-11		Constant $ 2Q-10⁽³⁾		Constant $ % Change 2Q-11 vs. 2Q-10 ⁽³⁾			YTD 2011		Constant $ YTD 2010 ⁽³⁾		Constant $ % Change YTD-11 vs. YTD-10 ⁽³⁾
Net premiums written
Property, casualty, and all other	$	2,836	$	2,518		13	%	$	5,230	$	5,107		2	%
Personal accident (A&H) ⁽¹⁾		907		888		2	%		1,798		1,746		3	%
Life ⁽²⁾		210		138		52	%		371		268		38	%

Total consolidated	$	3,953	$	3,544		12	%	$	7,399	$	7,121		4	%

Net premiums earned
Property, casualty, and all other	$	2,657	$	2,344		13	%	$	4,958	$	4,699		6	%
Personal accident (A&H) ⁽¹⁾		901		881		2	%		1,756		1,707		3	%
Life ⁽²⁾		199		130		53	%		352		256		38	%

Total consolidated	$	3,757	$	3,355		12	%	$	7,066	$	6,662		6	%


Income excluding net realized gains (losses)
Property, casualty, and all other	$	513	$	563		-9	%	$	630	$	1,000		-37	%
Personal accident (A&H) ⁽¹⁾		124		106		17	%		237		208		14	%
Life ⁽²⁾		49		37		32	%		87		72		21	%

Total consolidated	$	686	$	706		-3	%	$	954	$	1,280		-25	%

(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)	Prior periods on a constant dollar basis.


Line of Business 2		Page 5

ACE Limited

Consolidating Statement of Operations

Three months ended June 30, 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
June 30, 2011
Gross premiums written	$	2,714		$	1,937		$	298		$	—		$	4,949		$	474		$	5,423
Net premiums written		1,735			1,477			282			—			3,494			459			3,953
Net premiums earned		1,604			1,447			254			—			3,305			452			3,757
Losses and loss expenses		1,233			733			112			1			2,079			147			2,226
Policy benefits		—			—			—			—			—			108			108
Policy acquisition costs		143			348			47			—			538			66			604
Administrative expenses		147			242			14			40			443			72			515

Underwriting income (loss)		81			124			81			(41	)		245			59			304
Net investment income		300			138			71			1			510			59			569
Net realized gains (losses)		21			(10	)		(14	)		(2	)		(5	)		(68	)		(73	)
Interest expense		3			1			1			54			59			3			62
Other income (expense)		(3	)		5			(1	)		(2	)		(1	)		(8	)		(9	)
Income tax expense (benefit)		95			40			8			(35	)		108			14			122

Net income (loss)		301			216			128			(63	)		582			25			607
Net realized gains (losses)		21			(10	)		(14	)		(2	)		(5	)		(68	)		(73	)
Net realized gains (losses) in other income (expense)		3			1			(2	)		1			3			(1	)		2
Tax expense (benefit) on net realized gains (losses)		7			—			—			—			7			1			8

Income (loss) excluding net realized gains (losses) ⁽¹⁾	$	284		$	225		$	144		$	(62	)	$	591		$	95		$	686

June 30, 2010
Gross premiums written	$	2,649		$	1,787		$	320		$	—		$	4,756		$	398		$	5,154
Net premiums written		1,438			1,302			289			—			3,029			391			3,420
Net premiums earned		1,326			1,263			256			—			2,845			388			3,233
Losses and loss expenses		924			644			103			—			1,671			129			1,800
Policy benefits		—			1			—			—			1			86			87
Policy acquisition costs		126			296			48			—			470			66			536
Administrative expenses		147			207			15			40			409			54			463

Underwriting income (loss)		129			115			90			(40	)		294			53			347
Net investment income		287			115			73			—			475			43			518
Net realized gains (losses)		85			48			28			3			164			(155	)		9
Interest expense		—			—			—			52			52			—			52
Other income (expense)		(4	)		3			2			(1	)		—			(3	)		(3	)
Income tax expense (benefit)		110			59			9			(52	)		126			16			142

Net income (loss)		387			222			184			(38	)		755			(78	)		677
Net realized gains (losses)		85			48			28			3			164			(155	)		9
Net realized gains (losses) in other income (expense)		1			1			1			—			3			—			3
Tax expense (benefit) on net realized gains (losses)		12			13			—			(3	)		22			1			23

Income (loss) excluding net realized gains (losses) ⁽¹⁾	$	313		$	186		$	155		$	(44	)	$	610		$	78		$	688

(1)	See Non-GAAP Financial Measures.


Segment 2011 Qtr		Page 6

ACE Limited

Consolidating Statement of Operations

Six months ended June 30, 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
June 30, 2011
Gross premiums written	$	4,672	$	3,877		$	628		$	—		$	9,177		$	890		$	10,067
Net premiums written		3,020		2,914			597			—			6,531			868			7,399
Net premiums earned		2,950		2,751			514			—			6,215			851			7,066
Losses and loss expenses		2,227		1,595			391			1			4,214			275			4,489
Policy benefits		—		—			—			—			—			199			199
Policy acquisition costs		279		660			93			—			1,032			127			1,159
Administrative expenses		295		466			26			82			869			140			1,009

Underwriting income (loss)		149		30			4			(83	)		100			110			210
Net investment income		595		269			143			1			1,008			105			1,113
Net realized gains (losses)		10		(19	)		(27	)		(1	)		(37	)		(81	)		(118	)
Interest expense		7		2			1			109			119			6			125
Other income (expense)		13		7			5			(7	)		18			(13	)		5
Income tax expense (benefit)		184		59			18			(69	)		192			27			219

Net income (loss)		576		226			106			(130	)		778			88			866
Net realized gains (losses)		10		(19	)		(27	)		(1	)		(37	)		(81	)		(118	)
Net realized gains (losses) in other income (expense)		27		6			2			1			36			—			36
Tax expense (benefit) on net realized gains (losses)		8		(3	)		—			—			5			1			6

Income (loss) excluding net realized gains (losses) ⁽¹⁾	$	547	$	236		$	131		$	(130	)	$	784		$	170		$	954

June 30, 2010
Gross premiums written	$	4,779	$	3,658		$	719		$	—		$	9,156		$	788		$	9,944
Net premiums written		2,833		2,722			660			—			6,215			776			6,991
Net premiums earned		2,696		2,514			532			—			5,742			768			6,510
Losses and loss expenses		1,862		1,345			254			—			3,461			260			3,721
Policy benefits		—		4			—			—			4			170			174
Policy acquisition costs		282		579			102			—			963			127			1,090
Administrative expenses		295		409			27			80			811			112			923

Underwriting income (loss)		257		177			149			(80	)		503			99			602
Net investment income		565		229			142			—			936			86			1,022
Net realized gains (losses)		165		70			59			(5	)		289			(112	)		177
Interest expense		—		—			—			104			104			—			104
Other income (expense)		1		1			6			(1	)		7			(6	)		1
Income tax expense (benefit)		214		73			19			(70	)		236			30			266

Net income (loss)		774		404			337			(120	)		1,395			37			1,432
Net realized gains (losses)		165		70			59			(5	)		289			(112	)		177
Net realized gains (losses) in other income (expense)		1		6			5			—			12			1			13
Tax expense (benefit) on net realized gains (losses)		14		14			—			(5	)		23			2			25

Income (loss) excluding net realized gains (losses) ⁽¹⁾	$	622	$	342		$	273		$	(120	)	$	1,117		$	150		$	1,267

(1)	See Non-GAAP Financial Measures.


Segment 2011 YTD		Page 7

ACE Limited

Segment Results - Second Quarter Catastrophe Loss Charges

(in millions of U.S. dollars)

(Unaudited)

Second Quarter Catastrophe Loss Charges - 2011


Catastrophe Loss Charges	Insurance - North American			Insurance - Overseas General			Global Reinsurance			Reinstatement Premiums Expensed (Collected)			Pre-tax Total			After-tax Total
Net loss
True-up of Q1 Events	$	(6	)	$	(5	)	$	(20	)	$	(3	)	$	(34	)	$	(35	)
Q2 Events		116			15			42			(5	)		168			136

Total	$	110		$	10		$	22		$	(8	)	$	134		$	101


Catastrophe Losses		Page 8

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Insurance - North American


																YTD 2011			YTD 2010			Full Year 2010
	2Q-11			1Q-11			4Q-10			3Q-10			2Q-10			YTD 2011			YTD 2010			Full Year 2010
Gross premiums written	$	2,714		$	1,958		$	2,256		$	2,759		$	2,649		$	4,672		$	4,779		$	9,794
Net premiums written		1,735			1,285			1,519			1,445			1,438			3,020			2,833			5,797
Net premiums earned		1,604			1,346			1,511			1,444			1,326			2,950			2,696			5,651
Losses and loss expenses		1,233			994			1,030			1,026			924			2,227			1,862			3,918
Policy acquisition costs		143			136			178			165			126			279			282			625
Administrative expenses		147			148			154			112			147			295			295			561

Underwriting income		81			68			149			141			129			149			257			547
Net investment income		300			295			286			287			287			595			565			1,138
Net realized gains (losses)		21			(11	)		254			(2	)		85			10			165			417
Interest expense		3			4			3			6			—			7			—			9
Other income (expense)		(3	)		16			1			20			(4	)		13			1			22
Income tax expense		95			89			114			108			110			184			214			436

Net income		301			275			573			332			387			576			774			1,679

Net realized gains (losses)		21			(11	)		254			(2	)		85			10			165			417
Net realized gains (losses) in other income (expense)		3			24			3			20			1			27			1			24
Tax expense (benefit) on net realized gains (losses)		7			1			14			(2	)		12			8			14			26

Income excluding net realized gains (losses) ⁽¹⁾	$	284		$	263		$	330		$	312		$	313		$	547		$	622		$	1,264


Combined ratio
Loss and loss expense ratio		76.9	%		73.8	%		68.1	%		71.0	%		69.7	%		75.5	%		69.1	%		69.3	%
Policy acquisition cost ratio		8.9	%		10.1	%		11.8	%		11.4	%		9.5	%		9.5	%		10.5	%		11.1	%
Administrative expense ratio		9.2	%		11.1	%		10.2	%		7.8	%		11.1	%		10.0	%		10.9	%		9.9	%

Combined ratio		95.0	%		95.0	%		90.1	%		90.2	%		90.3	%		95.0	%		90.5	%		90.3	%


Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	—		$	(12	)	$	1		$	1		$	(3	)	$	(12	)	$	(6	)	$	(4	)
Catastrophe losses	$	110		$	76		$	21		$	17		$	53		$	186		$	105		$	143
Prior period development—unfavorable (favorable)	$	(71	)	$	(35	)	$	46		$	(35	)	$	(73	)	$	(106	)	$	(118	)	$	(107	)
Loss and loss expense ratio excluding catastrophe losses and prior period development		74.4	%		70.2	%		63.7	%		72.4	%		71.0	%		72.6	%		71.3	%		69.4	%

% Change versus prior year period
Net premiums written		21	%		-8	%		7	%		5	%		-1	%		7	%		0	%		3	%
Net premiums earned		21	%		-2	%		11	%		-2	%		-6	%		9	%		-5	%		-1	%

Other ratios
Net premiums written/gross premiums written		64	%		66	%		67	%		52	%		54	%		65	%		59	%		59	%

(1)	See Non-GAAP Financial Measures.


Insurance - North American		Page 9

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Insurance - Overseas General


	2Q-11			1Q-11			4Q-10			3Q-10			2Q-10			YTD 2011			YTD 2010			Full Year 2010
Gross premiums written	$	1,937		$	1,940		$	1,750		$	1,584		$	1,787		$	3,877		$	3,658		$	6,992
Net premiums written		1,477			1,437			1,353			1,205			1,302			2,914			2,722			5,280
Net premiums earned		1,447			1,304			1,405			1,321			1,263			2,751			2,514			5,240
Losses and loss expenses		733			862			697			605			644			1,595			1,345			2,647
Policy benefits		—			—			—			—			1			—			4			4
Policy acquisition costs		348			312			346			326			296			660			579			1,251
Administrative expenses		242			224			227			204			207			466			409			840

Underwriting income (loss)		124			(94	)		135			186			115			30			177			498

Net investment income		138			131			128			118			115			269			229			475
Net realized gains (losses)		(10	)		(9	)		21			32			48			(19	)		70			123
Interest expense		1			1			1			—			—			2			—			1
Other income (expense)		5			2			8			4			3			7			1			13
Income tax expense		40			19			37			63			59			59			73			173

Net income		216			10			254			277			222			226			404			935

Net realized gains (losses)		(10	)		(9	)		21			32			48			(19	)		70			123
Net realized gains (losses) in other income (expense)		1			5			7			9			1			6			6			22
Tax expense (benefit) on net realized gains (losses)		—			(3	)		3			6			13			(3	)		14			23

Income excluding net realized gains (losses) ⁽¹⁾	$	225		$	11		$	229		$	242		$	186		$	236		$	342		$	813


Combined ratio
Loss and loss expense ratio		50.7	%		66.1	%		49.6	%		45.8	%		51.0	%		58.0	%		53.7	%		50.6	%
Policy acquisition cost ratio		24.0	%		23.9	%		24.6	%		24.7	%		23.5	%		24.0	%		23.0	%		23.9	%
Administrative expense ratio		16.7	%		17.2	%		16.1	%		15.5	%		16.4	%		16.9	%		16.3	%		16.0	%

Combined ratio		91.4	%		107.2	%		90.3	%		86.0	%		90.9	%		98.9	%		93.0	%		90.5	%


Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	3		$	(63	)	$	—		$	(7	)	$	(2	)	$	(60	)	$	(26	)	$	(33	)
Catastrophe losses	$	10		$	187		$	25		$	25		$	18		$	197		$	82		$	132
Prior period development—unfavorable (favorable)	$	(40	)	$	(44	)	$	(91	)	$	(117	)	$	(45	)	$	(84	)	$	(82	)	$	(290	)
Loss and loss expense ratio excluding catastrophe losses and prior period development		52.9	%		52.8	%		54.4	%		52.5	%		53.0	%		52.7	%		53.1	%		53.3	%

% Change versus prior year period
Net premiums written as reported		14	%		1	%		0	%		0	%		3	%		7	%		5	%		3	%
Net premiums earned as reported		15	%		4	%		0	%		0	%		1	%		9	%		3	%		2	%
Net premiums written constant $		5	%		1	%		1	%		1	%		-1	%		3	%		-1	%		0	%
Net premiums earned constant $		5	%		2	%		1	%		2	%		-2	%		4	%		-3	%		0	%
Underwriting income constant $													$	127					$	184
Income excluding net realized gains (losses), constant $													$	204					$	355

Other ratios
Net premiums written/gross premiums written		76	%		74	%		77	%		76	%		73	%		75	%		74	%		76	%

(1)	See Non-GAAP Financial Measures.


Insurance - Overseas General		Page 10

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Global Reinsurance


	2Q-11			1Q-11			4Q-10			3Q-10			2Q-10			YTD 2011			YTD 2010			Full Year 2010
Gross premiums written	$	298		$	330		$	146		$	281		$	320		$	628		$	719		$	1,146
Net premiums written		282			315			143			272			289			597			660			1,075
Net premiums earned		254			260			268			271			256			514			532			1,071
Losses and loss expenses		112			279			127			137			103			391			254			518
Policy acquisition costs		47			46			51			51			48			93			102			204
Administrative expenses		14			12			14			14			15			26			27			55

Underwriting income (loss)		81			(77	)		76			69			90			4			149			294
Net investment income		71			72			75			71			73			143			142			288
Net realized gains (losses)		(14	)		(13	)		24			10			28			(27	)		59			93
Interest expense		1			—			—			—			—			1			—			—
Other income (expense)		(1	)		6			7			10			2			5			6			23
Income tax expense		8			10			11			12			9			18			19			42

Net income (loss)		128			(22	)		171			148			184			106			337			656
Net realized gains (losses)		(14	)		(13	)		24			10			28			(27	)		59			93
Net realized gains (losses) in other income (expense)		(2	)		4			6			10			1			2			5			21
Tax expense on net realized gains (losses)		—			—			—			1			—			—			—			1

Income excluding net realized gains (losses) ⁽¹⁾	$	144		$	(13	)	$	141		$	129		$	155		$	131		$	273		$	543


Combined ratio
Loss and loss expense ratio		44.1	%		107.3	%		47.5	%		50.4	%		40.4	%		76.1	%		47.8	%		48.4	%
Policy acquisition cost ratio		18.5	%		17.8	%		19.0	%		19.0	%		18.5	%		18.1	%		19.1	%		19.0	%
Administrative expense ratio		5.3	%		4.6	%		5.2	%		4.9	%		5.8	%		4.9	%		5.1	%		5.1	%

Combined ratio		67.9	%		129.7	%		71.7	%		74.3	%		64.7	%		99.1	%		72.0	%		72.5	%


Large losses and other items (before tax)
Reinstatement premiums collected	$	5		$	1		$	—		$	—		$	—		$	6		$	2		$	2
Catastrophe losses	$	22		$	152		$	5		$	49		$	5		$	174		$	37		$	91
Prior period development—unfavorable (favorable)	$	(35	)	$	(14	)	$	(12	)	$	(49	)	$	(31	)	$	(49	)	$	(45	)	$	(106	)
Loss and loss expense ratio excluding catastrophe losses and prior period development		50.1	%		54.4	%		50.3	%		50.2	%		50.9	%		52.2	%		49.6	%		50.0	%

% Change versus prior year period
Net premiums written		-2	%		-15	%		-1	%		32	%		-12	%		-10	%		-4	%		4	%
Net premiums earned		-1	%		-6	%		6	%		10	%		6	%		-3	%		11	%		9	%

Other ratios
Net premiums written/gross premiums written		95	%		95	%		98	%		97	%		90	%		95	%		92	%		94	%

(1)	See Non-GAAP Financial Measures.


Global Reinsurance		Page 11

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Life


	2Q-11			1Q-11			4Q-10			3Q-10			2Q-10			YTD 2011			YTD 2010			Full Year 2010
Gross premiums written⁽¹⁾	$	474		$	416		$	413		$	378		$	398		$	890		$	788		$	1,579
Net premiums written		459			409			407			373			391			868			776			1,556
Net premiums earned		452			399			388			386			388			851			768			1,542
Losses and loss expenses		147			128			117			119			129			275			260			496
Policy benefits		108			91			90			93			86			199			170			353
Policy acquisition costs		66			61			65			65			66			127			127			257
Administrative expenses		72			68			57			59			54			140			112			228
Net investment income		59			46			43			43			43			105			86			172

Life underwriting income ⁽²⁾		118			97			102			93			96			215			185			380

Net realized gains (losses)		(68	)		(13	)		5			(85	)		(155	)		(81	)		(112	)		(192	)
Interest expense		3			3			3			—			—			6			—			3
Other income (expense)		(8	)		(5	)		(9	)		(5	)		(3	)		(13	)		(6	)		(20	)
Income tax expense		14			13			16			16			16			27			30			62

Net income (loss)		25			63			79			(13	)		(78	)		88			37			103

Net realized gains (losses)		(68	)		(13	)		5			(85	)		(155	)		(81	)		(112	)		(192	)
Net realized gains (losses) in other income (expense)		(1	)		1			1			—			—			—			1			2
Tax expense (benefit) on net realized gains (losses)		1			—			5			—			1			1			2			7

Income excluding net realized gains (losses) ⁽³⁾	$	95		$	75		$	78		$	72		$	78		$	170		$	150		$	300


Deposits collected on universal life and investment contracts⁽¹⁾	$	94		$	117		$	93		$	51		$	58		$	211		$	113		$	257
Fees on universal life and investment contracts ⁽¹⁾	$	13		$	11		$	14		$	10		$	11		$	24		$	18		$	42

% Change versus prior year period
Net premiums written		17	%		6	%		4	%		0	%		7	%		12	%		9	%		5	%
Net premiums earned		16	%		5	%		5	%		7	%		7	%		11	%		10	%		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 12

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

Losses and loss expenses incurred		2,752			526			2,226
Losses and loss expenses paid		(2,730	)		(872	)		(1,858	)		83	%
Other (incl. foreign exch. revaluation)		86			30			56

Balance at June 30, 2011	$	38,951		$	12,667		$	26,284


Add net recoverable on paid losses		—			708			(708	)

Balance including net recoverable on paid losses	$	38,951		$	13,375		$	25,576


Loss Reserve Rollforward		Page 13

ACE Limited

Reinsurance Recoverable Analysis

(in millions of U.S. dollars)

(Unaudited)

Net Reinsurance Recoverable by Division


	June 30			March 31			December 31
	2011			2011			2010
Reinsurance recoverable on paid losses and loss expenses
Active operations	$	563		$	595		$	579
Brandywine		250			313			281
Westchester Run-off		32			26			26
Other Run-off		12			12			12

Total	$	857		$	946		$	898

Reinsurance recoverable on unpaid losses and loss expenses
Active operations	$	10,751		$	10,893		$	9,956
Brandywine		1,822			1,931			2,024
Westchester Run-off		441			463			468
Other Run-off		26			40			55

Total	$	13,040		$	13,327		$	12,503

Gross reinsurance recoverable
Active operations	$	11,314		$	11,488		$	10,535
Brandywine		2,072			2,244			2,305
Westchester Run-off		473			489			494
Other Run-off		38			52			67

Total	$	13,897		$	14,273		$	13,401

Provision for uncollectible reinsurance
Active operations	$	(326	)	$	(323	)	$	(324	)
Brandywine		(171	)		(172	)		(175	)
Westchester Run-off		(21	)		(21	)		(21	)
Other Run-off		(4	)		(8	)		(10	)

Total	$	(522	)	$	(524	)	$	(530	)

Net reinsurance recoverable
Active operations	$	10,988		$	11,165		$	10,211
Brandywine		1,901			2,072			2,130
Westchester Run-off		452			468			473
Other Run-off		34			44			57

Total	$	13,375		$	13,749		$	12,871


Reinsurance Recoverable		Page 14

ACE Limited

Investment Portfolio

(in millions of U.S. dollars)

(Unaudited)


	June 30 2011					March 31 2011					December 31 2010
Market Value
Fixed maturities available for sale	$	41,038				$	38,718				$	37,539
Fixed maturities held to maturity		9,078					9,202					9,461
Short-term investments		2,380					2,375					1,983

Total	$	52,496				$	50,295				$	48,983

Asset Allocation by Market Value
Treasury	$	1,832		3	%	$	1,880		4	%	$	2,075		4	%
Agency		1,755		3	%		1,946		4	%		2,015		4	%
Corporate and asset-backed		16,805		32	%		15,818		31	%		15,900		33	%
Mortgage-backed		13,483		26	%		12,880		25	%		12,362		25	%
Municipal ⁽¹⁾		2,534		5	%		2,453		5	%		2,449		5	%
Non-U.S.		13,707		26	%		12,943		26	%		12,199		25	%
Short-term investments		2,380		5	%		2,375		5	%		1,983		4	%

Total	$	52,496		100	%	$	50,295		100	%	$	48,983		100	%


Note: Insured municipal bonds represent $705 million, or 28% of our municipal bond holdings.

Credit Quality by Market Value
AAA	$	25,331		48	%	$	24,636		49	%	$	23,718		48	%
AA		4,783		9	%		4,543		9	%		4,714		10	%
A		9,944		19	%		8,847		18	%		8,482		17	%
BBB		5,691		11	%		5,583		11	%		5,487		11	%
BB		3,667		7	%		3,473		7	%		3,357		7	%
B		2,389		5	%		2,500		5	%		2,393		5	%
Other		691		1	%		713		1	%		832		2	%

Total	$	52,496		100	%	$	50,295		100	%	$	48,983		100	%

Cost/Amortized Cost
Fixed maturities available for sale	$	39,862				$	37,750				$	36,542
Fixed maturities held to maturity		9,033					9,270					9,501
Short-term investments		2,380					2,375					1,983

Subtotal		51,275					49,395					48,026
Equity securities		549					510					666
Other investments		1,916					1,613					1,511

Total	$	53,740				$	51,518				$	50,203

Avg. duration of fixed maturities		3.8 years					3.8 years					3.7 years
Avg. market yield of fixed maturities ⁽²⁾		3.4	%				3.5	%				3.6	%
Avg. credit quality		AA					AA					AA
Avg. yield on invested assets⁽³⁾		4.3	%				4.3	%				4.3	%

(1)	The rating of the municipal portfolio is AA with 15% 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 15

ACE Limited

Investment Portfolio - 2

(in millions of U.S. dollars)

(Unaudited)

Mortgage-backed Fixed Income Portfolio

Market Value at June 30, 2011


	S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total

Mortgage-backed securities
Residential mortgage-backed (RMBS)
GNMA	$	854	$	—	$	—	$	—	$	—	$	854
FNMA		6,872		—		—		—		—		6,872
Freddie Mac		3,214		—		—		—		—		3,214

Total agency RMBS		10,940		—		—		—		—		10,940
Non-agency RMBS		346		15		19		35		650		1,065

Total residential mortgage-backed		11,286		15		19		35		650		12,005
Commercial mortgage-backed		1,437		24		14		3		—		1,478

Total mortgage-backed securities	$	12,723	$	39	$	33	$	38	$	650	$	13,483

Mortgage-backed securities total $13.5 billion, are rated predominantly AAA and comprise 26% of the fixed income portfolio. This compares to a 36% 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 $10.9 billion and represent 91% of the residential mortgage-backed portfolio.

Non-agency residential mortgage-backed securities are backed by prime collateral, and broadly diversified in over 160,000 loans. The portfolio’s loan-to-value ratio is approximately 69% with an average FICO score of 730. With this conservative loan-to-value ratio and subordinated collateral of 9%, the cumulative 5-year foreclosure rate would have to rise to 14% and real estate values would have to fall 12% 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 $1.5 billion are rated predominantly AAA, broadly diversified with over 16,000 loans and seasoned with 67% of the portfolio issued before 2006 and 19% of the portfolio issued after 2009. The average loan-to-value ratio is approximately 67% with a debt service coverage ratio in excess of 1.7 and weighted average subordinated collateral of 32%. The cumulative foreclosure rate would have to rise to 41% before principal is impaired. The current foreclosure rate of the portfolio is about 2.7%.


Investments 2		Page 16

ACE Limited

Investment Portfolio - 3

(in millions of U.S. dollars)

(Unaudited)

Mortgage-backed Fixed Income Portfolio

Amortized Cost at June 30, 2011


	S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
Mortgage-backed securities
Residential mortgage-backed (RMBS)
GNMA	$	824	$	—	$	—	$	—	$	—	$	824
FNMA		6,741		—		—		—		—		6,741
Freddie Mac		3,148		—		—		—		—		3,148

Total agency RMBS		10,713		—		—		—		—		10,713
Non-agency RMBS		359		17		20		42		781		1,219

Total residential mortgage-backed		11,072		17		20		42		781		11,932
Commercial mortgage-backed		1,377		21		13		3		—		1,414

Total mortgage-backed securities	$	12,449	$	38	$	33	$	45	$	781	$	13,346


Investments 3		Page 17

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 June 30, 2011


	S&P Credit Rating
	AAA		AA		A		BBB		Total
Asset-backed	$	364	$	4	$	9	$	11	$	388
Banks		393		244		2,236		235		3,108
Basic Materials		—		—		71		190		261
Communications		—		—		647		688		1,335
Consumer, Cyclical		—		75		246		226		547
Consumer, Non-Cyclical		67		531		535		509		1,642
Diversified Financial Services		40		54		152		201		447
Energy		81		16		197		481		775
Industrial		89		443		379		153		1,064
Utilities		7		4		480		547		1,038
All Others		115		75		445		398		1,033

Total	$	1,156	$	1,446	$	5,397	$	3,639	$	11,638

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 18

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 June 30, 2011


	S&P Credit Rating
	BB		B		CCC		Total
Basic Materials	$	258	$	84	$	16	$	358
Communications		455		395		17		867
Consumer, Cyclical		324		338		21		683
Consumer, Non-Cyclical		599		418		3		1,020
Diversified Financial Services ⁽¹⁾		53		69		8		130
Energy		737		200		7		944
Industrial		334		188		8		530
Utilities		196		62		31		289
All Others		161		180		5		346

Total	$	3,117	$	1,934	$	116	$	5,167

(1)	Diversified Financial Services includes Asset-backed and Banking Industries.

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 $77 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 19

ACE Limited

Investment Portfolio - 6

(in millions of U.S. dollars)

(Unaudited)

Non-U.S. Fixed Income Portfolio

Market Value at June 30, 2011


	S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
United Kingdom	$	1,028	$	—	$	—	$	—	$	—	$	1,028
Canada		893		—		—		—		—		893
Republic of Korea		—		14		408		—		—		422
Japan		—		390		—		—		—		390
Germany		356		—		—		—		—		356
Federative Republic of Brazil		1		—		—		219		—		220
Province of Ontario		—		210		—		—		—		210
France		175		—		—		—		—		175
Swiss Confederation		162		—		—		—		—		162
Province of Quebec		—		—		137		—		—		137
State of Queensland		71		49		—		—		—		120
Kingdom of Thailand		6		—		105		6		—		117
People’s Republic of China		52		29		1		—		—		82
Commonwealth of Australia		70		9		—		—		—		79
United Mexican States		1		—		23		51		—		75
State of New South Wales		69		—		—		—		—		69
Federation of Malaysia		28		—		33		—		—		61
Dominion of New Zealand		60		—		—		—		—		60
Taiwan		—		59		—		—		—		59
State of Victoria		55		—		—		—		—		55
Republic of Austria		44		—		—		—		—		44
Arab Republic of Egypt		22		—		—		—		19		41
State of Qatar		—		37		—		—		—		37
Province of Manitoba		—		34		—		—		—		34
Province of Alberta		31		—		—		—		—		31
Other Non-U.S. Government		203		98		61		34		48		444

Non-U.S. Government Securities	$	3,327	$	929	$	768	$	310	$	67	$	5,401
European Country Non-U.S. Corporate ⁽¹⁾		867		303		819		490		343		2,822
Other Non-U.S. Corporate		937		824		2,086		1,144		493		5,484

	$	5,131	$	2,056	$	3,673	$	1,944	$	903	$	13,707

(1)	Excludes United Kingdom

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.

81% 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 53% of holdings are rated AAA or guaranteed by governments or quasi-government agencies.


Investments 6		Page 20

ACE Limited

Investment Portfolio - 7

(in millions of U.S. dollars)

(Unaudited)

European Country Non-U.S. Fixed Income Portfolio (Excluding United Kingdom)

Market Value at June 30, 2011


	Industry
	Bank		Financial		Industrial		Utility		Total
Netherlands	$	204	$	171	$	233	$	135	$	743
France		170		97		115		132		514
Germany		270		37		73		5		385
Luxembourg		41		3		216		98		358
Switzerland		228		—		—		—		228
Euro Supranational		204		—		—		—		204
Ireland		—		22		104		20		146
Spain		63		4		61		6		134
Italy		40		1		17		9		67
Finland		11		—		3		3		17
Belgium		—		1		11		2		14
Austria		7		1		2		—		10
Portugal		—		—		2		—		2

European Country Non-U.S. Corporate Securities	$	1,238	$	337	$	837	$	410	$	2,822

Note: ACE has no investments in Greece

Top 10 Exposures - European Banks (Excluding United Kingdom)


June 30, 2011	Market Value		Rating
European Investment Bank	$	193		AAA
KFW		187		AAA
UBS AG		117		A+
Credit Suisse Group AG		96		A
Rabobank Nederland NV		95		AAA
BNP Paribas SA		64		AA
Deutsche Bank AG		49		A+
Groupe BPCE		39		A+
Banco Santander SA		32		AA
Intesa Sanpaolo SpA		31		A+

Top 10 Exposures - European Corporate (Excluding United Kingdom)


June 30, 2011	Market Value		Rating
ING Groep NV	$	90		A
Deutsche Telekom AG		81		BBB+
EDF SA		70		AA-
Royal Dutch Shell PLC		67		AA
Telecom Italia SpA		59		BBB
Telefonica SA		49		A-
Credit Agricole Groupe		47		A+
General Electric Co		40		AA+
Gazprom OAO		39		BBB
ArcelorMittal		39		BBB-


Investments 7		Page 21

ACE Limited

Investment Portfolio - 8

(in millions of U.S. dollars)

(Unaudited)

Investment portfolio

Top 25 Exposures - Fixed Maturity Investments


June 30, 2011					Rating
	1	General Electric Co	$	523		AA+
	2	Bank of America Corp		436		A
	3	JP Morgan Chase & Co		429		A+
	4	Citigroup Inc		372		A
	5	Morgan Stanley		356		A
	6	Goldman Sachs Group Inc/The		325		A
	7	Verizon Communications Inc		310		A-
	8	Wells Fargo & Co		257		AA-
	9	AT&T INC		247		A-
	10	HSBC Holdings Plc		239		AA-
	11	Lloyds Banking Group Plc		216		A
	12	Royal Bank of Scotland Group P		170		A
	13	Comcast Corp		168		BBB+
	14	Kraft Foods Inc		165		BBB
	15	Barclays PLC		158		A+
	16	Credit Suisse Group		156		A
	17	ConocoPhillips		128		A
	18	Time Warner Cable Inc		125		BBB
	19	American Express Co		121		BBB+
	20	UBS AG		120		A+
	21	BP PLC		115		A
	22	Pfizer Inc		114		AA
	23	Dominion Resources Inc/VA		109		A-
	24	Banco Santander SA		108		AA
	25	Anheuser-Busch InBev NV		107		A-


Investments 8		Page 22

ACE Limited

Net Realized and Unrealized Gains (Losses)

(in millions of U.S. dollars)

(Unaudited)


	Three months ended June 30, 2011								Six months ended June 30, 2011
	Net Realized Gains (Losses)⁽¹⁾			Net Unrealized Gains (Losses)		Net Impact			Net Realized Gains (Losses) ⁽¹⁾			Net Unrealized Gains (Losses)		Net Impact
Fixed maturities	$	74		$	202	$	276		$	123		$	163	$	286
Equity securities		4			6		10			11			8		19
Equity and fixed income derivatives		(48	)		—		(48	)		(68	)		—		(68	)
Foreign exchange gains (losses)		(30	)		—		(30	)		(109	)		—		(109	)
Other		(4	)		15		11			(5	)		62		57

Sub-total		(4	)		223		219			(48	)		233		185
Mark-to-market gains (losses) from derivative transactions ⁽²⁾		(69	)		—		(69	)		(70	)		—		(70	)

Total gains (losses)		(73	)		223		150			(118	)		233		115
Partially-owned entities and private equity investments ⁽³⁾		2			2		4			36			2		38
Income tax expense (benefit)		8			74		82			6			60		66

Net gains (losses)	$	(79	)	$	151	$	72		$	(88	)	$	175	$	87

(1)	Other-than-temporary impairments for the quarter of $8 million include $5 million for fixed maturities and $3 million for other investments. Year to date other-than-temporary impairments of $12 million include $9 million for fixed maturities, and $3 million for other investments.

(2)	Includes $67 million of realized losses on the life reinsurance operations for the quarter which comprises a $70 million loss on guaranteed living benefit derivatives and $3 million of gains 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 June 30, 2010									Six months ended June 30, 2010
	Net Realized Gains (Losses)⁽⁴⁾			Net Unrealized Gains (Losses)			Net Impact			Net Realized Gains (Losses) ⁽⁴⁾			Net Unrealized Gains (Losses)			Net Impact
Fixed maturities	$	77		$	408		$	485		$	158		$	831		$	989
Equity securities		32			(31	)		1			77			(55	)		22
Equity and fixed income derivatives		5			—			5			24			—			24
Foreign exchange gains (losses)		61			—			61			52			—			52
Other		(12	)		13			1			(8	)		68			60

Sub-total		163			390			553			303			844			1,147
Mark-to-market gains (losses) from derivative transactions ⁽⁵⁾		(154	)		—			(154	)		(126	)		—			(126	)

Total gains (losses)		9			390			399			177			844			1,021
Partially-owned entities and private equity investments ⁽⁶⁾		3			—			3			13			—			13
Income tax expense (benefit)		23			108			131			25			213			238

Net gains (losses)	$	(11	)	$	282		$	271		$	165		$	631		$	796

(4)	Other-than-temporary impairments for the quarter of $18 million include $5 million for fixed maturities and $13 million for other investments. Year to date other-than-temporary impairments of $36 million include $23 million for fixed maturities, and $13 million for other investments.

(5)	Includes $158 million of realized losses on the life reinsurance operations for the quarter which comprises a $301 million loss on guaranteed living benefit derivatives and $143 million of gains 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).


Investment Gains (Losses)		Page 23

ACE Limited

Capital Structure

(in millions of U.S. dollars)

(Unaudited)


	June 30			March 31			December 31			December 31
	2011			2011			2010			2009
Total short-term debt	$	1,400		$	1,401		$	1,300		$	161
Total long-term debt		3,360			3,358			3,358			3,158

Total debt	$	4,760		$	4,759		$	4,658		$	3,319

Total trust preferred securities	$	309		$	309		$	309		$	309

Total shareholders’ equity	$	24,113		$	23,376		$	22,974		$	19,667

Total capitalization	$	29,182		$	28,444		$	27,941		$	23,295
Tangible capital ⁽¹⁾	$	24,324		$	23,715		$	23,277		$	19,364
Leverage ratios
Debt/ total capitalization		16.3	%		16.7	%		16.7	%		14.2	%
Debt plus trust preferred securities/ total capitalization		17.4	%		17.8	%		17.8	%		15.6	%
Debt/ tangible capital		19.6	%		20.1	%		20.0	%		17.1	%
Debt plus trust preferred securities/ tangible capital		20.8	%		21.4	%		21.3	%		18.7	%

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


Capital Structure		Page 24

ACE Limited

Debt, Trust Preferred, and Credit Facilities

(in millions of U.S. dollars)

(Unaudited)

June 30, 2011


	Par Amount Outstanding		Carrying value		Coupon		Maturity Date
Debt and Trust Preferred
Repurchase Agreement ⁽¹⁾	$	150	$	150		0.18%	July 21, 2011
Repurchase Agreements	$	100	$	100		0.14%	August 2, 2011
Repurchase Agreement	$	300	$	300		0.16%	August 10, 2011
Repurchase Agreements	$	450	$	450		0.22%	September 6, 2011
Repurchase Agreement	$	10	$	10		0.18%	September 15, 2011
Repurchase Agreements	$	390	$	390		0.19%	October 6, 2011
ACE INA Holdings Inc. Senior Notes	$	500	$	500		5.88%	June 15, 2014
ACE INA Holdings Inc. Senior Notes	$	450	$	449		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

	$	5,072	$	5,069


	Commitment		Usage				Date
Credit Facilities
Syndicated Letter of Credit Facility	$	1,000	$	518			November 8, 2012
Revolving Credit / LOC Facility	$	500	$	55			November 8, 2012
Bilateral Letter of Credit Facility	$	500	$	500			September 20, 2014
Funds at Lloyds Capital Facilities	$	400	$	377			December 31, 2015

	$	2,400	$	1,450

(1)	Subsequent to June 30, 2011, this repurchase agreement was repaid.


Capital Structure 2		Page 25

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 June 30						Six months ended June 30
	2011			2010			2011			2010
Numerator
Income to common shares, excl. net realized gains (losses) ⁽¹⁾	$	686		$	688		$	954		$	1,267
Net realized gains (losses), net of income tax		(79	)		(11	)		(88	)		165

Net income available to the holders of common shares	$	607		$	677		$	866		$	1,432

Rollforward of Common Shares Outstanding
Shares - beginning of period		337,173,864			338,610,718			334,942,852			336,524,657
Issued under employee stock purchase plan		103,472			—			199,751			118,172
Shares (cancelled) granted		(63,810	)		(32,891	)		1,196,657			1,754,034
Issued for option exercises		698,798			177,777			1,573,064			358,741

Shares - end of period		337,912,324			338,755,604			337,912,324			338,755,604

Denominator
Weighted average shares outstanding		338,920,580			339,975,261			338,021,487			339,202,374
Effect of other dilutive securities		2,768,388			1,268,395			2,596,909			1,185,944

Adj. wtd. avg. shares outstanding and assumed conversions		341,688,968			341,243,656			340,618,396			340,388,318

Basic earnings per share
Income excluding net realized gains (losses) ⁽¹⁾	$	2.02		$	2.02		$	2.82		$	3.73
Net realized gains (losses), net of income tax		(0.23	)		(0.03	)		(0.26	)		0.49

Net income	$	1.79		$	1.99		$	2.56		$	4.22

Diluted earnings per share
Income excluding net realized gains (losses) ⁽¹⁾	$	2.01		$	2.01		$	2.80		$	3.72
Net realized gains (losses), net of income tax		(0.24	)		(0.03	)		(0.26	)		0.49

Net income	$	1.77		$	1.98		$	2.54		$	4.21

(1)	See Non-GAAP Financial Measures.


Earnings per share		Page 26

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. Income excluding net realized gains (losses) should not be viewed as a substitute for net income determined in accordance with GAAP.

The following table presents the reconciliation of Net income to Income excluding net realized gains (losses):


	2Q-11			1Q-11			4Q-10		3Q-10			2Q-10		YTD 2011			YTD 2010		Full Year 2010
Net income, as reported	$	607		$	259		$	1,001	$	675		$	677	$	866		$	1,432	$	3,108
Net realized gains (losses)		(73	)		(45	)		305		(50	)		9		(118	)		177		432
Net realized gains (losses) in other income (expense) (1)		2			34			17		39			3		36			13		69
Income tax expense (benefit) on net realized gains (losses)		8			(2	)		23		2			23		6			25		50

Income excluding net realized gains (losses)	$	686		$	268		$	702	$	688		$	688	$	954		$	1,267	$	2,657

(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).


Reconciliation Non-GAAP		Page 27

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


	June 30 2011			March 31 2011			December 31 2010			June 30 2010
Shareholders’ equity	$	24,113		$	23,376		$	22,974		$	21,410
Less: goodwill and other intangible assets		4,858			4,729			4,664			3,836

Numerator for tangible book value per share	$	19,255		$	18,647		$	18,310		$	17,574

Denominator		337,912,324			337,173,864			334,942,852			338,755,604

Book value per common share	$	71.36		$	69.33		$	68.59		$	63.20
Tangible book value per common share	$	56.98		$	55.31		$	54.66		$	51.88

Reconciliation of Book Value

Shareholders’ equity, beginning of quarter	$	23,376		$	22,974		$	22,845		$	20,636
Income excluding net realized gains (losses)		686			268			702			688
Net realized gains (losses), net of tax		(79	)		(9	)		299			(11	)
Net unrealized gains (losses), net of tax		151			24			(569	)		282
Repurchase of shares		—			—			(303	)		(115	)
Dividend declared on common shares		(119	)		(113	)		(113	)		(113	)
Cumulative translation, net of tax		56			168			47			—
Pension liability		—			(4	)		6			1
Other ⁽¹⁾		42			68			60			42

	$	24,113		$	23,376		$	22,974		$	21,410

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


Reconciliation Book Value		Page 28

ACE Limited

Comprehensive Income

(in millions of U.S. dollars)

(Unaudited)

Consolidated Statement of Comprehensive Income


	2Q-11			1Q-11			4Q-10			3Q-10			2Q-10			YTD 2011			YTD 2010			Full Year 2010
Net income	$	607		$	259		$	1,001		$	675		$	677		$	866		$	1,432		$	3,108

Net unrealized appreciation (depreciation) on investments
Unrealized appreciation (depreciation) on investments		303			66			(497	)		953			487			369			1,070			1,526
Reclassification adjustment for net realized (gains) losses included in net income		(78	)		(56	)		(286	)		(120	)		(97	)		(134	)		(226	)		(632	)
Change in cumulative translation adjustments		69			232			66			186			(169	)		301			(259	)		(7	)
Change in minimum pension liability		1			(6	)		9			(6	)		2			(5	)		8			11
Income tax (expense) benefit related to other comprehensive income items		(88	)		(48	)		192			(197	)		(55	)		(136	)		(122	)		(127	)

Other comprehensive income		207			188			(516	)		816			168			395			471			771

Comprehensive income	$	814		$	447		$	485		$	1,491		$	845		$	1,261		$	1,903		$	3,879


Comprehensive Income		Page 29

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 30

Chubb Ltd - FORM 8-K - EX-99.2 - SECOND QUARTER 2011 FINANCIAL SUPPLEMENT - July 26, 2011

Attached files

Chubb Ltd Reports