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

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8-K - FORM 8-K - Chubb Ltd	d338983d8k.htm
EX-99.1 - PRESS RELEASE - Chubb Ltd	d338983dex991.htm

Exhibit 99.2

LOGO


Investor Contact		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.
Helen M. Wilson
Phone: (441) 299-9283
Fax: (441) 292-8675 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

III.	Segment Results
	- Insurance - North American	5
	- Insurance - Overseas General	6
	- Global Reinsurance	7
	- Life	8

IV.	Balance Sheet Details
	- Loss Reserve Rollforward	9
	- Reinsurance Recoverable Analysis	10
	- Investment Portfolio	11 -16
	- Net Realized and Unrealized Gains (Losses)	17
	- Capital Structure	18
	- Computation of Basic and Diluted Earnings Per Share	19

V.	Other Disclosures
	- Non-GAAP Financial Measures	20 - 21
	- Book Value and Book Value per Common Share	22
	- Glossary	23

ACE Limited

Consolidated Financial Highlights

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

(Unaudited)


							% Change					% Change
	Three months ended March 31						1Q-12 vs.			Constant $		1Q-12 vs.
	2012			2011			1Q-11			2011 ⁽²⁾		1Q-11 ⁽²⁾
Gross premiums written	$	4,787		$	4,644			3.1	%	$	4,619		3.6	%
Net premiums written	$	3,572		$	3,446			3.7	%	$	3,421		4.4	%
Net premiums earned	$	3,381		$	3,309			2.2	%	$	3,286		2.9	%
Net investment income	$	544		$	544			0	%
Net income	$	973		$	250			289	%
Income excluding net realized gains (losses) ⁽¹⁾	$	701		$	259			171	%
Comprehensive income	$	1,271		$	438			190	%
Operating cash flow	$	572		$	1,003

P&C combined ratio
Loss and loss expense ratio		56.9	%		73.7	%
Underwriting and administrative expense ratio		32.3	%		31.5	%

Combined ratio		89.2	%		105.2	%

Annualized return on equity (ROE) calculated using income excluding net realized gains (losses) ⁽¹⁾		12.2	%		4.8	%
Annualized ROE calculated using net income		15.6	%		4.3	%

Effective tax rate on income excluding net realized gains (losses) ⁽¹⁾		13.0	%		27.3	%
Effective tax rate		10.2	%		27.7	%

Diluted earnings per share
Income excluding net realized gains (losses) ⁽¹⁾	$	2.05		$	0.76			170	%
Net income	$	2.84		$	0.73			289	%

Book value per common share ⁽¹⁾	$	75.09		$	68.89			9.0	%
Tangible book value per common share ⁽¹⁾	$	60.74		$	54.96			10.5	%

Weighted average basic common shares outstanding		338.6			337.1
Weighted average diluted common shares outstanding		341.7			339.7

Debt/total capitalization		16.0	%		16.8	%

(1)	See Non-GAAP Financial Measures.

(2)	Prior periods on a constant dollar basis.

Adoption of New Accounting Pronouncement:

Shareholders’ equity and book value per common share at December 31, 2011 and March 31, 2011 and annualized ROE percentages for the three months ended March 31, 2011 have been retrospectively adjusted to reflect the adoption of new guidance issued by the Financial Accounting Standards Board related to the accounting for costs associated with acquiring or renewing insurance contracts. The adoption of this guidance decreased shareholders’ equity by $181 million as of December 31, 2011. The effect of the adoption of the new guidance on net income for the three months ended March 31, 2011 was $10 million.


Financial Highlights		Page 1

ACE Limited

Consolidated Results - Consecutive Quarters

(in millions of U.S. dollars, except ratios)

(Unaudited)

ACE Limited Consolidated


	1Q-12			4Q-11			3Q-11			2Q-11			1Q-11			Full Year 2011
Consolidated Results Excluding Life Segment
Gross premiums written	$	4,275		$	4,344		$	5,391		$	4,910		$	4,196		$	18,841
Net premiums written		3,084			3,134			3,855			3,460			3,010			13,459
Net premiums earned		2,908			3,361			4,010			3,273			2,884			13,528
Losses and loss expenses		1,656			2,132			2,603			2,067			2,125			8,927
Policy acquisition costs		506			546			577			527			483			2,133
Administrative expenses		432			447			439			440			425			1,751

Underwriting income (loss) excluding Life segment ⁽¹⁾		314			236			391			239			(149	)		717

Life underwriting income excluding investment income and gains (losses) from fair value changes in separate account assets ⁽²⁾		24			27			82			54			46			209
Net investment income		544			565			564			569			544			2,242
Net realized gains (losses)		260			83			(760	)		(73	)		(45	)		(795	)
Interest expense		62			63			62			62			63			250
Other income (expense): ⁽²⁾
Gains (losses) from fair value changes in separate account assets		18			3			(39	)		—			—			(36	)
Other		(15	)		4			(50	)		(12	)		13			(45	)
Income tax expense		110			120			165			121			96			502

Net income (loss)		973			735			(39	)		594			250			1,540

Net realized gains (losses)		260			83			(760	)		(73	)		(45	)		(795	)
Net realized gains (losses) in other income (expense)⁽³⁾		18			16			(28	)		2			34			24
Tax expense (benefit) on net realized gains (losses)		6			12			2			8			(2	)		20

Income excluding net realized gains (losses) ⁽¹⁾	$	701		$	648		$	751		$	673		$	259		$	2,331

% Change versus prior year period ⁽⁴⁾
Net premiums written as reported		2.5	%		4.9	%		33.0	%		15.0	%		-4.9	%		11.6	%
Net premiums earned as reported		0.8	%		6.4	%		33.1	%		15.9	%		0.2	%		13.9	%

Net premiums written constant $		3.2	%
Net premiums earned constant $		1.5	%

Other ratios
Net premiums written/gross premiums written		72	%		72	%		72	%		70	%		72	%		71	%
Effective tax rate on income excluding net realized gains (losses) ⁽¹⁾		13.0	%		14.4	%		17.7	%		14.4	%		27.3	%		17.1	%

P&C combined ratio ⁽⁴⁾
Loss and loss expense ratio		56.9	%		63.4	%		64.9	%		63.1	%		73.7	%		66.0	%
Policy acquisition cost ratio		17.4	%		16.3	%		14.4	%		16.1	%		16.7	%		15.8	%
Administrative expense ratio		14.9	%		13.3	%		10.9	%		13.5	%		14.8	%		12.9	%

Combined ratio		89.2	%		93.0	%		90.2	%		92.7	%		105.2	%		94.7	%

P&C expense ratio		32.3	%		29.6	%		25.3	%		29.6	%		31.5	%		28.7	%
P&C expense ratio excluding A&H		28.4	%		25.5	%		21.0	%		25.1	%		27.6	%		24.7	%
Large losses and other items (before tax) ⁽⁴⁾
Reinstatement premiums (expensed) collected	$	—		$	—		$	26		$	8		$	(74	)	$	(40	)
Catastrophe losses	$	19		$	155		$	147		$	142		$	415		$	859
Prior period development (PPD) - unfavorable (favorable) ⁽⁵⁾	$	(93	)	$	(123	)	$	(194	)	$	(146	)	$	(93	)	$	(556	)
Loss and loss expense ratio excluding catastrophe losses and PPD ^{(1) (5)}		59.5	%		62.5	%		66.7	%		63.4	%		61.0	%		63.6	%

(1)	See Non-GAAP Financial Measures.

(2)	Gains (losses) from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP are reclassified from Other income (expense) for purposes of presenting Life underwriting income.

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

(4)	Presented excluding the Life segment. This is a non-GAAP measure.

(5)	For Q3 2011, favorable prior period development is net of $26 million of net earned premium adjustments on loss sensitive policies.


Consolidated Results		Page 2

ACE Limited

Summary Consolidated Balance Sheets

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

(Unaudited)


	March 31 2012			December 31 2011
Assets
Fixed maturities available for sale, at fair value	$	43,468		$	41,967
Fixed maturities held to maturity, at amortized cost		8,117			8,447
Equity securities, at fair value		679			647
Short-term investments, at fair value		2,099			2,301
Other investments		2,429			2,314

Total investments		56,792			55,676

Cash		715			614
Securities lending collateral		2,204			1,375
Insurance and reinsurance balances receivable		4,487			4,387
Reinsurance recoverable on losses and loss expenses		12,057			12,389
Deferred policy acquisition costs		1,649			1,548
Value of business acquired		669			676
Prepaid reinsurance premiums		1,643			1,541
Goodwill and other intangible assets		4,860			4,799
Deferred tax assets		568			673
Investments in partially-owned insurance companies		346			352
Other assets		3,759			3,291

Total assets	$	89,749		$	87,321

Liabilities
Unpaid losses and loss expenses	$	37,247		$	37,477
Unearned premiums		6,664			6,334
Future policy benefits		4,358			4,274
Insurance and reinsurance balances payable		3,454			3,542
Securities lending payable		2,211			1,385
Payable for securities purchased		569			287
Accounts payable, accrued expenses, and other liabilities		4,615			4,770
Short-term debt		1,531			1,251
Long-term debt		3,360			3,360
Trust preferred securities		309			309

Total liabilities		64,318			62,989

Shareholders’ equity
Total shareholders’ equity, excl. AOCI		23,222			22,421
Accumulated other comprehensive income (AOCI)		2,209			1,911

Total shareholders’ equity		25,431			24,332

Total liabilities and shareholders’ equity	$	89,749		$	87,321

Book value per common share ⁽¹⁾	$	75.09		$	72.22
% change over prior quarter		4.0	%		3.0	%
Tangible book value per common share ⁽¹⁾	$	60.74		$	57.97
% change over prior quarter		4.8	%		3.7	%

(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-12		% of Total Consolidated			1Q-11		% of Total Consolidated			% Change 1Q-12 vs. 1Q-11			Constant $ % Change 1Q-12 vs. 1Q-11 ⁽²⁾
Net premiums written
Property and all other	$	1,112		31	%	$	961		28	%		15.7	%
Agriculture		119		3	%		118		3	%		0.8	%
Casualty		1,214		34	%		1,307		38	%		-7.1	%

Subtotal		2,445		68	%		2,386		69	%		2.5	%		3.1	%
Personal accident (A&H) ⁽¹⁾		882		25	%		872		25	%		1.1	%		2.1	%
Life		245		7	%		188		6	%		30.3	%		31.7	%

Total consolidated	$	3,572		100	%	$	3,446		100	%		3.7	%		4.4	%

Net premiums earned
Property and all other	$	970		29	%	$	835		25	%		16.2	%
Agriculture		59		2	%		78		2	%		-24.4	%
Casualty		1,270		37	%		1,380		42	%		-8.0	%

Subtotal		2,299		68	%		2,293		69	%		0.3	%		0.8	%
Personal accident (A&H) ⁽¹⁾		852		25	%		837		25	%		1.8	%		2.7	%
Life		230		7	%		179		6	%		28.5	%		30.7	%

Total consolidated	$	3,381		100	%	$	3,309		100	%		2.2	%		2.9	%

Income excluding net realized gains (losses)
Property, casualty, and all other	$	516		74	%	$	108		42	%		377.8	%		443.2	%
Agriculture		25		3	%		11		4	%		127.3	%		127.3	%
Personal accident (A&H) ⁽¹⁾		119		17	%		108		42	%		10.2	%		10.2	%
Life		41		6	%		32		12	%		28.1	%		32.3	%

Total consolidated	$	701		100	%	$	259		100	%		170.7	%		185.5	%

(1)	For purposes of this schedule only, A&H results from our Combined North American and International businesses, normally included in the Insurance-Overseas General and Life segments, respectively, are included in the Personal Accident (A&H) line items above.

(2)	Prior periods on a constant dollar basis.


Line of Business		Page 4

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars, except ratios)

(Unaudited)

Insurance - North American


	1Q-12			4Q-11			3Q-11			2Q-11			1Q-11			Full Year 2011
Gross premiums written	$	2,012		$	2,394		$	3,294		$	2,714		$	1,958		$	10,360
Net premiums written		1,293			1,624			2,207			1,735			1,285			6,851
Net premiums earned		1,287			1,662			2,299			1,604			1,346			6,911
Losses and loss expenses		849			1,211			1,838			1,233			994			5,276
Policy acquisition costs		127			157			174			145			136			612
Administrative expenses		147			144			153			147			148			592

Underwriting income		164			150			134			79			68			431

Net investment income		274			284			291			300			295			1,170
Net realized gains (losses)		(1	)		26			(2	)		21			(11	)		34
Interest expense		3			4			4			3			4			15
Other income (expense)		1			3			(21	)		(3	)		16			(5	)
Income tax expense		91			91			120			95			89			395

Net income		344			368			278			299			275			1,220

Net realized gains (losses)		(1	)		26			(2	)		21			(11	)		34
Net realized gains (losses) in other income (expense)		15			10			(9	)		3			24			28
Tax expense (benefit) on net realized gains (losses)		4			10			1			7			1			19

Income excluding net realized gains (losses) ⁽¹⁾	$	334		$	342		$	290		$	282		$	263		$	1,177


Combined ratio
Loss and loss expense ratio		66.0	%		72.8	%		80.0	%		76.9	%		73.8	%		76.3	%
Policy acquisition cost ratio		9.9	%		9.5	%		7.6	%		9.0	%		10.1	%		8.9	%
Administrative expense ratio		11.4	%		8.7	%		6.6	%		9.2	%		11.1	%		8.6	%

Combined ratio		87.3	%		91.0	%		94.2	%		95.1	%		95.0	%		93.8	%


Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	—		$	—		$	7		$	—		$	(12	)	$	(5	)
Catastrophe losses	$	16		$	42		$	119		$	110		$	76		$	347
Prior period development (PPD) - unfavorable (favorable) ⁽²⁾	$	(60	)	$	(31	)	$	(58	)	$	(71	)	$	(35	)	$	(195	)
Loss and loss expense ratio excluding catastrophe losses and PPD ^{(1) (2)}		69.3	%		72.2	%		77.6	%		74.4	%		70.2	%		74.1	%

% Change versus prior year period
Net premiums written		0.6	%		6.9	%		52.7	%		20.7	%		-7.9	%		18.2	%
Net premiums earned		-4.4	%		10.0	%		59.2	%		21.0	%		-1.8	%		22.3	%

Other ratios
Net premiums written/gross premiums written		64	%		68	%		67	%		64	%		66	%		66	%

(1)	See Non-GAAP Financial Measures.

(2)	For Q3 2011, favorable prior period development is net of $13 million of net earned premium adjustments on loss sensitive policies.


Insurance-North American		Page 5

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars, except ratios)

(Unaudited)


Insurance - Overseas General

	1Q-12			4Q-11			3Q-11			2Q-11			1Q-11			Full Year 2011
Gross premiums written	$	1,984		$	1,818		$	1,843		$	1,898		$	1,908		$	7,467
Net premiums written		1,528			1,378			1,398			1,443			1,410			5,629
Net premiums earned		1,391			1,450			1,471			1,415			1,278			5,614
Losses and loss expenses		705			785			671			721			852			3,029
Policy acquisition costs		335			346			353			335			301			1,335
Administrative expenses		229			241			236			239			223			939

Underwriting income (loss)		122			78			211			120			(98	)		311

Net investment income		131			140			138			137			131			546
Net realized gains (losses)		20			51			1			(10	)		(9	)		33
Interest expense		1			1			2			1			1			5
Other income (expense)		—			3			(10	)		5			2			—
Income tax expense		38			52			56			39			17			164

Net income		234			219			282			212			8			721

Net realized gains (losses)		20			51			1			(10	)		(9	)		33
Net realized gains (losses) in other income (expense)		3			2			(10	)		1			5			(2	)
Tax expense (benefit) on net realized gains (losses)		3			3			1			—			(3	)		1

Income excluding net realized gains (losses) ⁽¹⁾	$	214		$	169		$	292		$	221		$	9		$	691


Combined ratio
Loss and loss expense ratio		50.7	%		54.1	%		45.6	%		51.0	%		66.7	%		54.0	%
Policy acquisition cost ratio		24.1	%		23.8	%		24.1	%		23.6	%		23.5	%		23.8	%
Administrative expense ratio		16.4	%		16.6	%		15.9	%		17.0	%		17.4	%		16.7	%

Combined ratio		91.2	%		94.5	%		85.6	%		91.6	%		107.6	%		94.5	%


Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	—		$	1		$	17		$	3		$	(63	)	$	(42	)
Catastrophe losses	$	2		$	98		$	34		$	10		$	187		$	329
Prior period development (PPD) - unfavorable (favorable)	$	(22	)	$	(80	)	$	(126	)	$	(40	)	$	(44	)	$	(290	)
Loss and loss expense ratio excluding catastrophe losses and PPD ⁽¹⁾		52.1	%		53.0	%		52.5	%		53.2	%		53.1	%		52.9	%

% Change versus prior year period
Net premiums written as reported		8.4	%		3.9	%		18.3	%		12.6	%		0.7	%		8.5	%
Net premiums earned as reported		8.8	%		5.1	%		13.3	%		13.9	%		3.8	%		9.0	%

Net premiums written constant $		9.8	%
Net premiums earned constant $		10.4	%

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

(1)	See Non-GAAP Financial Measures.


Insurance-Overseas General		Page 6

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars, except ratios)

(Unaudited)


Global Reinsurance

	1Q-12			4Q-11			3Q-11			2Q-11			1Q-11			Full Year 2011
Gross premiums written	$	279		$	132		$	254		$	298		$	330		$	1,014
Net premiums written		263			132			250			282			315			979
Net premiums earned		230			249			240			254			260			1,003
Losses and loss expenses		102			136			94			112			279			621
Policy acquisition costs		43			42			50			47			46			185
Administrative expenses		12			14			12			14			12			52

Underwriting income (loss)		73			57			84			81			(77	)		145

Net investment income		71			74			70			71			72			287
Net realized gains (losses)		13			6			(29	)		(14	)		(13	)		(50	)
Interest expense		1			1			—			1			—			2
Other income (expense)		5			3			(7	)		(1	)		6			1
Income tax expense		6			5			7			8			10			30

Net income (loss)		155			134			111			128			(22	)		351

Net realized gains (losses)		13			6			(29	)		(14	)		(13	)		(50	)
Net realized gains (losses) in other income (expense)		5			3			(6	)		(2	)		4			(1	)
Tax expense (benefit) on net realized gains (losses)		—			—			(1	)		—			—			(1	)

Income (loss) excluding net realized gains (losses) ⁽¹⁾	$	137		$	125		$	145		$	144		$	(13	)	$	401


Combined ratio
Loss and loss expense ratio		44.4	%		54.8	%		39.2	%		44.1	%		107.3	%		62.0	%
Policy acquisition cost ratio		18.7	%		17.0	%		20.6	%		18.5	%		17.8	%		18.4	%
Administrative expense ratio		5.2	%		5.3	%		5.6	%		5.3	%		4.6	%		5.2	%

Combined ratio		68.3	%		77.1	%		65.4	%		67.9	%		129.7	%		85.6	%


Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	—		$	(1	)	$	2		$	5		$	1		$	7
Catastrophe losses	$	1		$	15		$	(6	)	$	22		$	152		$	183
Prior period development (PPD) - unfavorable (favorable)⁽²⁾	$	(11	)	$	(12	)	$	(10	)	$	(35	)	$	(14	)	$	(71	)
Loss and loss expense ratio excluding catastrophe losses and PPD ^{(1) (2)}		48.7	%		53.2	%		49.1	%		50.1	%		54.4	%		51.7	%

% Change versus prior year period
Net premiums written as reported		-16.5	%		-7.7	%		-8.1	%		-2.4	%		-15.1	%		-8.9	%
Net premiums earned as reported		-11.5	%		-7.1	%		-11.4	%		-0.8	%		-5.8	%		-6.3	%
Net premiums written constant $		-15.7	%
Net premiums earned constant $		-11.3	%

Other ratios
Net premiums written/gross premiums written		94	%		100	%		99	%		95	%		95	%		97	%

(1)	See Non-GAAP Financial Measures.

(2)	For Q3 2011, favorable prior period development is net of $13 million of net earned premium adjustments on loss sensitive policies.


Global Reinsurance		Page 7

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Life


	1Q-12			4Q-11			3Q-11			2Q-11			1Q-11			Full Year 2011
Gross premiums written	$	512		$	520		$	509		$	513		$	448		$	1,990
Net premiums written		488			496			488			493			436			1,913
Net premiums earned		473			470			480			484			425			1,859
Losses and loss expenses		148			154			142			159			138			593
Policy benefits ⁽¹⁾		147			119			83			108			91			401
(Gains) losses from fair value changes in separate account assets ⁽¹⁾		(18	)		(3	)		39			—			—			36
Policy acquisition costs		76			86			92			85			76			339
Administrative expenses		78			84			81			78			74			317
Net investment income		61			60			60			60			46			226

Life underwriting income ⁽²⁾		103			90			103			114			92			399

Net realized gains (losses):
Mark-to-market on guaranteed living benefits derivative (net of related hedges)		197			(10	)		(706	)		(67	)		—			(783	)
Foreign exchange gains (losses) and all other		34			17			(26	)		(1	)		(13	)		(23	)
Interest expense		3			2			3			3			3			11
Other income (expense) ⁽¹⁾		(9	)		1			(10	)		(11	)		(6	)		(26	)
Income tax expense		11			9			13			14			14			50

Net income (loss)		311			87			(655	)		18			56			(494	)

Net realized gains (losses)		231			7			(732	)		(68	)		(13	)		(806	)
Net realized gains (losses) in other income (expense)		(5	)		1			(2	)		(1	)		1			(1	)
Tax expense (benefit) on net realized gains (losses)		(1	)		—			1			1			—			2

Income excluding net realized gains (losses) ⁽³⁾	$	84		$	79		$	80		$	88		$	68		$	315


% Change versus prior year period
Net premiums written as reported		11.9	%		14.5	%		23.1	%		19.7	%		7.8	%		16.2	%
Net premiums earned as reported		11.3	%		13.7	%		17.5	%		18.5	%		6.5	%		14.1	%

Net premiums written constant $		12.4	%
Net premiums earned constant $		11.9	%

(1)

(Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP are reclassified from Other income (expense) for purposes of presenting Life underwriting income. The offsetting movement in the separate account liabilities is included in Policy benefits.

(2)	We assess the performance of our Life business based on Life underwriting income which includes Net investment income and (Gains) losses from fair value changes in separate account assets.

(3)	See Non-GAAP Financial Measures.


Life		Page 8

ACE Limited

Loss Reserve Rollforward

(in millions of U.S. dollars, except ratios)

(Unaudited)


	Unpaid Losses									Net Paid to Incurred Ratio
	Gross			Ceded			Net			Net Paid to Incurred Ratio
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
Losses and loss expenses incurred		3,207			462			2,745
Losses and loss expenses paid		(3,366	)		(992	)		(2,374	)		86	%
Other (incl. foreign exch. revaluation)		(316	)		(95	)		(221	)

Balance at September 30, 2011	$	38,476		$	12,042		$	26,434
Losses and loss expenses incurred		3,066			780			2,286
Losses and loss expenses paid		(3,837	)		(1,166	)		(2,671	)		117	%
Other (incl. foreign exch. revaluation)		(228	)		(54	)		(174	)

Balance at December 31, 2011	$	37,477		$	11,602		$	25,875
Losses and loss expenses incurred		2,361			557			1,804
Losses and loss expenses paid		(2,876	)		(931	)		(1,945	)		108	%
Other (incl. foreign exch. revaluation)		285			90			195

Balance at March 31, 2012	$	37,247		$	11,318		$	25,929


Add net recoverable on paid losses		—			739			(739	)

Balance including net recoverable on paid losses	$	37,247		$	12,057		$	25,190


Loss Reserve Rollforward		Page 9

ACE Limited

Reinsurance Recoverable Analysis

(in millions of U.S. dollars)

(Unaudited)

Net Reinsurance Recoverable by Division


	March 31 2012			December 31 2011
Reinsurance recoverable on paid losses and loss expenses
Active operations	$	573		$	629
Brandywine		234			232
Other Run-off		42			41

Total	$	849		$	902

Reinsurance recoverable on unpaid losses and loss expenses
Active operations	$	9,605		$	9,805
Brandywine		1,721			1,775
Other Run-off		362			386

Total	$	11,688		$	11,966

Gross reinsurance recoverable
Active operations	$	10,178		$	10,434
Brandywine		1,955			2,007
Other Run-off		404			427

Total	$	12,537		$	12,868

Provision for uncollectible reinsurance ⁽¹⁾
Active operations	$	(300	)	$	(299	)
Brandywine		(161	)		(160	)
Other Run-off		(19	)		(20	)

Total	$	(480	)	$	(479	)

Net reinsurance recoverable
Active operations	$	9,878		$	10,135
Brandywine		1,794			1,847
Other Run-off		385			407

Total	$	12,057		$	12,389

(1)	The provision for uncollectible reinsurance is based on a default analysis applied to gross reinsurance recoverables, net of approximately $2.8 billion of collateral.


Reinsurance Recoverable		Page 10

ACE Limited

Investment Portfolio

(in millions of U.S. dollars)

(Unaudited)


	March 31 2012					December 31 2011
Market Value
Fixed maturities available for sale	$	43,468				$	41,967
Fixed maturities held to maturity		8,348					8,605
Short-term investments		2,099					2,301

Total	$	53,915				$	52,873

Asset Allocation by Market Value
Treasury	$	2,451		5	%	$	2,361		5	%
Agency		1,811		3	%		1,725		3	%
Corporate and asset-backed		17,618		33	%		17,030		32	%
Mortgage-backed		12,800		24	%		13,237		25	%
Municipal ⁽¹⁾		3,295		6	%		2,888		6	%
Non-U.S.		13,841		26	%		13,331		25	%
Short-term investments		2,099		3	%		2,301		4	%

Total	$	53,915		100	%	$	52,873		100	%


Note: Insured municipal bonds represent $720 million, or 22% of our municipal bond holdings.

Credit Quality by Market Value
AAA	$	9,115		17	%	$	9,284		18	%
AA		20,665		38	%		20,562		39	%
A		10,523		20	%		10,106		19	%
BBB		6,244		12	%		6,152		12	%
BB		4,009		7	%		3,755		7	%
B		2,828		5	%		2,428		4	%
Other		531		1	%		586		1	%

Total	$	53,915		100	%	$	52,873		100	%

Cost/Amortized Cost
Fixed maturities available for sale	$	41,661				$	40,450
Fixed maturities held to maturity		8,117					8,447
Short-term investments		2,099					2,301

Subtotal		51,877					51,198
Equity securities		662					671
Other investments		2,221					2,112

Total	$	54,760				$	53,981

Avg. duration of fixed maturities		3.9 years					3.7 years
Avg. market yield of fixed maturities ⁽²⁾		3.0	%				3.1	%
Avg. credit quality ⁽³⁾		A/Aa					A/Aa
Avg. yield on invested assets⁽⁴⁾		4.0	%				4.2	%

(1)	The rating of the municipal portfolio is AA with 12% of our holdings pre-funded with AA/Aaa Federal securities. The portfolio is highly diversified predominantly in State general obligation bonds and essential service revenue bonds, including education and utilities (water, power, and 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)	We use a split rating due to S&P’s downgrade of U.S. Treasury and Agency securities.

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


Investments		Page 11

ACE Limited

Investment Portfolio - 2

(in millions of U.S. dollars)

(Unaudited)

Mortgage-backed Fixed Income Portfolio

Mortgage-backed securities


	S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
Market Value at March 31, 2012
Agency residential mortgage-backed (RMBS)	$	—	$	10,869	$	—	$	—	$	—	$	10,869
Non-agency RMBS		181		18		22		16		456		693
Commercial mortgage-backed		1,203		18		10		7		—		1,238

Total mortgage-backed securities at market value	$	1,384	$	10,905	$	32	$	23	$	456	$	12,800


	S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
Amortized Cost at March 31, 2012
Agency RMBS	$	—	$	10,467	$	—	$	—	$	—	$	10,467
Non-agency RMBS		181		18		23		17		547		786
Commercial mortgage-backed		1,130		15		10		6		—		1,161

Total mortgage-backed securities at amortized cost	$	1,311	$	10,500	$	33	$	23	$	547	$	12,414

Mortgage-backed securities total $12.8 billion, are rated predominantly AA and comprise 24% of the fixed income portfolio. This compares to a 33% mortgage-backed weighting in representative indices of the U.S. fixed income market. The minimum rating for initial purchases of mortgage-backed securities is AA for agency mortgages and AAA for non-agency mortgages.

Securities issued by Federal agencies with implied or explicit government guarantees total $10.9 billion and represent 94% of the residential mortgage-backed portfolio.

Non-agency residential mortgage-backed securities are backed by prime collateral, and broadly diversified in over 92,000 loans. The portfolio’s original loan-to-value ratio is approximately 67% with an average FICO score of 730. With this conservative loan-to-value ratio and subordinated collateral of 6%, the cumulative 5-year foreclosure rate would have to rise to 10% before principal is significantly impaired. The current foreclosure rate of ACE’s non-agency RMBS portfolio is 8%.

Commercial mortgage-backed securities of $1.2 billion are rated predominantly AAA, broadly diversified with over 14,000 loans and seasoned with 54% of the portfolio issued before 2006 and 32% of the portfolio issued after 2009. The average loan-to-value ratio is approximately 65% with a debt service coverage ratio in excess of 1.8 and weighted average subordinated collateral of 31%. The cumulative foreclosure rate would have to rise to 43% before principal is impaired. The current foreclosure rate of the portfolio is about 2.7%.


Investments 2		Page 12

ACE Limited

Investment Portfolio - 3

(in millions of U.S. dollars)

(Unaudited)

U.S. Corporate and Asset-backed Fixed Income Portfolios


Market Value at March 31, 2012	S&P Credit Rating
	Investment Grade
	AAA		AA		A		BBB		Total
Asset-backed	$	304	$	109	$	1	$	—	$	414
Banks		—		114		2,198		359		2,671
Basic Materials		—		—		118		229		347
Communications		—		—		620		764		1,384
Consumer, Cyclical		—		101		286		270		657
Consumer, Non-Cyclical		58		487		791		564		1,900
Diversified Financial Services		—		100		154		190		444
Energy		79		14		217		576		886
Industrial		—		449		309		153		911
Utilities		—		4		500		538		1,042
All Others		51		120		441		472		1,084

Total	$	492	$	1,498	$	5,635	$	4,115	$	11,740

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.


Market Value at March 31, 2012	S&P Credit Rating
	Below Investment Grade
	BB		B		CCC		Total
Asset-backed	$	—	$	—	$	14	$	14
Banks		16		2		—		18
Basic Materials		253		105		5		363
Communications		395		479		9		883
Consumer, Cyclical		371		413		23		807
Consumer, Non-Cyclical		702		593		8		1,303
Diversified Financial Services		55		62		6		123
Energy		795		269		5		1,069
Industrial		336		252		6		594
Utilities		275		28		10		313
All Others		182		203		6		391

Total	$	3,380	$	2,406	$	92	$	5,878

U.S. 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 $91 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 3		Page 13

ACE Limited

Investment Portfolio - 4

(in millions of U.S. dollars)

(Unaudited)

Non-U.S. Fixed Income Portfolio

March 31, 2012


	Market Value by S&P Credit Rating												Amortized Cost
	AAA		AA		A		BBB		BB and below		Total		Amortized Cost
United Kingdom	$	1,201	$	—	$	—	$	—	$	—	$	1,201	$	1,171
Canada		944		—		—		—		—		944		916
Republic of Korea		—		—		467		—		—		467		444
Germany		405		—		—		—		—		405		394
Japan		—		368		—		—		—		368		367
Province of Ontario		—		241		—		—		—		241		231
Federative Republic of Brazil		—		—		—		179		—		179		171
Province of Quebec		—		—		156		—		—		156		147
Kingdom of Thailand		—		—		128		17		—		145		145
Swiss Confederation		140		—		—		—		—		140		133
Federation of Malaysia		—		—		139		—		—		139		138
France		—		135		—		—		—		135		132
Commonwealth of Australia		128		—		—		—		—		128		120
People’s Republic of China		54		74		—		—		—		128		124
State of Queensland		74		53		—		—		—		127		121
United Mexican States		3		—		36		49		—		88		83
State of New South Wales		80		—		—		—		—		80		77
Taiwan		—		59		—		—		—		59		57
State of Victoria		51		—		—		—		—		51		49
Dominion of New Zealand		1		38		—		—		—		39		39
Socialist Republic of Vietnam		—		—		—		—		38		38		37
Province of British Columbia		37		—		—		—		—		37		35
Republic of Austria		—		37		—		—		—		37		36
Province of Manitoba		—		36		—		—		—		36		35
State of Qatar		—		35		—		—		—		35		34
Other Non-U.S. Government		189		153		52		60		63		517		503

Non-U.S. Government Securities	$	3,307	$	1,229	$	978	$	305	$	101	$	5,920	$	5,739
Eurozone Non-U.S. Corporate ⁽¹⁾		723		325		517		515		353		2,433		2,362
Other Non-U.S. Corporate		834		590		2,331		1,196		537		5,488		5,256

	$	4,864	$	2,144	$	3,826	$	2,016	$	991	$	13,841	$	13,357

(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.

79% 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 4		Page 14

ACE Limited

Investment Portfolio - 5

(in millions of U.S. dollars)

(Unaudited)

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


March 31, 2012	Market Value by Industry										Amortized Cost
	Bank		Financial		Industrial		Utility		Total		Amortized Cost
Netherlands	$	235	$	137	$	287	$	119	$	778	$	751
France		116		40		115		144		415		409
Germany		330		—		66		8		404		391
Luxembourg		26		—		225		93		344		332
Euro Supranational		216		—		—		—		216		210
Ireland		12		1		85		20		118		113
Spain		19		4		46		6		75		76
Italy		14		1		10		2		27		26
Austria		20		—		5		—		25		24
Finland		7		—		5		3		15		14
Belgium		—		—		14		1		15		14
Portugal		—		—		1		—		1		2

Eurozone Non-U.S. Corporate Securities	$	995	$	183	$	859	$	396	$	2,433	$	2,362

Note: ACE has no investments in Greece

Top 10 Exposures - Eurozone Banks (Excluding United Kingdom)


March 31, 2012	Market Value		Amortized Cost		Rating
KFW	$	211	$	206	AAA
European Investment Bank		189		184	AAA
Rabobank Nederland NV		119		115	AA
Deutsche Bank AG		46		45	A+
Bank Nederlandse Gemeenten		39		38	AAA
BNP Paribas SA		33		32	AA-
ABN AMRO Group NV		33		31	A+
Credit Agricole Groupe		28		28	A
Nederlandse Waterschapsbank NV		21		21	AAA
Groupe BPCE		20		19	A

Top 10 Exposures - Eurozone Corporate (Excluding United Kingdom)


March 31, 2012	Market Value		Amortized Cost		Rating
EDF SA	$	79	$	79	A+
ING Groep NV		77		77	A
Deutsche Telekom AG		70		63	BBB+
Royal Dutch Shell PLC		63		60	AA
Intelsat SA		62		60	B
Telefonica SA		42		42	BBB+
ArcelorMittal		42		40	BBB-
Gazprom OAO		39		37	BBB
Liberty Global Inc		39		36	B+
France Telecom SA		37		35	A-


Investments 5		Page 15

ACE Limited

Investment Portfolio - 6

(in millions of U.S. dollars)

(Unaudited)

Investment portfolio

Top 25 Exposures - Fixed Maturity Investments


	March 31, 2012	Market Value		Rating
1	JP Morgan Chase & Co	$	433	A
2	General Electric Co		432	AA+
3	Citigroup Inc		359	A-
4	Bank of America Corp		327	A-
5	The Goldman Sachs Group Inc		324	A-
6	Morgan Stanley		284	A-
7	Verizon Communications Inc		280	A-
8	AT&T INC		242	A-
9	HSBC Holdings Plc		211	A+
10	Wells Fargo & Co		197	A+
11	Lloyds Banking Group Plc		187	A-
12	Kraft Foods Inc		169	BBB
13	Comcast Corp		166	BBB+
14	Royal Bank of Scotland Group Plc		163	A-
15	Time Warner Cable Inc		141	BBB
16	ConocoPhillips		138	A
17	Barclays Plc		133	A
18	American Express Co		124	BBB+
19	BP Plc		123	A
20	UBS AG		121	A
21	Pfizer Inc		119	AA
22	Rabobank Nederland NV		119	AA
23	Dominion Resources Inc/VA		118	A-
24	Credit Suisse Group		117	A
25	Philip Morris International Inc		110	A


Investments 6		Page 16

ACE Limited

Net Realized and Unrealized Gains (Losses)

(in millions of U.S. dollars)

(Unaudited)


	Three months ended March 31, 2012
	Net Realized Gains (Losses)⁽¹⁾			Net Unrealized Gains (Losses)		Net Impact
Fixed maturities	$	34		$	243	$	277
Fixed income derivatives		42			—		42

Total fixed maturities		76			243		319

Public equity		1			38		39
Private equity		23			7		30

Total equity		24			45		69

Mark-to-market gains (losses) from derivative transactions ⁽²⁾		192			—		192
Foreign exchange gains (losses) ⁽²⁾		(5	)		—		(5	)
Other		(2	)		4		2
Partially-owned entities ⁽³⁾		(7	)		—		(7	)
Income tax expense		6			49		55

Net gains	$	272		$	243	$	515

(1)	Other-than-temporary impairments for the quarter includes $7 million for fixed maturities, $2 million for private equity, and $1 million for public equity.

(2)

The $231 million of realized gains from variable annuity reinsurance for the quarter is split $197 million in mark-to-market gains (losses) from derivative transactions and $34 million in foreign exchange gains. The $197 million of realized gains is net of $231 million of losses on applicable hedges.

(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, 2011
	Net Realized Gains (Losses)⁽⁴⁾			Net Unrealized Gains (Losses)			Net Impact
Fixed maturities	$	49		$	(39	)	$	10
Fixed income derivatives		(20	)		—			(20	)

Total fixed maturities		29			(39	)		(10	)

Public Equity		7			2			9
Private equity		33			44			77

Total equity		40			46			86

Mark-to-market gains (losses) from derivative transactions ⁽⁵⁾		(1	)		—			(1	)
Foreign exchange gains (losses)		(79	)		—			(79	)
Other		(1	)		3			2
Partially-owned entities ⁽⁶⁾		1			—			1
Income tax expense (benefit)		(2	)		(14	)		(16	)

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

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

(5)	Includes no net realized gains or losses on the life reinsurance operations for the quarter. 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.

(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 17

ACE Limited

Capital Structure

(in millions of U.S. dollars, except ratios)

(Unaudited)


	March 31 2012			December 31 2011			December 31 2010
Total short-term debt ⁽¹⁾	$	1,531		$	1,251		$	1,300
Total long-term debt		3,360			3,360			3,358

Total debt	$	4,891		$	4,611		$	4,658

Total trust preferred securities	$	309		$	309		$	309

Total shareholders’ equity	$	25,431		$	24,332		$	22,835

Total capitalization	$	30,631		$	29,252		$	27,802
Tangible capital ⁽²⁾	$	25,771		$	24,453		$	23,138

Leverage ratios
Debt/ total capitalization		16.0	%		15.8	%		16.8	%
Debt plus trust preferred securities/ total capitalization		17.0	%		16.8	%		17.9	%
Debt/ tangible capital		19.0	%		18.9	%		20.1	%
Debt plus trust preferred securities/ tangible capital		20.2	%		20.1	%		21.5	%

Note: As of March 31, 2012, there was $1.9 billion usage of credit facilities on a total commitment of $2.4 billion.

(1)	Repurchase agreements in the amount of $400 million matured during the quarter, and there were new repurchase agreements in the amount of $550 million.

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


Capital Structure		Page 18

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
	2012			2011
Numerator
Income to common shares, excl. net realized gains (losses) ⁽¹⁾	$	701		$	259
Net realized gains (losses), net of income tax		272			(9	)

Net income	$	973		$	250

Rollforward of Common Shares Outstanding
Shares - beginning of period		336,927,276			334,942,852
Repurchase of shares		(100,000	)		—
Shares issued, excluding option exercises		1,036,709			1,356,746
Issued for option exercises		789,397			874,266

Shares - end of period		338,653,382			337,173,864

Denominator
Weighted average shares outstanding		338,567,341			337,088,217
Effect of other dilutive securities		3,123,641			2,572,982

Adj. wtd. avg. shares outstanding and assumed conversions		341,690,982			339,661,199

Basic earnings per share
Income excluding net realized gains (losses) ⁽¹⁾	$	2.07		$	0.77
Net realized gains (losses), net of income tax		0.80			(0.03	)

Net income	$	2.87		$	0.74

Diluted earnings per share
Income excluding net realized gains (losses) ⁽¹⁾	$	2.05		$	0.76
Net realized gains (losses), net of income tax		0.79			(0.03	)

Net income	$	2.84		$	0.73

(1)	See Non-GAAP Financial Measures.


Earnings per share		Page 19

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 page 22.

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). Life underwriting income includes net investment income and gains (losses) from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP.

Loss and loss expense ratio excluding the impact of catastrophe losses and prior period development (PPD) is a non-GAAP financial measure. The loss ratio numerator includes Losses and loss expenses adjusted to exclude catastrophe losses and PPD. The loss ratio denominator includes Net premiums earned adjusted to exclude the amount of reinstatement premiums (expensed) collected. In periods where there are adjustments on loss sensitive policies, these adjustments are excluded from PPD and net earned premiums when calculating this ratio. We believe that excluding the impact of catastrophe losses and PPD provides a better evaluation of our core underwriting performance and enhances the understanding of the trends in our property & casualty business that may be obscured by these items.

Annualized ROE calculated using income excluding net realized gains (losses) is a non-GAAP financial measure. The ROE numerator includes income adjusted to exclude net realized gains (losses), net of tax. The ROE denominator includes the average shareholders’ equity for the period adjusted to exclude unrealized gains (losses) on investments, net of tax. To annualize a quarterly rate, multiply by four. Annualized ROE calculated using income excluding realized gains (losses), net of tax, is a useful measure as it enhances the understanding of the return on shareholders’ equity by highlighting the underlying profitability relative to shareholders’ equity excluding the effect of unrealized gains and losses on our investments.

Income excluding net realized gains (losses), net of tax, is a common performance measurement for insurance companies 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):


	1Q-12		4Q-11		3Q-11			2Q-11			1Q-11			Full Year 2011
Net income (loss), as reported	$	973	$	735	$	(39	)	$	594		$	250		$	1,540
Net realized gains (losses)		260		83		(760	)		(73	)		(45	)		(795	)
Net realized gains (losses) in other income (expense) ⁽¹⁾		18		16		(28	)		2			34			24
Income tax expense (benefit) on net realized gains (losses)		6		12		2			8			(2	)		20

Income excluding net realized gains (losses)	$	701	$	648	$	751		$	673		$	259		$	2,331

(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 20

ACE Limited

Non-GAAP Financial Measures - 2

(in millions of U.S. dollars, except ratios)

(Unaudited)

Regulation G - Non-GAAP Financial Measures (continued)

The following table presents the reconciliation of effective tax rate to the effective tax rate on income excluding net realized gains (losses):


	1Q-12			4Q-11			3Q-11			2Q-11			1Q-11			Full Year 2011
Tax expense, as reported	$	110		$	120		$	165		$	121		$	96		$	502
Tax expense (benefit) on net realized gains (losses)		6			12			2			8			(2	)		20

Tax expense, adjusted	$	104		$	108		$	163		$	113		$	98		$	482

Income before tax, as reported	$	1,083		$	855		$	126		$	715		$	346		$	2,042
Less: realized gains (losses)		260			83			(760	)		(73	)		(45	)		(795	)
Less: realized gains (losses) in other income (expense)		18			16			(28	)		2			34			24

Income excluding net realized gains (losses) before tax	$	805		$	756		$	914		$	786		$	357		$	2,813

Effective tax rate		10.2	%		14.1	%		131.9	%		16.9	%		27.7	%		24.6	%
Adjustment for tax impact of net realized gains (losses)		2.8	%		0.3	%		-114.2	%		-2.5	%		-0.4	%		-7.5	%

Effective tax rate on income excluding net realized gains (losses)		13.0	%		14.4	%		17.7	%		14.4	%		27.3	%		17.1	%

The following table presents the reconciliation of annualized ROE calculated using net income to annualized ROE calculated using income excluding net realized gains (losses):


	1Q-12			1Q-11			Full Year 2011
Net income	$	973		$	250		$	1,540
Income excluding net realized gains (losses)	$	701		$	259		$	2,331

Equity - beginning of period, as reported	$	24,332		$	22,835		$	22,835
Less: unrealized gains (losses) on investments, net of deferred tax		1,715			1,399			1,399

Equity - beginning of period, as adjusted	$	22,617		$	21,436		$	21,436

Equity - end of period, as reported	$	25,431		$	23,228		$	24,332
Less: unrealized gains (losses) on investments, net of deferred tax		1,958			1,423			1,715

Equity - end of period, as adjusted	$	23,473		$	21,805		$	22,617

Average equity, as reported	$	24,882		$	23,032		$	23,584
Average equity, as adjusted	$	23,045		$	21,621		$	22,027
Annualized ROE calculated using income excluding net realized gains (losses)		12.2	%		4.8	%		10.6	%
Annualized ROE calculated using net income		15.6	%		4.3	%		6.5	%


Reconciliation Non-GAAP 2		Page 21

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 2012			December 31 2011			March 31 2011
Shareholders’ equity	$	25,431		$	24,332		$	23,228
Less: goodwill and other intangible assets		4,860			4,799			4,697

Numerator for tangible book value per share	$	20,571		$	19,533		$	18,531

Denominator		338,653,382			336,927,276			337,173,864

Book value per common share	$	75.09		$	72.22		$	68.89
Tangible book value per common share	$	60.74		$	57.97		$	54.96

Reconciliation of Book Value

Shareholders’ equity, beginning of quarter	$	24,332		$	23,581		$	22,835
Income excluding net realized gains (losses)		701			648			259
Net realized gains (losses), net of tax		272			87			(9	)
Net unrealized gains (losses), net of tax		243			189			24
Repurchase of shares		(7	)		(32	)		—
Dividend declared on common shares		(200	)		(118	)		(113	)
Cumulative translation, net of tax		56			(123	)		168
Pension liability		(1	)		6			(4	)
Other⁽¹⁾		35			94			68

	$	25,431		$	24,332		$	23,228

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


Reconciliation Book Value		Page 22

ACE Limited

Glossary

ACE Limited Consolidated comprises all segments including Corporate and Other.

Annualized return on equity calculated using income excluding net realized gains (losses): Income excluding net realized gains (losses), net of tax, divided by average shareholders’ equity for the period excluding unrealized gains (losses) on investments, net of tax. 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 on income excluding net realized gains (losses): Income tax expense excluding tax expense (benefit) on net realized gains (losses) divided by income excluding net realized gains (losses) before tax.

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. In addition, Life underwriting income includes gains/losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP.

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 23

Chubb Ltd - FORM 8-K - EX-99.2 - FIRST QUARTER FINANCIAL SUPPLEMENT - April 24, 2012

Attached files

Chubb Ltd Reports