Chubb Ltd - FORM 8-K - EX-99.2

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EX-99.1 - EX-99.1 - Chubb Ltd	d525704dex991.htm
8-K - FORM 8-K - Chubb Ltd	d525704d8k.htm

Exhibit 99.2

LOGO


Investor Contact Helen M. Wilson Phone: (441) 299-9283 Fax: (441) 292-8675 email: investorrelations@acegroup.com		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. 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 Operating Income by Line of Business		4 - 5

III. Segment Results
- Insurance—North American—For Reference Only		6
- Insurance—North American P&C		7
- Insurance—North American Agriculture		8
- Insurance—Overseas General		9
- Global Reinsurance		10
- Life		11

IV. Balance Sheet Details
- Loss Reserve Rollforward		12
- Reinsurance Recoverable Analysis		13
- Investment Portfolio		14 - 19
- Net Realized and Unrealized Gains (Losses)		20
- Capital Structure		21
- Computation of Basic and Diluted Earnings Per Share		22

V. Other Disclosures
- Non-GAAP Financial Measures		23 - 24
- Book Value and Book Value per Common Share		25
- Glossary		26

ACE Limited

Consolidated Financial Highlights

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

(Unaudited)

Note: All dollar amounts in the Financial Supplement are rounded. However, percent changes and ratios are calculated using whole dollars. Accordingly, calculations using rounded dollars may differ.


													Constant $
							% Change						% Change
	Three months ended March 31						1Q-13 vs.			Constant $			1Q-13 vs.
	2013			2012			1Q-12			2012 ⁽²⁾			1Q-12⁽²⁾
Gross premiums written	$	4,963		$	4,787			3.7	%	$	4,789			3.6	%
Net premiums written	$	3,798		$	3,572			6.3	%	$	3,573			6.3	%
Net premiums earned	$	3,573		$	3,381			5.7	%	$	3,374			5.9	%
Net investment income	$	531		$	544			-2.4	%
Net income	$	953		$	973			-2.0	%
Operating income ⁽¹⁾	$	746		$	701			6.5	%
Comprehensive income	$	716		$	1,271			-43.7	%
Operating cash flow	$	913		$	572
P&C combined ratio
Loss and loss expense ratio		57.1	%		56.9	%
Underwriting and administrative expense ratio		31.1	%		32.3	%

Combined ratio		88.2	%		89.2	%
Operating return on equity (ROE) ⁽¹⁾		11.9	%		12.2	%
ROE		13.7	%		15.6	%
Operating effective tax rate ⁽¹⁾		10.8	%		13.0	%
Effective tax rate		11.3	%		10.2	%
Diluted earnings per share
Operating income ⁽¹⁾	$	2.17		$	2.05			5.9	%
Net income	$	2.77		$	2.84			-2.5	%

										December 31 2012			% Change 1Q-13 vs. 4Q-12
Book value per common share ⁽¹⁾	$	82.17		$	75.09			9.4	%	$	80.90			1.6	%
Tangible book value per common share ⁽¹⁾	$	67.74		$	60.74			11.5	%	$	66.28			2.2	%
Weighted average basic common shares outstanding		340.8			338.6
Weighted average diluted common shares outstanding		343.9			341.7
Debt plus trust preferred securities/ tangible capital		20.7	%		20.2	%					18.4	%

(1)	See Non-GAAP Financial Measures.

(2)	Prior periods on a constant dollar basis.


Financial Highlights		Page 1

ACE Limited

Consolidated Results—Consecutive Quarters

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

(Unaudited)

ACE Limited Consolidated


	1Q-13			4Q-12			3Q-12			2Q-12			1Q-12			Full Year 2012
Consolidated Results Excluding Life Segment
Gross premiums written	$	4,435		$	4,602		$	5,496		$	5,140		$	4,275		$	19,513
Net premiums written		3,296			3,140			4,228			3,644			3,084			14,096
Net premiums earned		3,096			3,359			4,185			3,309			2,908			13,761
Losses and loss expenses		1,769			2,535			2,883			1,968			1,656			9,042
Policy acquisition costs		534			546			529			531			506			2,112
Administrative expenses		429			462			438			436			432			1,768

Underwriting income (loss) ⁽¹⁾		364			(184	)		335			374			314			839
Net investment income		468			502			470			475			483			1,930
Net realized gains (losses)		79			83			11			27			29			150
Interest expense		56			60			60			59			59			238
Other income (expense)		6			20			3			(15	)		(6	)		2
Income tax expense (benefit)		109			(149	)		133			129			99			212

Net income		752			510			626			673			662			2,471
Net realized gains (losses)		79			83			11			27			29			150
Net realized gains (losses) in other income (expense)^{(1) (2)}		28			30			23			(1	)		23			75
Tax expense on net realized gains (losses)		31			21			9			17			7			54

Operating income ⁽¹⁾		676			418			601			664			617			2,300
Life segment operating income ⁽¹⁾		70			74			87			79			84			324

Consolidated operating income ⁽¹⁾	$	746		$	492		$	688		$	743		$	701		$	2,624

% Change versus prior year period ⁽³⁾
Net premiums written as reported		6.9	%		0.3	%		9.6	%		5.3	%		2.5	%		4.7	%
Net premiums earned as reported		6.4	%		-0.1	%		4.4	%		1.1	%		0.8	%		1.7	%
Net premiums written constant $		6.9	%														6.3	%
Net premiums earned constant $		6.7	%														3.3	%
Other ratios
Net premiums written/gross premiums written⁽³⁾		74	%		68	%		77	%		71	%		72	%		72	%
Operating effective tax rate ⁽¹⁾		10.8	%		-46.8	%		16.7	%		14.6	%		13.0	%		7.5	%
P&C combined ratio ⁽³⁾
Loss and loss expense ratio		57.1	%		75.5	%		68.9	%		59.5	%		56.9	%		65.7	%
Policy acquisition cost ratio		17.2	%		16.2	%		12.7	%		16.1	%		17.4	%		15.3	%
Administrative expense ratio		13.9	%		13.8	%		10.4	%		13.1	%		14.9	%		12.9	%

Combined ratio		88.2	%		105.5	%		92.0	%		88.7	%		89.2	%		93.9	%

Combined ratio excluding catastrophe losses and PPD ⁽¹⁾		89.4	%		91.4	%		96.5	%		90.4	%		91.7	%		92.8	%
P&C expense ratio		31.1	%		30.0	%		23.1	%		29.2	%		32.3	%		28.2	%
P&C expense ratio excluding A&H		27.4	%		26.2	%		19.3	%		25.3	%		28.4	%		24.3	%
Large losses and other items (before tax) ⁽³⁾
Reinstatement premiums (expensed) collected	$	—		$	(7	)	$	2		$	—		$	—		$	(5	)
Catastrophe losses	$	32		$	504		$	55		$	55		$	19		$	633
Favorable prior period development (PPD) ⁽⁴⁾	$	(70	)	$	(37	)	$	(236	)	$	(113	)	$	(93	)	$	(479	)
Loss and loss expense ratio excluding catastrophe losses and PPD ⁽¹⁾		58.3	%		61.4	%		73.4	%		61.2	%		59.5	%		64.6	%

(1)	See Non-GAAP Financial Measures.

(2)	Net realized investment gains and losses related to unconsolidated entities.

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

(4)	Q1 2013 favorable PPD is gross of a $2 million unfavorable profit commission adjustment.


Consolidated Results		Page 2

ACE Limited

Summary Consolidated Balance Sheets

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

(Unaudited)


	March 31 2013			December 31 2012
Assets
Fixed maturities available for sale, at fair value	$	47,947		$	47,306
Fixed maturities held to maturity, at amortized cost		6,867			7,270
Equity securities, at fair value		832			744
Short-term investments, at fair value		2,893			2,228
Other investments		2,820			2,716

Total investments		61,359			60,264
Cash		855			615
Securities lending collateral		1,786			1,791
Insurance and reinsurance balances receivable		4,154			4,147
Reinsurance recoverable on losses and loss expenses		11,530			12,078
Deferred policy acquisition costs		1,966			1,873
Value of business acquired		583			614
Prepaid reinsurance premiums		1,653			1,617
Goodwill and other intangible assets		4,909			4,975
Deferred tax assets		505			453
Investments in partially-owned insurance companies		449			454
Other assets		3,712			3,664

Total assets	$	93,461		$	92,545

Liabilities
Unpaid losses and loss expenses	$	37,082		$	37,946
Unearned premiums		7,019			6,864
Future policy benefits		4,465			4,470
Insurance and reinsurance balances payable		3,402			3,472
Securities lending payable		1,789			1,795
Accounts payable, accrued expenses, and other liabilities		5,744			5,397
Short-term debt		1,402			1,401
Long-term debt		4,307			3,360
Trust preferred securities		309			309

Total liabilities		65,519			65,014
Shareholders’ equity
Total shareholders’ equity, excl. AOCI		25,292			24,644
Accumulated other comprehensive income (AOCI)		2,650			2,887

Total shareholders’ equity		27,942			27,531

Total liabilities and shareholders’ equity	$	93,461		$	92,545

Book value per common share ⁽¹⁾	$	82.17		$	80.90
% change over prior quarter		1.6	%		1.9	%
Tangible book value per common share ⁽¹⁾	$	67.74		$	66.28
% change over prior quarter		2.2	%		2.5	%

(1)	See Non-GAAP Financial Measures.


Consol Bal Sheet		Page 3

ACE Limited

Consolidated Premiums and Operating Income by Line of Business

(in millions of U.S. dollars)

(Unaudited)

ACE Limited Consolidated


	1Q-13		% of Total Consolidated			1Q-12		% of Total Consolidated			% Change 1Q-13 vs. 1Q-12
Net premiums written
Property and all other	$	1,222		32	%	$	1,112		31	%		9.9	%
Agriculture		113		3	%		119		3	%		-5.1	%
Casualty		1,308		35	%		1,214		34	%		7.7	%

Subtotal		2,643		70	%		2,445		68	%		8.1	%
Personal accident (A&H) ⁽¹⁾		914		24	%		882		25	%		3.7	%
Life		241		6	%		245		7	%		-1.6	%

Total consolidated	$	3,798		100	%	$	3,572		100	%		6.3	%

Net premiums earned
Property and all other	$	1,067		30	%	$	970		29	%		10.0	%
Agriculture		52		1	%		59		2	%		-11.1	%
Casualty		1,353		38	%		1,270		37	%		6.5	%

Subtotal		2,472		69	%		2,299		68	%		7.5	%
Personal accident (A&H) ⁽¹⁾		874		25	%		852		25	%		2.6	%
Life		227		6	%		230		7	%		-1.3	%

Total consolidated	$	3,573		100	%	$	3,381		100	%		5.7	%

Operating income ⁽²⁾
Property, casualty, and all other	$	581		78	%	$	517		74	%		12.4	%
Agriculture		7		1	%		25		3	%		-72.4	%
Personal accident (A&H) ⁽¹⁾		124		16	%		118		17	%		5.4	%
Life		34		5	%		41		6	%		-17.1	%

Total consolidated	$	746		100	%	$	701		100	%		6.5	%

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

(2)	See Non-GAAP Financial Measures.


Line of Business		Page 4

ACE Limited

Consolidated Premiums and Operating Income

by Line of Business, Adjusted for Foreign Exchange

(in millions of U.S. dollars)

(Unaudited)

ACE Limited Consolidated Constant Dollar


	1Q-13		Constant $ 1Q-12⁽²⁾		Constant $ % Change 1Q-13 vs. 1Q-12
Net premiums written
Property, casualty, agriculture, and all other	$	2,643	$	2,441		8.3	%
Personal accident (A&H) ⁽¹⁾		914		887		3.1	%
Life		241		245		-1.6	%

Total consolidated	$	3,798	$	3,573		6.3	%

Net premiums earned
Property, casualty, agriculture, and all other	$	2,472	$	2,288		8.0	%
Personal accident (A&H) ⁽¹⁾		874		855		2.2	%
Life		227		231		-1.7	%

Total consolidated	$	3,573	$	3,374		5.9	%

Operating income ⁽³⁾
Property, casualty, agriculture, and all other	$	588	$	542		8.5	%
Personal accident (A&H) ⁽¹⁾		124		119		4.4	%
Life		34		42		-19.0	%

Total consolidated	$	746	$	703		6.1	%

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

(2)	Prior periods on a constant dollar basis.

(3)	See Non-GAAP Financial Measures.


Line of Business 2		Page 5

ACE Limited

Insurance—North American

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

(Unaudited)

Effective Q1 2013, the company’s Insurance—North American business is presented in two distinct reporting segments: Insurance—North American P&C (refer to page 7) and Insurance—North American Agriculture (refer to page 8). The below table shows the previous Insurance—North American business presentation and should be used for reference purposes only.

Insurance—North American


	1Q-13			4Q-12			3Q-12			2Q-12			1Q-12			Full Year 2012
Gross premiums written	$	2,068		$	2,528		$	3,345		$	2,856		$	2,012		$	10,741
Net premiums written		1,397			1,518			2,537			1,860			1,293			7,208
Net premiums earned		1,390			1,608			2,472			1,652			1,287			7,019
Losses and loss expenses		910			1,504			2,110			1,163			849			5,626
Policy acquisition costs		147			142			160			157			127			586
Administrative expenses		130			153			148			153			147			601

Underwriting income (loss)		203			(191	)		54			179			164			206
Net investment income		257			283			263			271			274			1,091
Net realized gains (losses)		26			26			(1	)		18			(1	)		42
Interest expense		(2	)		3			3			3			3			12
Other income (expense)		7			13			5			(10	)		1			9
Income tax expense (benefit)		96			(79	)		81			107			91			200

Net income		399			207			237			348			344			1,136
Net realized gains (losses)		26			26			(1	)		18			(1	)		42
Net realized gains (losses) in other income (expense) ⁽¹⁾		14			21			17			5			15			58
Tax expense on net realized gains (losses)		9			10			2			10			4			26

Operating income ⁽¹⁾	$	368		$	170		$	223		$	335		$	334		$	1,062

Combined ratio
Loss and loss expense ratio		65.5	%		93.6	%		85.3	%		70.4	%		66.0	%		80.2	%
Policy acquisition cost ratio		10.5	%		8.8	%		6.5	%		9.5	%		9.9	%		8.3	%
Administrative expense ratio		9.4	%		9.5	%		6.0	%		9.3	%		11.4	%		8.6	%

Combined ratio		85.4	%		111.9	%		97.8	%		89.2	%		87.3	%		97.1	%

Combined ratio excluding catastrophe losses & PPD ⁽¹⁾		87.6	%		90.0	%		99.5	%								93.4	%
Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	—		$	(8	)	$	—		$	—		$	—		$	(8	)
Catastrophe losses	$	11		$	338		$	38		$	49		$	16		$	441
Unfavorable (favorable) prior period development (PPD)	$	(43	)	$	7		$	(80	)	$	(59	)	$	(60	)	$	(192	)
Loss and loss expense ratio excluding catastrophe losses and PPD ⁽¹⁾		67.6	%		71.8	%		87.2	%		71.1	%		69.3	%		76.6	%
% Change versus prior year period
Net premiums written		8.0	%		-6.5	%		14.9	%		7.2	%		0.6	%		5.2	%
Net premiums earned		7.9	%		-3.2	%		7.5	%		3.0	%		-4.4	%		1.6	%
Other ratios
Net premiums written/gross premiums written		68	%		60	%		76	%		65	%		64	%		67	%

(1)	See Non-GAAP Financial Measures.


Insurance—North American		Page 6

ACE Limited

Segment Results—Consecutive Quarters

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

(Unaudited)

Insurance—North American P&C ⁽¹⁾


	1Q-13			4Q-12			3Q-12			2Q-12			1Q-12			Full Year 2012
Gross premiums written	$	1,819		$	2,236		$	1,921		$	2,134		$	1,829		$	8,120
Net premiums written		1,284			1,434			1,373			1,368			1,174			5,349
Net premiums earned		1,338			1,345			1,306			1,268			1,228			5,147
Losses and loss expenses		878			1,241			819			844			811			3,715
Policy acquisition costs		143			139			147			135			137			558
Administrative expenses		125			157			148			153			150			608

Underwriting income (loss)		192			(192	)		192			136			130			266
Net investment income		251			277			257			265			267			1,066
Net realized gains (losses)		26			26			(2	)		18			(1	)		41
Interest expense		(2	)		3			3			3			3			12
Other income (expense)		15			21			13			(2	)		9			41
Income tax expense (benefit)		94			(79	)		129			96			83			229

Net income		392			208			328			318			319			1,173
Net realized gains (losses)		26			26			(2	)		18			(1	)		41
Net realized gains (losses) in other income (expense) ⁽²⁾		14			21			17			5			15			58
Tax expense on net realized gains (losses)		9			10			2			10			4			26

Operating income ⁽²⁾	$	361		$	171		$	315		$	305		$	309		$	1,100

Combined ratio
Loss and loss expense ratio		65.6	%		92.2	%		62.7	%		66.6	%		66.0	%		72.2	%
Policy acquisition cost ratio		10.7	%		10.3	%		11.3	%		10.6	%		11.2	%		10.8	%
Administrative expense ratio		9.4	%		11.8	%		11.3	%		12.1	%		12.2	%		11.8	%

Combined ratio		85.7	%		114.3	%		85.3	%		89.3	%		89.4	%		94.8	%

Combined ratio excluding catastrophe losses and PPD ⁽²⁾		87.7	%		88.4	%		88.8	%								89.9	%
Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	—		$	(8	)	$	—		$	—		$	—		$	(8	)
Catastrophe losses	$	11		$	335		$	38		$	45		$	14		$	430
Unfavorable (favorable) prior period development (PPD) ⁽³⁾	$	(40	)	$	8		$	(80	)	$	(57	)	$	(51	)	$	(180	)
Loss and loss expense ratio excluding catastrophe losses and PPD ⁽²⁾		67.6	%		66.4	%		66.7	%		67.6	%		69.0	%		67.4	%
% Change versus prior year period
Net premiums written		9.3	%		6.0	%		20.3	%		10.3	%		0.6	%		9.2	%
Net premiums earned		8.9	%		9.0	%		7.1	%		1.6	%		-4.4	%		3.6	%
Other ratios
Net premiums written/gross premiums written		71	%		64	%		71	%		64	%		64	%		66	%

(1)	Effective Q1 2013, the company’s Insurance—North American business is presented in two distinct reporting segments: Insurance—North American P&C and Insurance—North American Agriculture. Prior year amounts have been adjusted to conform to the new segment presentation.

(2)	See Non-GAAP Financial Measures.

(3)	Q1 2013 favorable PPD is gross of a $2 million unfavorable profit commission adjustment.


Insurance—North American P&C		Page 7

ACE Limited

Segment Results—Consecutive Quarters

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

(Unaudited)

Insurance—North American Agriculture ⁽¹⁾


	1Q-13			4Q-12			3Q-12			2Q-12			1Q-12			Full Year 2012
Gross premiums written	$	249		$	292		$	1,424		$	722		$	183		$	2,621
Net premiums written		113			84			1,164			492			119			1,859
Net premiums earned		52			263			1,166			384			59			1,872
Losses and loss expenses		32			263			1,291			319			38			1,911
Policy acquisition costs		4			3			13			22			(10	)		28
Administrative expenses		5			(4	)		—			—			(3	)		(7	)

Underwriting income (loss)		11			1			(138	)		43			34			(60	)
Net investment income		6			6			6			6			7			25
Net realized gains (losses)		—			—			1			—			—			1
Interest expense		—			—			—			—			—			—
Other income (expense)		(8	)		(8	)		(8	)		(8	)		(8	)		(32	)
Income tax expense (benefit)		2			—			(48	)		11			8			(29	)

Net income (loss)		7			(1	)		(91	)		30			25			(37	)
Net realized gains (losses)		—			—			1			—			—			1
Net realized gains (losses) in other income (expense) ⁽²⁾		—			—			—			—			—			—
Tax expense on net realized gains (losses)		—			—			—			—			—			—

Operating income ⁽²⁾	$	7		$	(1	)	$	(92	)	$	30		$	25		$	(38	)

Combined ratio
Loss and loss expense ratio		61.9	%		100.3	%		110.7	%		83.0	%		64.2	%		102.1	%
Policy acquisition cost ratio		7.5	%		1.2	%		1.1	%		5.9	%		-17.7	%		1.5	%
Administrative expense ratio		9.9	%		-2.0	%		0.0	%		-0.2	%		-3.7	%		-0.4	%

Combined ratio		79.3	%		99.5	%		111.8	%		88.7	%		42.8	%		103.2	%

Combined ratio excluding PPD & certain items ⁽³⁾		85.6	%											88.1	%
Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe losses	$	—		$	4		$	1		$	4		$	2		$	11
Favorable prior period development (PPD)	$	(3	)	$	(1	)	$	—		$	(2	)	$	(9	)	$	(12	)
Loss and loss expense ratio excluding catastrophe losses ⁽²⁾		67.9	%		99.3	%		110.6	%		82.4	%		76.1	%		102.2	%
% Change versus prior year period
Net premiums written		-5.1	%		-69.0	%		9.2	%		-0.5	%		0.9	%		-4.7	%
Net premiums earned		-11.1	%		-38.6	%		7.9	%		7.8	%		-24.3	%		-3.6	%
Other ratios
Net premiums written/gross premiums written		45	%		29	%		82	%		68	%		65	%		71	%

(1)	Effective Q1 2013, the company’s Insurance—North American business is presented in two distinct reporting segments: Insurance—North American P&C and Insurance—North American Agriculture. Prior year amounts have been adjusted to conform to the new segment presentation.

(2)	See Non-GAAP Financial Measures.

(3)	Q1 2012 benefited from favorable prior period development, a favorable agent profit share commission adjustment, and higher administrative and operating expense reimbursements related to the 2011 crop year. This is a non-GAAP financial measure.


Insurance—North American Agriculture		Page 8

ACE Limited

Segment Results—Consecutive Quarters

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

(Unaudited)

Insurance—Overseas General


	1Q-13			4Q-12			3Q-12			2Q-12			1Q-12			Full Year 2012
Gross premiums written	$	2,073		$	1,925		$	1,841		$	1,952		$	1,984		$	7,702
Net premiums written		1,620			1,476			1,384			1,475			1,528			5,863
Net premiums earned		1,459			1,497			1,432			1,420			1,391			5,740
Losses and loss expenses		747			832			622			703			705			2,862
Policy acquisition costs		339			357			329			332			335			1,353
Administrative expenses		236			239			234			233			229			935

Underwriting income		137			69			247			152			122			590
Net investment income		132			135			127			128			131			521
Net realized gains (losses)		34			44			13			26			20			103
Interest expense		1			1			2			1			1			5
Other income (expense)		1			—			3			(6	)		—			(3	)
Income tax expense (benefit)		46			(33	)		77			51			38			133

Net income		257			280			311			248			234			1,073
Net realized gains (losses)		34			44			13			26			20			103
Net realized gains (losses) in other income (expense) ⁽¹⁾		6			1			2			(3	)		3			3
Tax expense on net realized gains (losses)		22			11			6			7			3			27

Operating income ⁽¹⁾	$	239		$	246		$	302		$	232		$	214		$	994

Combined ratio
Loss and loss expense ratio		51.2	%		55.5	%		43.4	%		49.6	%		50.7	%		49.8	%
Policy acquisition cost ratio		23.2	%		23.8	%		23.1	%		23.4	%		24.1	%		23.6	%
Administrative expense ratio		16.2	%		16.1	%		16.2	%		16.3	%		16.4	%		16.3	%

Combined ratio		90.6	%		95.4	%		82.7	%		89.3	%		91.2	%		89.7	%

Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	—		$	(8	)	$	—		$	—		$	—		$	(8	)
Catastrophe losses	$	21		$	65		$	4		$	5		$	2		$	76
Favorable prior period development (PPD)	$	(22	)	$	(30	)	$	(135	)	$	(39	)	$	(22	)	$	(226	)
Loss and loss expense ratio excluding catastrophe losses and PPD ⁽¹⁾		51.3	%		52.9	%		52.6	%		51.9	%		52.1	%		52.4	%
% Change versus prior year period
Net premiums written as reported		6.0	%		7.1	%		-1.0	%		2.2	%		8.4	%		4.2	%
Net premiums earned as reported		4.9	%		3.2	%		-2.6	%		0.3	%		8.8	%		2.2	%
Net premiums written constant $		6.3	%														7.7	%
Net premiums earned constant $		5.7	%														6.0	%
Other ratios
Net premiums written/gross premiums written		78	%		77	%		75	%		76	%		77	%		76	%

(1)	See Non-GAAP Financial Measures.


Insurance—Overseas General		Page 9

ACE Limited

Segment Results—Consecutive Quarters

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

(Unaudited)

Global Reinsurance


	1Q-13			4Q-12			3Q-12			2Q-12			1Q-12			Full Year 2012
Gross premiums written	$	294		$	149		$	310		$	332		$	279		$	1,070
Net premiums written		279			146			307			309			263			1,025
Net premiums earned		247			254			281			237			230			1,002
Losses and loss expenses		106			198			151			102			102			553
Policy acquisition costs		48			47			40			42			43			172
Administrative expenses		12			13			13			13			12			51

Underwriting income (loss)		81			(4	)		77			80			73			226
Net investment income		72			77			72			70			71			290
Net realized gains (losses)		20			12			(2	)		(17	)		13			6
Interest expense		1			1			1			1			1			4
Other income (expense)		8			8			5			(3	)		5			15
Income tax expense (benefit)		8			(2	)		11			—			6			15

Net income		172			94			140			129			155			518
Net realized gains (losses)		20			12			(2	)		(17	)		13			6
Net realized gains (losses) in other income (expense) ⁽¹⁾		8			8			4			(3	)		5			14
Tax expense (benefit) on net realized gains (losses)		—			—			1			—			—			1

Operating income ⁽¹⁾	$	144		$	74		$	139		$	149		$	137		$	499

Combined ratio
Loss and loss expense ratio		43.0	%		78.2	%		53.9	%		42.5	%		44.4	%		55.2	%
Policy acquisition cost ratio		19.3	%		18.3	%		14.1	%		17.8	%		18.7	%		17.1	%
Administrative expense ratio		5.0	%		5.2	%		4.7	%		5.8	%		5.2	%		5.2	%

Combined ratio		67.3	%		101.7	%		72.7	%		66.1	%		68.3	%		77.5	%

Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	—		$	9		$	2		$	—		$	—		$	11
Catastrophe losses	$	—		$	101		$	13		$	1		$	1		$	116
Favorable prior period development (PPD)	$	(5	)	$	(14	)	$	(21	)	$	(15	)	$	(11	)	$	(61	)
Loss and loss expense ratio excluding catastrophe losses and PPD ⁽¹⁾		44.8	%		45.6	%		57.7	%		48.3	%		48.7	%		50.4	%
% Change versus prior year period
Net premiums written as reported		6.1	%		12.0	%		22.2	%		9.4	%		-16.5	%		4.7	%
Net premiums earned as reported		7.3	%		2.3	%		16.8	%		-6.5	%		-11.5	%		0.0	%
Net premiums written constant $		4.8	%														5.3	%
Net premiums earned constant $		7.0	%														0.4	%
Other ratios
Net premiums written/gross premiums written		95	%		99	%		99	%		93	%		94	%		96	%

(1)	See Non-GAAP Financial Measures.


Global Reinsurance		Page 10

ACE Limited

Segment Results—Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Life


																Full Year
	1Q-13			4Q-12			3Q-12			2Q-12			1Q-12			2012
Gross premiums written	$	528		$	544		$	511		$	513		$	512		$	2,080
Net premiums written		502			517			488			486			488			1,979
Net premiums earned		477			489			480			474			473			1,916
Losses and loss expenses		157			148			164			151			148			611
Policy benefits ⁽¹⁾		131			142			130			102			147			521
(Gains) losses from fair value changes in separate account assets ⁽¹⁾		(4	)		(11	)		(14	)		14			(18	)		(29	)
Policy acquisition costs		80			90			80			88			76			334
Administrative expenses		85			91			81			78			78			328
Net investment income		63			65			63			62			61			251

Life underwriting income ⁽²⁾		91			94			102			103			103			402
Net realized gains (losses):
Mark-to-market on guaranteed living benefits derivative (net of related hedges)		78			138			(64	)		(397	)		197			(126	)
Foreign exchange gains (losses) and all other		49			51			(7	)		(24	)		34			54
Interest expense		4			3			3			3			3			12
Other income (expense) ⁽¹⁾		—			(11	)		—			(5	)		(9	)		(25	)
Income tax expense		13			14			14			19			11			58

Net income (loss)		201			255			14			(345	)		311			235
Net realized gains (losses)		127			189			(71	)		(421	)		231			(72	)
Net realized gains (losses) in other income (expense) ⁽³⁾		5			(7	)		(3	)		2			(5	)		(13	)
Tax expense (benefit) on net realized gains (losses)		1			1			(1	)		5			(1	)		4

Operating income ⁽³⁾	$	70		$	74		$	87		$	79		$	84		$	324

% Change versus prior year period
Net premiums written as reported		3.0	%		3.9	%		0.0	%		-1.2	%		11.9	%		3.4	%
Net premiums earned as reported		1.1	%		4.2	%		0.0	%		-1.9	%		11.3	%		3.1	%
Net premiums written constant $ ⁽⁴⁾		2.7	%														4.5	%
Net premiums earned constant $		0.8	%														4.2	%

(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.

(4)	Net premiums written and deposits breakdown:


			Constant $		Constant $
	1Q-13		1Q-12		% Change
Life excluding life reinsurance run-off products⁽³⁾⁽⁵⁾	$	630	$	535		17.8	%
Life reinsurance run-off products including variable annuity		74		85		-12.9	%

Total Life ⁽³⁾	$	704	$	620		13.5	%

(5)	Includes deposits collected on universal life and investment contracts of $202 million for Q1 2013 and $131 million for Q1 2012 on a constant-dollar basis. Consistent with GAAP, premiums collected on universal life and investment contracts are considered deposits and excluded from revenues.


Life		Page 11

ACE Limited

Loss Reserve Rollforward

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

(Unaudited)


	Unpaid Losses									Net Paid to
	Gross			Ceded			Net			Incurred Ratio
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
Losses and loss expenses incurred		2,851			732			2,119
Losses and loss expenses paid		(2,916	)		(893	)		(2,023	)		95	%
Other (incl. foreign exch. revaluation)		(332	)		(171	)		(161	)

Balance at June 30, 2012	$	36,850		$	10,986		$	25,864
Losses and loss expenses incurred		4,073			1,026			3,047
Losses and loss expenses paid		(3,078	)		(1,013	)		(2,065	)		68	%
Other (incl. foreign exch. revaluation)		355			163			192

Balance at September 30, 2012	$	38,200		$	11,162		$	27,038
Losses and loss expenses incurred		4,642			1,959			2,683
Losses and loss expenses paid		(4,913	)		(1,727	)		(3,186	)		119	%
Other (incl. foreign exch. revaluation)		17			5			12

Balance at December 31, 2012	$	37,946		$	11,399		$	26,547
Losses and loss expenses incurred		2,483			557			1,926
Losses and loss expenses paid		(2,987	)		(932	)		(2,055	)		107	%
Other (incl. foreign exch. revaluation)		(360	)		(106	)		(254	)

Balance at March 31, 2013	$	37,082		$	10,918		$	26,164

Add net recoverable on paid losses		—			612			(612	)

Balance including net recoverable on paid losses	$	37,082		$	11,530		$	25,552


Loss Reserve Rollforward		Page 12

ACE Limited

Reinsurance Recoverable Analysis

(in millions of U.S. dollars)

(Unaudited)

Net Reinsurance Recoverable by Division


	March 31			December 31
	2013			2012
Reinsurance recoverable on paid losses and loss expenses
Active operations	$	409		$	464
Brandywine and Other Run-off		284			303

Total	$	693		$	767

Reinsurance recoverable on unpaid losses and loss expenses
Active operations	$	9,786		$	10,199
Brandywine and Other Run-off		1,484			1,551

Total	$	11,270		$	11,750

Gross reinsurance recoverable
Active operations	$	10,195		$	10,663
Brandywine and Other Run-off		1,768			1,854

Total	$	11,963		$	12,517

Provision for uncollectible reinsurance ⁽¹⁾
Active operations	$	(274	)	$	(277	)
Brandywine and Other Run-off		(159	)		(162	)

Total	$	(433	)	$	(439	)

Net reinsurance recoverable
Active operations	$	9,921		$	10,386
Brandywine and Other Run-off		1,609			1,692

Total	$	11,530		$	12,078

(1)	The provision for uncollectible reinsurance is based on a default analysis applied to gross reinsurance recoverables, net of approximately $2.5 billion of collateral.


Reinsurance Recoverable		Page 13

ACE Limited

Investment Portfolio

(in millions of U.S. dollars)

(Unaudited)


	March 31					December 31
	2013					2012
Market Value
Fixed maturities available for sale	$	47,947				$	47,306
Fixed maturities held to maturity		7,213					7,633
Short-term investments		2,893					2,228

Total	$	58,053				$	57,167

Asset Allocation by Market Value
Treasury	$	2,750		5	%	$	2,794		5	%
Agency		2,090		4	%		2,024		4	%
Corporate and asset-backed		19,123		33	%		18,983		33	%
Mortgage-backed		12,064		21	%		12,589		22	%
Municipal ⁽¹⁾		4,532		7	%		3,872		7	%
Non-U.S.		14,601		25	%		14,677		25	%
Short-term investments		2,893		5	%		2,228		4	%

Total	$	58,053		100	%	$	57,167		100	%


Note: Insured municipal bonds represent $749 million, or 17% of our municipal bond holdings.

Credit Quality by Market Value
AAA	$	9,948		17	%	$	9,285		16	%
AA		22,036		38	%		22,014		39	%
A		11,150		19	%		10,760		19	%
BBB		6,596		11	%		6,591		12	%
BB		4,010		7	%		4,146		7	%
B		3,956		7	%		3,846		6	%
Other		357		1	%		525		1	%

Total	$	58,053		100	%	$	57,167		100	%

Cost/Amortized Cost
Fixed maturities available for sale	$	45,470				$	44,666
Fixed maturities held to maturity		6,867					7,270
Short-term investments		2,893					2,228

Subtotal		55,230					54,164
Equity securities		781					707
Other investments		2,544					2,465

Total	$	58,555				$	57,336

Avg. duration of fixed maturities		4.0 years					3.9 years
Avg. market yield of fixed maturities ⁽²⁾		2.3	%				2.3	%
Avg. credit quality ⁽³⁾		A/Aa					A/Aa
Avg. yield on invested assets⁽⁴⁾		3.7	%				3.8	%

(1)	The rating of the municipal portfolio is AA with 7% 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, excluding non-recurring items, divided by average cost of fixed maturities and other investments, and average market value of equity securities. Net investment income includes private equity distributions of $24 million and $29 million for Q1 2013 and Q4 2012, respectively.


Investments		Page 14

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, 2013
Agency residential mortgage-backed (RMBS)	$	—	$	10,274	$	—	$	—	$	—	$	10,274
Non-agency RMBS		70		15		33		26		213		357
Commercial mortgage-backed		1,403		13		10		7		—		1,433

Total mortgage-backed securities at market value	$	1,473	$	10,302	$	43	$	33	$	213	$	12,064


	S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
Amortized Cost at March 31, 2013
Agency RMBS	$	—	$	9,901	$	—	$	—	$	—	$	9,901
Non-agency RMBS		69		14		32		25		220		360
Commercial mortgage-backed		1,338		11		9		6		—		1,364

Total mortgage-backed securities at amortized cost	$	1,407	$	9,926	$	41	$	31	$	220	$	11,625

Mortgage-backed securities total $12.1 billion, are rated predominantly AA and comprise 21% of the fixed income portfolio. This compares to a 31% 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 $10.3 billion and represent 97% of the residential mortgage-backed portfolio.

Non-agency residential mortgage-backed securities are backed by prime collateral, and broadly diversified in over 33,000 loans. The portfolio’s original loan-to-value ratio is approximately 65% with an average FICO score of 731. With this conservative loan-to-value ratio and subordinated collateral of 5%, the cumulative 5-year foreclosure rate would have to rise to 17% before principal is significantly impaired. The foreclosure rate of ACE’s non-agency RMBS portfolio at March 31, 2013 was 6%.

Commercial mortgage-backed securities of $1.4 billion are rated predominantly AAA, broadly diversified with over 13,000 loans and seasoned with 31% of the portfolio issued before 2006 and 52% of the portfolio issued after 2009. The average loan-to-value ratio is approximately 64% with a debt service coverage ratio in excess of 1.9 and weighted average subordinated collateral of 30%. The cumulative foreclosure rate would have to rise to 43% before principal is impaired. The foreclosure rate of ACE’s commercial mortgage-backed securities portfolio at March 31, 2013 was 1.7%.


Investments 2		Page 15

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, 2013


	S&P Credit Rating
	Investment Grade
	AAA		AA		A		BBB		Total
Asset-backed	$	613	$	67	$	1	$	—	$	681
Banks		—		—		2,412		350		2,762
Basic Materials		—		—		88		246		334
Communications		—		—		789		573		1,362
Consumer, Cyclical		—		88		282		241		611
Consumer, Non-Cyclical		63		506		943		591		2,103
Diversified Financial Services		—		54		218		106		378
Energy		35		27		217		683		962
Industrial		—		309		352		220		881
Utilities		—		12		555		505		1,072
All Others		49		144		436		592		1,221

Total	$	760	$	1,207	$	6,293	$	4,107	$	12,367

U.S. Investment Grade Corporate Fixed Income Portfolio

The average credit quality of ACE’s U.S. 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, 2013


	S&P Credit Rating
	Below Investment Grade
	BB		B		CCC		Total
Asset-backed	$	—	$	4	$	18	$	22
Banks		—		3		—		3
Basic Materials		142		167		6		315
Communications		448		529		27		1,004
Consumer, Cyclical		537		534		35		1,106
Consumer, Non-Cyclical		570		858		26		1,454
Diversified Financial Services		74		107		9		190
Energy		681		398		15		1,094
Industrial		390		418		10		818
Utilities		258		14		—		272
All Others		177		296		5		478

Total	$	3,277	$	3,328	$	151	$	6,756

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 750 issuers with our largest current issuer exposure at $90 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 16

ACE Limited

Investment Portfolio—4

(in millions of U.S. dollars)

(Unaudited)

Non-U.S. Fixed Income Portfolio

March 31, 2013


	Market Value by S&P Credit Rating												Amortized Cost
	AAA		AA		A		BBB		BB and below		Total		Amortized Cost
United Kingdom	$	1,054	$	—	$	—	$	—	$	—	$	1,054	$	1,019
Canada		908		—		—		—		—		908		883
Republic of Korea		—		531		63		—		—		594		529
Germany		432		—		—		—		—		432		423
France		—		323		—		—		—		323		313
Japan		—		321		—		—		—		321		320
Kingdom of Thailand		—		—		194		50		—		244		240
Federative Republic of Brazil		—		—		—		243		—		243		233
Province of Ontario		—		212		—		—		—		212		202
Province of Quebec		—		—		188		—		—		188		178
Commonwealth of Australia		186		1		—		—		—		187		176
State of Queensland		58		88		—		—		—		146		138
Federation of Malaysia		—		—		129		—		—		129		129
United Mexican States		—		—		62		58		—		120		113
Swiss Confederation		116		—		—		—		—		116		111
People’s Republic of China		67		48		1		—		—		116		112
State of New South Wales		85		—		—		—		—		85		81
Taiwan		—		82		2		—		—		84		83
Socialist Republic of Vietnam		—		—		—		—		74		74		69
Russian Federation		—		—		—		64		—		64		63
State of Victoria		53		—		—		—		—		53		50
Republic of Indonesia		—		—		—		—		50		50		49
Republic of Colombia		—		—		—		49		—		49		48
Province of British Columbia		41		—		—		—		—		41		39
Dominion of New Zealand		—		38		1		—		—		39		39
Other Non-U.S. Government		207		235		95		47		150		734		715

Non-U.S. Government Securities	$	3,207	$	1,879	$	735	$	511	$	274	$	6,606	$	6,355
Eurozone Non-U.S. Corporate ⁽¹⁾		545		357		502		480		406		2,290		2,158
Other Non-U.S. Corporate		712		600		2,396		1,391		606		5,705		5,377

	$	4,464	$	2,836	$	3,633	$	2,382	$	1,286	$	14,601	$	13,890

(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.

75% of ACE’s non-U.S. fixed income portfolios are denominated in G7 currencies.

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


Investments 4		Page 17

ACE Limited

Investment Portfolio—5

(in millions of U.S. dollars)

(Unaudited)

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

March 31, 2013


	Market Value by Industry										Amortized Cost
	Bank		Financial		Industrial		Utility		Total		Amortized Cost
Netherlands	$	182	$	144	$	339	$	142	$	807	$	754
France		116		35		179		157		487		463
Luxembourg		10		5		229		72		316		296
Germany		214		—		60		5		279		267
Euro Supranational		175		—		—		—		175		167
Ireland		12		1		105		12		130		120
Belgium		10		—		30		—		40		37
Finland		16		—		9		3		28		27
Austria		18		—		3		—		21		21
Spain		6		—		—		—		6		6
Portugal		—		—		1		—		1		—

Eurozone Non-U.S. Corporate Securities	$	759	$	185	$	955	$	391	$	2,290	$	2,158

Note: ACE has no investments in Greece and Italy.

Top 10 Exposures—Eurozone Banks (Excluding United Kingdom)


March 31, 2013	Market Value		Amortized Cost		Rating
European Investment Bank	$	142	$	135	AAA
KFW		140		134	AAA
Rabobank Nederland NV		107		98	AA-
Bank Nederlandse Gemeenten		39		38	AAA
BNP Paribas SA		33		31	A+
Credit Agricole Groupe		33		32	A
Groupe BPCE		24		23	A
Erste Abwicklungsanstalt		24		23	AA-
EUROFIMA		18		17	AA+
Societe Generale SA		17		17	A

Top 10 Exposures—Eurozone Corporate (Excluding United Kingdom)


March 31, 2013	Market Value		Amortized Cost		Rating
Electricite de France SA	$	91	$	86	A+
ING Groep NV		81		77	A
Intelsat SA		76		71	B
Royal Dutch Shell PLC		74		70	AA
Deutsche Telekom AG		64		58	BBB+
LyondellBasell Industries NV		57		49	BBB-
France Telecom SA		41		39	A-
General Electric Co		34		30	AA+
NIBC Holding NV		33		32	BBB-
Porsche Automobil Holding SE		31		31	A-


Investments 5		Page 18

ACE Limited

Investment Portfolio—6

(in millions of U.S. dollars)

(Unaudited)

Investment portfolio

Top 25 Exposures—Fixed Maturity Investments


	March 31, 2013	Market Value		Rating
1	JP Morgan Chase & Co	$	508	A
2	Goldman Sachs Group Inc		418	A-
3	General Electric Co		375	AA+
4	Citigroup Inc		345	A-
5	Bank of America Corp		304	A-
6	Morgan Stanley		282	A-
7	Wells Fargo & Co		265	A+
8	Verizon Communications Inc		260	A-
9	AT&T INC		218	A-
10	HSBC Holdings Plc		214	A+
11	Comcast Corp		187	A-
12	Mondelez International Inc		159	BBB
13	Anheuser-Busch InBev NV		143	A
14	BP Plc		135	A
15	Philip Morris International Inc		134	A
16	Duke Energy Corp		128	BBB+
17	Time Warner Cable Inc		125	BBB
18	Pfizer Inc		123	AA
19	Barclays Plc		118	A
20	Enterprise Products Partners LP		117	BBB+
21	Credit Suisse Group		113	A
22	Royal Bank of Scotland Group Plc		113	A-
23	American Express Co		113	BBB+
24	Rabobank Nederland NV		107	AA-
25	UBS AG		105	A


Investments 6		Page 19

ACE Limited

Net Realized and Unrealized Gains (Losses)

(in millions of U.S. dollars)

(Unaudited)


	Three months ended March 31, 2013
	Net Realized			Net Unrealized
	Gains			Gains			Net
	(Losses)⁽¹⁾			(Losses)			Impact
Fixed maturities	$	36		$	(191	)	$	(155	)
Fixed income derivatives		18			—			18

Total fixed maturities		54			(191	)		(137	)

Public equity		(1	)		14			13
Private equity		28			25			53

Total equity		27			39			66

Mark-to-market gains from derivative transactions ⁽²⁾		78			—			78
Foreign exchange gains ⁽²⁾		76			—			76
Other		—			1			1
Partially-owned entities ⁽³⁾		4			—			4
Income tax expense (benefit)		32			(56	)		(24	)

Net gains (losses)	$	207		$	(95	)	$	112

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

(2)

Includes $78 million of realized gains from variable annuity reinsurance for the quarter which comprises $328 million in mark-to-market gains from derivative transactions, net of $250 million of losses on applicable hedges. The variable annuity reinsurance foreign exchange gains for the quarter were $41 million.

(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, 2012
	Net Realized			Net Unrealized
	Gains			Gains		Net
	(Losses)⁽⁴⁾			(Losses)		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 from derivative transactions ⁽⁵⁾		192			—		192
Foreign exchange losses ⁽⁵⁾		(5	)		—		(5	)
Other		(2	)		4		2
Partially-owned entities ⁽⁶⁾		(7	)		—		(7	)
Income tax expense		6			49		55

Net gains	$	272		$	243	$	515

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

(5)

Includes $197 million of realized gains from variable annuity reinsurance for the quarter which comprises $428 million in mark-to-market gains from derivatives transactions, net of $231 million of losses on applicable hedges. The variable annuity reinsurance foreign exchange gains for the quarter were $34 million.

(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 20

ACE Limited

Capital Structure

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

(Unaudited)


	March 31			December 31			December 31
	2013			2012			2011
Total short-term debt ⁽¹⁾	$	1,402		$	1,401		$	1,251
Total long-term debt⁽²⁾		4,307			3,360			3,360

Total debt	$	5,709		$	4,761		$	4,611

Total trust preferred securities	$	309		$	309		$	309

Total shareholders’ equity	$	27,942		$	27,531		$	24,332

Total capitalization	$	33,960		$	32,601		$	29,252
Tangible capital ⁽³⁾	$	29,051		$	27,626		$	24,453
Leverage ratios
Debt/ total capitalization		16.8	%		14.6	%		15.8	%
Debt plus trust preferred securities/ total capitalization		17.7	%		15.6	%		16.8	%
Debt/ tangible capital		19.7	%		17.2	%		18.9	%
Debt plus trust preferred securities/ tangible capital		20.7	%		18.4	%		20.1	%

Note: As of March 31, 2013, there was $1.4 billion usage of credit facilities on a total commitment of $1.9 billion.

(1)	Repurchase agreements in the amount of $608 million matured during the quarter, and there were new repurchase agreements in the amount of $609 million.

(2)	During Q1 2013, we issued $950 million par value of 10-year and 30-year senior debt.

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


Capital Structure		Page 21

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
	2013			2012
Numerator
Operating income to common shares ⁽¹⁾	$	746		$	701
Net realized gains (losses), net of income tax		207			272

Net income	$	953		$	973

Rollforward of Common Shares Outstanding
Shares—beginning of period		340,321,534			336,927,276
Repurchase of shares		(1,808,300	)		(100,000	)
Shares issued, excluding option exercises		947,536			1,036,709
Issued for option exercises		584,486			789,397

Shares—end of period		340,045,256			338,653,382

Denominator
Weighted average shares outstanding		340,778,142			338,567,341
Effect of other dilutive securities		3,128,226			3,123,641

Adj. wtd. avg. shares outstanding and assumed conversions		343,906,368			341,690,982

Basic earnings per share
Operating income ⁽¹⁾	$	2.19		$	2.07
Net realized gains (losses), net of income tax		0.61			0.80

Net income	$	2.80		$	2.87

Diluted earnings per share
Operating income ⁽¹⁾	$	2.17		$	2.05
Net realized gains (losses), net of income tax		0.60			0.79

Net income	$	2.77		$	2.84

(1)	See Non-GAAP Financial Measures.


Earnings per share		Page 22

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 25.

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.

Combined ratio excluding catastrophe losses and PPD is a non-GAAP financial measure. The ratio numerator includes losses and loss expenses, policy acquisition costs, and administrative expenses adjusted to exclude catastrophe losses and PPD. The ratio denominator includes net premiums earned adjusted to exclude the amount of reinstatement premiums (expensed) collected and net earned premium adjustments on loss sensitive policies. 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.

Life net premiums written and deposits collected, excluding life reinsurance run-off products, is a non-GAAP financial measure. Deposits collected on universal life and investment contracts (life deposits) are properly not reflected as revenues in our consolidated statements of operations in accordance with GAAP. However, we include life deposits in presenting growth in our Life business because new life deposits are an important component of production and key to our efforts to grow our business. However, we exclude results associated with our life reinsurance run-off products as there is no new life reinsurance business currently being written.

Operating return on equity (ROE) or ROE calculated using income excluding net realized gains (losses) is an annualized 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. Operating ROE 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.

Operating income or Income excluding net realized gains (losses), net of tax, is a common performance measurement for insurance companies and non-GAAP financial 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. Operating income or Income excluding net realized gains (losses) should not be viewed as a substitute for net income determined in accordance with GAAP.

Operating effective tax rate is a non-GAAP financial measure. The numerator excludes tax on net realized gains (losses). The denominator excludes net realized gains (losses), before tax. We exclude net realized gains (losses) and the related tax impact because these amounts are heavily influenced by, and fluctuate in part according to, the availability of market opportunities. Operating effective tax rate should not be viewed as a substitute for effective tax rate determined in accordance with GAAP.

The following table presents the reconciliation of Net income to Operating income:


													Full Year
	1Q-13		4Q-12		3Q-12			2Q-12			1Q-12		2012
Net income, as reported	$	953	$	765	$	640		$	328		$	973	$	2,706
Net realized gains (losses)		206		272		(60	)		(394	)		260		78
Net realized gains (losses) in other income (expense) ⁽¹⁾		33		23		20			1			18		62
Income tax expense on net realized gains (losses)		32		22		8			22			6		58

Operating income	$	746	$	492	$	688		$	743		$	701	$	2,624

(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 23

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 operating effective tax rate:


																Full Year
	1Q-13			4Q-12			3Q-12			2Q-12			1Q-12			2012
Tax expense (benefit), as reported	$	122		$	(135	)	$	147		$	148		$	110		$	270
Tax expense on net realized gains (losses)		32			22			8			22			6			58

Tax expense (benefit), adjusted	$	90		$	(157	)	$	139		$	126		$	104		$	212

Income before tax, as reported	$	1,075		$	630		$	787		$	476		$	1,083		$	2,976
Less: realized gains (losses)		206			272			(60	)		(394	)		260			78
Less: realized gains (losses) in other income (expense)		33			23			20			1			18			62

Operating income before tax	$	836		$	335		$	827		$	869		$	805		$	2,836

Effective tax rate		11.3	%		-21.4	%		18.7	%		31.0	%		10.2	%		9.1	%
Adjustment for tax impact of net realized gains (losses)		-0.5	%		-25.4	%		-2.0	%		-16.4	%		2.8	%		-1.6	%

Operating effective tax rate		10.8	%		-46.8	%		16.7	%		14.6	%		13.0	%		7.5	%


The following table presents the reconciliation of ROE to Operating ROE:

																Full Year
	1Q-13												1Q-12			2012
Net income	$	953											$	973		$	2,706
Operating income	$	746											$	701		$	2,624
Equity—beginning of period, as reported	$	27,531											$	24,332		$	24,332
Less: unrealized gains (losses) on investments, net of deferred tax		2,633												1,715			1,715

Equity—beginning of period, as adjusted	$	24,898											$	22,617		$	22,617

Equity—end of period, as reported	$	27,942											$	25,431		$	27,531
Less: unrealized gains (losses) on investments, net of deferred tax		2,538												1,958			2,633

Equity—end of period, as adjusted	$	25,404											$	23,473		$	24,898

Average equity, as reported	$	27,737											$	24,882		$	25,932
Average equity, as adjusted	$	25,151											$	23,045		$	23,758
Operating ROE		11.9	%											12.2	%		11.0	%
ROE		13.7	%											15.6	%		10.4	%


Reconciliation Non-GAAP 2		Page 24

ACE Limited

Book Value and Book Value per Common Share

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

(Unaudited)

Reconciliation of Book Value per Common Share


	March 31			December 31			March 31
	2013			2012			2012
Shareholders’ equity	$	27,942		$	27,531		$	25,431
Less: goodwill and other intangible assets		4,909			4,975			4,860

Numerator for tangible book value per share	$	23,033		$	22,556		$	20,571

Book value—% change over prior quarter		1.5	%		2.1	%		4.5	%
Tangible book value—% change over prior quarter		2.1	%		2.7	%		5.3	%
Denominator		340,045,256			340,321,534			338,653,382

Book value per common share	$	82.17		$	80.90		$	75.09
Tangible book value per common share	$	67.74		$	66.28		$	60.74
Reconciliation of Book Value
Shareholders’ equity, beginning of quarter	$	27,531		$	26,963		$	24,332
Operating income		746			492			701
Net realized gains (losses), net of tax		207			273			272
Net unrealized gains (losses), net of tax		(95	)		(70	)		243
Repurchase of shares		(154	)		—			(7	)
Dividend declared on common shares		(168	)		(168	)		(200	)
Cumulative translation, net of tax		(156	)		(37	)		56
Pension liability		14			(20	)		(1	)
Other⁽¹⁾		17			98			35

	$	27,942		$	27,531		$	25,431

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


Reconciliation Book Value		Page 25

ACE Limited

Glossary

ACE Limited Consolidated comprises all segments including Corporate and Other.

Operating return on equity (ROE) or ROE calculated using income excluding net realized gains (losses): Operating income or 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.

Operating effective tax rate: 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 26

Chubb Ltd - FORM 8-K - EX-99.2 - April 22, 2013

Attached files

Chubb Ltd Reports