8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant To Section 13 or 15 (d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)—October 28, 2003

ACE LIMITED

(Exact name of registrant as specified in its charter)

Cayman Islands	1-11778	98-0091805
(State or other jurisdiction)	(Commission File Number)	(I.R.S. Employer of Incorporation Identification No.)

ACE Global Headquarters

17 Woodbourne Avenue

Hamilton HM 08 Bermuda

(Address of principal executive offices)

Registrant’s telephone number, including area code: (441) 295-5200

Not applicable

(Former name or former address, if changed since last report)

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

(c)  Exhibits

Exhibit Number	Description
99.1	Press release, dated October 28, 2003, reporting third quarter results
99.2	Third quarter Financial Supplement

Item 12. Results of Operations and Financial Condition

On October 28, 2003, ACE Limited issued a press release reporting its third quarter 2003 results and the availability of its third quarter financial supplement. The press release and the financial supplement are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively, and are hereby incorporated herein by reference.

In accordance with general instruction B.6 of Form 8-K, the information in this report, including exhibits, is furnished pursuant to Item 12 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ACE LIMITED
By:	/s/    Philip V. Bancroft
	Philip V. Bancroft Chief Financial Officer

DATE: October 28, 2003

EXHIBIT INDEX

Number	Description	Method of Filing
99.1	Press release, dated October 28, 2003, reporting third quarter results	Furnished herewith
99.2	Third quarter Financial Supplement	Furnished herewith

EX-99.1

Exhibit 99.1

[LOGO]	ACE Limited ACE Global Headquarters 17 Woodbourne Avenue Bermuda Hamilton HM 08 Bermuda	PO Box HM 1015 Hamilton HM DX Bermuda 441 295-5200 main 441 292-8675 fax www.acelimited.com	News               Release
FOR IMMEDIATE RELEASE
		Investor Contact:	Helen M. Wilson (441) 299-9283
		Media Contact:	Anna Lowry (441) 278-6683

ACE LIMITED REPORTS THIRD QUARTER RESULTS

HAMILTON, Bermuda, October 28, 2003—ACE Limited (NYSE:ACE) today reported that fully diluted net income per share totaled $1.22, which included after-tax net realized gains of $51 million for the quarter. This compared with a net loss of $0.24 per share for the quarter a year ago after considering $205 million in net realized losses. Income excluding net realized gains (losses) for the third quarter of 2003 was up 105% to a record $304 million, or $1.04 per share, compared with $148 million or $0.53 per share for the same quarter last year. ⁽¹⁾

Net premiums written increased 4% to $2.3 billion for the quarter. Out of total net premiums written, consolidated property and casualty increased by 27%, while Financial Services declined 78% reflecting the erratic nature of production in this segment. Most of this decline was due to the absence of new loss portfolio transfer and equity CDO premium for the quarter.

Brian Duperreault, Chairman and Chief Executive Officer of ACE Limited commented, “This was another excellent quarter for our Company that once again demonstrated the growing strength of our organization, our global presence and diversified product capability. ACE recorded increased income before net realized gains (losses) in every operating segment for the quarter. We remain optimistic about business conditions for the balance of the year and beyond.”

Other operating highlights were as follows:

• The P&C combined ratio was 91.6% for the quarter compared with 98.0% a year ago

• Current quarter catastrophe losses totaled $42 million or 1.9% of P&C earned premiums for the quarter, compared with $100 million, or 6.7% of P&C earned premiums in the comparable quarter of 2002

• Operating cash flow amounted to $1.1 billion for the quarter

• Net investment income increased 9% to $216 million

• Diluted book value per ordinary share increased to $27.76 from $24.16 at December 30, 2002, up 15% ⁽²⁾

Shareholders’ equity is $8.3 billion, an increase of 31% from December 31, 2002. Tangible equity amounted to $5.6 billion, a gain of 53% in the first nine months. Total capital resources were $10.7 billion as of September 30, 2003. ACE’s debt to total capital ratio improved to 17.7%. Income before net realized gains as a percent of average equity, including the application of FAS 115, on an annualized basis totaled 15.2% for the quarter, and 16.8 % excluding FAS 115.

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Financial results improved over the prior year’s results for each segment; details are available in the financial supplement. Key items include:

• Insurance-North American: Net premiums written rose 23% in the quarter and the combined ratio was 91.9% reflecting the positive contributions made by the major business units.

• Insurance-Overseas General: Net premiums written were up 26% as reported and 19% excluding the effect of foreign exchange. The foreign exchange impact on earnings was minimal. The segment’s combined ratio improved to 92.9%. We are experiencing particularly strong results in our European and Asia Pacific operations.

• Global Reinsurance: Net premiums written were up 66%, a result of our continued strategy to diversify our reinsurance operations into a multi-line reinsurer. This segment had an excellent combined ratio of 75.0% in the quarter. The company is developing its casualty reinsurance market with segment net written premium year-to-date of $1 billion. We incurred catastrophe losses of $12 million in the quarter.

• Financial Services: Net premiums written were $105 million in the third quarter of 2003, principally arising from the Financial Guaranty business. Income excluding net realized gains (losses) was up 19% in the quarter. The segment had a $26 million pre-tax realized gain on its FAS 133 mark-to-market and reported a combined ratio of 89.5% for the third quarter.

Please refer to the ACE Financial Supplement September 30, 2003, which is posted on the Company’s website, for more detailed information on individual segment performance, together with additional disclosure on reinsurance recoverable, loss reserves, financial guaranty portfolio, investment portfolio and capital structure. ACE’s website reference (url) is http://media.corporate-ir.net/media_files/nys/ace/reports fin_supp_september_30_2003.xls. (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser’s URL address field.)

ACE Limited (NYSE: ACE) will host its third quarter earnings conference call and webcast on Wednesday, October 29, 2003 beginning at 8:00 a.m. EST. The call is available via live and archived webcast at www.acelimited.com or by dialing 1-973-582-2745. Please refer to our website in the “Investor Information, Calendar of Events” for details. A replay of the call will be available from Wednesday, October 29, 2003 until Wednesday, November 12, 2003 at 5:00 p.m. EST. To listen to the replay, dial: 1-877-519-4471 (in the United States) or 1-973-341-3080 (international); passcode 4224312.

The ACE Group of Companies is a global leader in insurance and reinsurance serving a diverse group of clients. A component of the Standard & Poor’s 500 stock index, ACE Group conducts its business on a worldwide basis with operating subsidiaries in nearly 50 countries. Additional information can be found at: http://www.acelimited.com.

¹Income (loss) excluding net realized gains (losses) on investments and the tax effect of net realized gains (losses) on investments is a common performance measurement. 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) on investments because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the availability of market opportunities. This measure should not be viewed as a substitute for net income determined in accordance with generally accepted accounting principles (GAAP).

²Diluted book value per ordinary share is ordinary shareholders’ equity and net proceeds from assumed conversions of outstanding in-the-money options divided by the sum of shares outstanding and the number of options assumed issued.

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Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995:

Any forward-looking statements made in this press release reflect the Company’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, the Company’s forward-looking statements could be affected by competition, pricing and policy term trends, the levels of new and renewal business achieved, market acceptance, changes in demand, the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, the impact of aggregate policy coverage limits, the impact of bankruptcies of various asbestos producers and related businesses, new theories of liability, judicial and legislative developments, litigation tactics, the amount and timing of reinsurance recoverable, actual market developments, rating agency action, possible terrorism or the outbreak and effects of war and economic, political, regulatory, insurance and reinsurance business conditions, as well as management’s response to these factors, and other factors identified in the Company’s filings with the Securities and Exchange Commission. 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. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

(tables to follow)

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ACE Limited

Summary Consolidated Balance Sheets

(in millions of U.S. dollars)

	September 30 2003		December 31 2002
	(Unaudited)		(Audited)
Assets
Total investments and cash	$	22,085	$	18,324
Reinsurance recoverable		14,032		13,991
Insurance and reinsurance balances receivable		2,821		2,654
Other assets		8,296		8,482
Total assets	$	47,234	$	43,451
Liabilities
Unpaid losses and loss expenses	$	25,637	$	24,315
Unearned premiums		6,243		5,586
Other liabilities		7,008		6,850
Total liabilities	$	38,888	$	36,751
Commitments and contingencies
Mezzanine equity	$	—	$	311
Shareholders’ equity
Total shareholders’ equity	$	8,346	$	6,389
Total liabilities, mezzanine equity and shareholders’ equity	$	47,234	$	43,451
Diluted book value per ordinary share (2)	$	27.76	$	24.16

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ACE Limited

Summary Consolidated Financial Data

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

(Unaudited)

	Three Months Ended September 30						Nine Months Ended September 30
	2003			2002			2003			2002
Gross premiums written	$	3,451		$	3,528		$	10,969		$	9,575
Net premiums written		2,306			2,223			7,642			6,084
Net premiums earned		2,397			1,925			6,775			4,861
Losses and loss expenses		1,519			1,328			4,261			3,142
Life and annuity benefits		45			60			137			106
Policy acquisition costs		343			253			973			685
Administrative expenses		293			250			840			678
Underwriting income		197			34			564			250
Net investment income		216			199			633			600
Other income (expense)		(3	)		(15	)		(8	)		(22	)
Interest expense		45			48			133			146
Income tax expense		61			22			187			89
Income excluding net realized gains (losses) (1)	$	304		$	148		$	869		$	593
Net realized gains (losses)		57			(235	)		124			(401	)
Tax effect of net realized gains (losses)		(6	)		30			(20	)		53
Net income		355			(57	)		973			245
Preference shares dividend		(11	)		—			(15	)		—
FELINE PRIDE dividend		—			(6	)		(10	)		(19	)
Net income available to holders of Ordinary Shares	$	344		$	(63	)	$	948		$	226
Diluted earnings per share:
Income excluding net realized gains (losses) (1)	$	1.04		$	0.53		$	3.08		$	2.13
Net income	$	1.22		$	(0.24	)	$	3.46		$	0.84
Weighted average diluted shares outstanding		281,890,236			268,262,197			274,206,084			270,195,775
Loss and loss expense ratio		64.6	%		71.0	%		64.2	%		66.1	%
Policy acquisition cost ratio		14.4	%		13.4	%		14.5	%		14.1	%
Administrative expense ratio		12.4	%		13.3	%		12.6	%		14.2	%
Combined ratio		91.4	%		97.7	%		91.3	%		94.4	%

Ratios exclude life reinsurance business

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ACE Limited

Consolidated Supplemental Segment Information

(in millions of U.S. dollars)

(Unaudited)

	Three Months Ended September 30						Nine Months Ended September 30
	2003			2002			2003			2002
Gross Premiums Written
Insurance—North American	$	1,819		$	1,783		$	5,131		$	4,476
Insurance—Overseas General		1,200			1,008			3,850			2,911
Global Reinsurance*		325			244			1,231			889
Financial Services		107			493			757			1,299
Total	$	3,451		$	3,528		$	10,969		$	9,575
Net Premiums Written
Insurance—North American	$	1,065		$	869		$	2,967		$	2,100
Insurance—Overseas General		872			690			2,769			1,920
Global Reinsurance*		264			188			1,143			795
Financial Services		105			476			763			1,269
Total	$	2,306		$	2,223		$	7,642		$	6,084
Net Premiums Earned
Insurance—North American	$	990		$	654		$	2,663		$	1,733
Insurance—Overseas General		882			647			2,556			1,722
Global Reinsurance*		320			251			927			571
Financial Services		205			373			629			835
Total	$	2,397		$	1,925		$	6,775		$	4,861
Income (Loss) Excluding Net Realized Gains (Losses)(1)
Insurance—North American	$	125		$	113		$	379		$	333
Insurance—Overseas General		86			(16	)		221			44
Global Reinsurance*		95			66			266			224
Financial Services		57			48			174			152
Corporate		(59	)		(63	)		(171	)		(160	)
Total	$	304		$	148		$	869		$	593

* Includes both property and casualty reinsurance and life reinsurance

# # #

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EX-99.2

Exhibit 99.2

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ACE Limited

Financial Supplement

September 30, 2003

Investor Contact Helen M. Wilson Phone: (441) 299-9283 Fax: (441) 292-8675 email: investorrelations@ace.bm This report is for informational purposes only. It should be read in conjuction 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.

Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995:

Any forward-looking statements made in this financial supplement reflect the Company’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, the Company’s forward-looking statements concerning reserves and recoverables could be affected by the frequency of unpredictable catastrophic events, actual loss experience which differs from the Company’s assumptions, uncertainties in the reserving or settlement process, the impact of aggregate policy coverage limits, the impact of bankruptcies of various asbestos producers and related business, new theories of liability, judicial and legislative developments, litigation tactics, credit developments among reinsurers and other factors identified in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2002, the Company’s quarterly reports on Form 10-Q for the quarters ended March 31, 2003 and June 30, 2003 and in the Company’s earnings press release, which are available on the Company’s website. 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. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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ACE Limited

Financial Supplement Table of Contents

		Page
I.	Financial Highlights
	—  Consolidated Financial Highlights	1
II.	Consolidated Results
	—  Consolidated Results—Consecutive Quarters	2-3
	—  Computation of Basic and Diluted Earnings Per Share	4
	—  Summary Consolidated Balance Sheets	5
	—  Consolidated Premiums by Line of Business	6
	—  Consolidating Statement of Operations	7-8
III.	Segment Results
	—  Insurance-North American	9
	—  Insurance-Overseas General	10-11
	—  Global Reinsurance	12-13
	—  Financial Services	14-15
	—  Financial Guaranty Profile	16-17
	—  Financial Services Portfolio	18-21
IV.	Balance Sheet Details
	—  Loss Reserve Rollforward	22
	—  Asbestos and Environmental Reserves	23
	—  Reinsurance Recoverable Analysis	24-27
	—  Investment Portfolio	28-29
	—  Realized and Unrealized Gains (Losses)	30
	—  Capital Structure	31
V.	Other Disclosures
	—  Non-GAAP Financial Measures and Comprehensive Income	32
	—  Diluted Book Value per Ordinary Share	33
	—  Statutory Accounting Principles to GAAP Reconciliation	34
	—  Glossary	35

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ACE Limited

Consolidated Financial Highlights

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

(Unaudited)

	Three months ended Sept. 30					% Change 3Q-03 vs. 3Q-02	Nine months ended Sept. 30				% Change YTD- 03 vs. YTD-02
	2003		2002				2003		2002
Gross premiums written	$	3,451	$	3,528		-2%	$	10,969	$	9,575	15%
Net premiums written	$	2,306	$	2,223		4%	$	7,642	$	6,084	26%
Net premiums earned	$	2,397	$	1,925		25%	$	6,775	$	4,861	39%
Net investment income	$	216	$	199		9%	$	633	$	600	6%
Income excluding net realized gains (losses)	$	304	$	148		105%	$	869	$	593	47%
Net income	$	355	$	(57	)	NM	$	973	$	245	297%
Comprehensive income	$	210	$	104		101%	$	1,201	$	428	180%
Operating cash flow	$	1,060	$	1,020		4%	$	2,638	$	1,591	66%
Combined ratio
Loss and loss expense ratio		64.6%		71.0%				64.2%		66.1%
Underwriting and administrative expense ratio		26.8%		26.7%				27.1%		28.3%
Combined ratio		91.4%		97.7%				91.3%		94.4%
Annualized ROE		15.2%		8.9%				15.9%		12.2%
Annualized ROE, excluding FAS 115		16.8%		9.2%				17.3%		12.7%
Diluted earnings per share
Income excluding net realized gains (losses)	$	1.04	$	0.53		96%	$	3.08	$	2.13	45%
Net income	$	1.22	$	(0.24	)	NM	$	3.46	$	0.84	312%
Diluted book value per ordinary share	$	27.76	$	24.37		14%	$	27.76	$	24.37	14%
Diluted tangible book value per ordinary share	$	18.43	$	14.78		25%	$	18.43	$	14.78	25%
Weighted average diluted ordinary shares outstanding		281.9		268.2		5%		274.2		270.2	1%
Debt/ total capitalization		17.7%		21.4%				17.7%		21.4%

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ACE Limited

Consolidated Results—Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

ACE Limited Consolidated

	3Q-03			2Q-03			1Q-03			4Q-02			3Q-02			YTD 2003			YTD 2002			Full Year 2002
Consolidated Property and Casualty
Excluding Financial Services (1)
Gross premiums written	$	3,295		$	3,241		$	3,532		$	2,956		$	2,977		$	10,068		$	8,161		$	11,117
Net premiums written		2,154			2,230			2,357			1,709			1,690			6,741			4,703			6,412
Net premiums earned		2,146			2,049			1,815			1,631			1,495			6,010			3,914			5,545
Losses and loss expenses		1,375			1,298			1,122			1,507			1,000			3,795			2,452			3,959
Policy acquisition costs		321			315			281			260			232			917			612			872
Administrative expenses		271			266			241			250			233			778			631			881
P& C Underwriting income (loss)	$	179		$	170		$	171		$	(386	)	$	30		$	520		$	219		$	(167	)
Financial Services underwriting income		22			17			19			6			12			58			45			51
Life underwriting income (loss) excluding investment income		(4	)		(5	)		(5	)		(8	)		(8	)		(14	)		(14	)		(22	)
Net investment income		216			211			206			202			199			633			600			802
Other income (expense) (2)		(3	)		1			(6	)		1			(15	)		(8	)		(22	)		(21	)
Interest expense		45			43			45			47			48			133			146			193
Income tax expense (benefit)		61			65			61			(133	)		22			187			89			(44	)
Income (loss) excluding net realized gains (losses)	$	304		$	286		$	279		$	(99	)	$	148		$	869		$	593		$	494
Net realized gains (losses)		57			107			(40	)		(88	)		(235	)		124			(401	)		(489	)
Tax effect of net realized gains (losses)		(6	)		(22	)		8			19			30			(20	)		53			72
Net income (loss)	$	355		$	371		$	247		$	(168	)	$	(57	)	$	973		$	245		$	77
% Change Versus Prior Year Period (1)
Gross premiums written		11%			25%			36%			44%			43%			23%			31%			34%
Net premiums written		27%			46%			59%			54%			67%			43%			39%			43%
Net premiums earned		44%			55%			65%			54%			50%			54%			29%			36%
Other Ratios (1)
Net premiums written/gross premiums written		65%			69%			67%			58%			57%			67%			58%			58%
Effective tax rate		17%			19%			18%			57%			13%			18%			13%			-10%
ROE
Annualized ROE		15.2%			15.6%			16.7%			-6.6%			8.9%			15.9%			12.2%			7.5%
Annualized ROE, excluding FAS 115		16.8%			17.2%			18.1%			-7.1%			9.2%			17.3%			12.7%			7.9%

(1) Consolidated property and casualty excluding financial services is presented to allow for comparison and analysis with earnings guidance.

(2) Other income (expense) in Q2 and Q3 of 2002 includes debt prepayment expense. The tax effect in 2Q-02 was $4M and 3Q-02 was $5M.

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ACE Limited

Consolidated Results—Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

ACE Limited Consolidated

	3Q-03	2Q-03	1Q-03	4Q-02	3Q-02	YTD 2003	YTD 2002	Full Year 2002
Combined ratio
Loss and loss expense ratio	64.6%	64.5%	63.4%	91.8%	71.0%	64.2%	66.1%	73.5%
Policy acquisition cost ratio	14.4%	14.6%	14.4%	14.3%	13.4%	14.5%	14.1%	14.2%
Administrative expense ratio	12.4%	12.6%	12.8%	13.7%	13.3%	12.6%	14.2%	14.0%
Combined ratio	91.4%	91.7%	90.6%	119.8%	97.7%	91.3%	94.4%	101.7%

Consolidated Property and Casualty Excluding Financial Services (1)

	3Q-03		2Q-03		1Q-03		4Q-02			3Q-02			YTD 2003		YTD 2002			Full Year 2002
Combined ratio
Loss and loss expense ratio		64.0%		63.4%		61.8%		92.4%			66.8%			63.1%		62.6%			71.4%
Policy acquisition cost ratio		15.0%		15.3%		15.5%		15.9%			15.6%			15.3%		15.6%			15.7%
Administrative expense ratio		12.6%		13.0%		13.3%		15.4%			15.6%			12.9%		16.1%			15.9%
Combined ratio		91.6%		91.7%		90.6%		123.7%			98.0%			91.3%		94.3%			103.0%
Large losses and other items
Catastrophe losses	$	42	$	30	$	—	$	—		$	100	(3)	$	72	$	100	(3)	$	100	(3)
Other losses		—		—		—		516	(2)		—			—		—			516	(2)
Prior period development (4)		62		21		24		71			52			107		93			164

(1) Consolidated property and casualty excluding financial services is presented to allow for comparison and analysis with earnings guidance.

(2) Reported in press release on January 27, 2003.

(3) Reported in press release on September 18, 2002. Total after tax of $90 million includes Overseas General and Global Reinsurance.

(4) Prior period development for the Financial Services segment was favorable $2 million in 3Q-03, favorable $9 million in 2Q-03, adverse $10 million 1Q-03 and adverse $3 million for both 4Q and 3Q 2002. Year to date 2003 is favorable $1 million compared with adverse of $27 million in 2002. Full year 2002 was adverse $30 million.

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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 Sept. 30						Nine months ended Sept. 30
	2003			2002			2003			2002
Numerator
Income excluding net realized gains (losses)	$	304		$	148		$	869		$	593
Perpetual preferred dividend		(11	)		—			(15	)		—
Mezzanine equity dividend		—			(6	)		(10	)		(19	)
Income to ordinary shares, excl. net realized gains (losses)		293			142			844			574
Net realized gains (losses), net of income tax		51			(205	)		104			(348	)
Net income available to the holders of ordinary shares	$	344		$	(63	)	$	948		$	226
Rollforward of ordinary shares
Ordinary shares—beginning of period		277,755,290			262,247,758			262,679,356			259,861,205
Mezzanine equity conversion		—			—			11,814,274			—
Issued under employee stock purchase plan		152,251			138,834			288,400			252,619
Stock (cancelled) granted		12,631			(58,995	)		1,066,771			423,864
Issued for option exercises		560,738			167,613			2,632,109			1,957,522
Ordinary shares—end of period		278,480,910			262,495,210			278,480,910			262,495,210
Denominator
Weighted average shares outstanding		275,404,544			260,264,791			268,474,758			259,810,039
Dilutive effect of mezzanine equity		—			1,614,340			—			3,137,944
Effect of other dilutive securities		6,485,692			6,383,066			5,731,326			7,247,792
Adj. wtd. avg. shares outstanding and assumed conversions		281,890,236			268,262,197			274,206,084			270,195,775
Basic earnings (loss) per share
Income excluding net realized gains (losses)	$	1.06		$	0.55		$	3.14		$	2.21
% Change		93%						42%
Net realized gains (losses)		0.19			(0.79	)		0.39			(1.34	)
Net income	$	1.25		$	(0.24	)	$	3.53		$	0.87
Diluted earnings (loss) per share
Income excluding net realized gains (losses)	$	1.04		$	0.53		$	3.08		$	2.13
% Change		96%						45%
Net realized gains (losses)		0.18			(0.77	)		0.38			(1.29	)
Net income	$	1.22		$	(0.24	)	$	3.46		$	0.84

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ACE Limited

Summary Consolidated Balance Sheets

(in millions of U.S. dollars)

	September 30 2003			June 30 2003			March 31 2003			December 31 2002			December 31 2001
Assets		(Unaudited	)		(Unaudited	)		(Unaudited	)		(Audited	)		(Audited	)
Fixed maturities available for sale, at fair value	$	17,413		$	16,884		$	15,044		$	14,420		$	13,000
Equity securities, at fair value		460			471			410			411			468
Securities on loan, at fair value		596			546			521			293			—
Short-term investments		2,520			2,048			2,081			1,885			1,206
Other investments, at fair value		665			661			685			652			591
Cash		431			576			477			663			671
Total investments and cash	$	22,085			21,186		$	19,218		$	18,324		$	15,936
Insurance and reinsurance balances receivable		2,821			3,186			3,228			2,654			2,522
Reinsurance recoverable		14,032			13,891			14,132			13,991			11,398
Deferred policy acquisition costs		998			984			915			832			679
Prepaid reinsurance premiums		1,370			1,452			1,790			1,721			1,223
Goodwill		2,711			2,711			2,711			2,717			2,772
Deferred tax assets		1,103			1,075			1,227			1,288			1,251
Other assets		2,114			2,141			2,235			1,924			1,406
Total assets	$	47,234			46,626		$	45,456		$	43,451		$	37,187
Liabilities
Unpaid losses and loss expenses	$	25,637		$	24,940		$	24,636		$	24,315		$	20,728
Unearned premiums		6,243			6,394			6,573			5,586			3,853
Future policy benefits for life and annuity contracts		479			470			459			442			383
Insurance and reinsurance balances payable		1,874			1,989			1,963			1,870			1,418
Contract holder deposit funds		76			74			89			90			101
Securities lending collateral		608			561			533			301			—
Accounts payable, accrued expenses and other liabilities		1,601			1,650			1,820			1,777			1,567
Short-term debt		146			146			146			146			495
Long-term debt		1,749			1,749			1,749			1,749			1,349
Trust preferred securities		475			475			475			475			875
Total liabilities	$	38,888		$	38,448		$	38,443		$	36,751		$	30,769
Mezzanine equity	$	—		$	—		$	311		$	311		$	311
Shareholders’ equity
Total shareholders’ equity, excl. AOCI	$	7,678		$	7,365		$	6,164		$	5,949		$	6,005
Accumulated other comprehensive income (AOCI)		668			813			538			440			102
Total shareholders’ equity	$	8,346		$	8,178		$	6,702		$	6,389		$	6,107
Total liabilities, mezzanine equity and shareholders’ equity	$	47,234		$	46,626		$	45,456		$	43,451		$	37,187
Diluted book value per ordinary share	$	27.76		$	27.24		$	25.14		$	24.16		$	23.59
Diluted tangible book value per ordinary share	$	18.43		$	17.91		$	15.72		$	14.56		$	13.99

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ACE Limited

Consolidated Premiums Line of Business

(in millions of U.S. dollars)

(Unaudited)

ACE Limited Consolidated

	YTD 2003		% of Total Consolidated	YTD 2002		% of Total Consolidated	% Change YTD-03 vs. YTD-02	Full Year 2002
Net Premiums Written
Property and all other	$	2,625	34%	$	2,035	33%	29%	$	2,518
Casualty		3,398	45%		2,149	35%	58%		3,188
Personal accident		718	9%		519	9%	38%		706
Total P&C	$	6,741	88%	$	4,703	77%	43%	$	6,412
Global Re—life		138	2%		112	2%	23%		159
Financial guaranty		350	5%		291	5%	20%		387
Financial solutions		413	5%		978	16%	-58%		1,110
Total Consolidated	$	7,642	100%	$	6,084	100%	26%	$	8,068
Net Premiums Earned
Property and all other	$	2,367	35%	$	1,657	34%	43%	$	2,255
Casualty		2,971	44%		1,748	36%	70%		2,589
Personal accident		672	10%		509	11%	32%		701
Total P&C	$	6,010	89%	$	3,914	81%	54%	$	5,545
Global Re—life		136	2%		112	2%	21%		158
Financial guaranty		240	3%		201	4%	19%		282
Financial solutions		389	6%		634	13%	-39%		845
Total Consolidated	$	6,775	100%	$	4,861	100%	39%	$	6,830

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ACE Limited

Consolidating Statement of Operations

Three months ended September 30, 2003 and 2002

(in millions of U.S. dollars)

(Unaudited)

	Insurance— North American			Insurance— Overseas General			Global Reinsurance			Corporate & Other			Consolidated P&C			Financial Services			ACE Consolidated
September 30, 2003
Gross premiums written	$	1,819		$	1,200		$	276		$	—		$	3,295		$	107		$	3,402
Net premiums written		1,065			872			217			—			2,154			105			2,259
Net premiums earned		990			882			274			—			2,146			205			2,351
Losses and loss expenses		712			529			134			—			1,375			144			1,519
Policy acquisition costs		95			170			56			—			321			17			338
Administrative expenses		103			121			16			31			271			22			293
Underwriting income (loss)	$	80		$	62		$	68		$	(31	)	$	179		$	22		$	201
Life underwriting income		—			—			6			—			6			—			6
Net investment income—property and casualty		100			40			23			(6	)		157			49			206
Other income (expense)		—			(3	)		1			—			(2	)		(1	)		(3	)
Interest expense		7			1			—			35			43			2			45
Income tax expense (benefit)		48			12			3			(13	)		50			11			61
Income (loss) excluding net realized gains (losses)	$	125		$	86		$	95		$	(59	)	$	247		$	57		$	304
Net realized gains (losses)		8			4			10			5			28			29			57
Tax effect of net realized gains (losses)		—			—			—			—			—			(6	)		(6	)
Net income (loss)	$	133		$	90		$	105		$	(54	)	$	275		$	80		$	355
September 30, 2002
Gross premiums written	$	1,783		$	1,008		$	186		$	—		$	2,977		$	493		$	3,470
Net premiums written		869			690			131			—			1,690			476			2,166
Net premiums earned		654			647			194			—			1,495			373			1,868
Losses and loss expenses		453			446			101			—			1,000			328			1,328
Policy acquisition costs		55			140			37			—			232			18			250
Administrative expenses		86			107			11			29			233			15			248
Underwriting income (loss)	$	60		$	(46	)	$	45		$	(29	)	$	30		$	12		$	42
Life underwriting income (loss)		—			—			(1	)		—			(1	)		—			(1	)
Net investment income—property and casualty		101			28			20			(3	)		146			46			192
Other income (expense)		—			(1	)		1			(15	)		(15	)		—			(15	)
Interest expense		7			1			—			37			45			3			48
Income tax expense (benefit)		41			(4	)		(1	)		(21	)		15			7			22
Income (loss) excluding net realized gains (losses)	$	113		$	(16	)	$	66		$	(63	)	$	100		$	48		$	148
Net realized gains (losses)		(55	)		(21	)		(27	)		(55	)		(158	)		(77	)		(235	)
Tax effect of net realized gains (losses)		4			7			—			—			11			19			30
Net income (loss)	$	62		$	(30	)	$	39		$	(118	)	$	(47	)	$	(10	)	$	(57	)

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ACE Limited

Consolidating Statement of Operations

Nine months ended September 30, 2003 and 2002

(in millions of U.S. dollars)

(Unaudited)

	Insurance— North American			Insurance— Overseas General			Global Reinsurance			Corporate & Other			Consolidated P&C			Financial Services			ACE Consolidated
September 30, 2003
Gross premiums written	$	5,131		$	3,850		$	1,087		$	—		$	10,068		$	757		$	10,825
Net premiums written		2,967			2,769			1,005			—			6,741			763			7,504
Net premiums earned		2,663			2,556			791			—			6,010			629			6,639
Losses and loss expenses		1,861			1,541			393			—			3,795			466			4,261
Policy acquisition costs		279			485			153			—			917			45			962
Administrative expenses		293			356			45			84			778			60			838
Underwriting income (loss)	$	230		$	174		$	200		$	(84	)	$	520		$	58		$	578
Life underwriting income		—			—			11			—			11			—			11
Net investment income—property and casualty		306			113			63			(23	)		459			149			608
Other income (expense)		(6	)		(4	)		2			—			(8	)		—			(8	)
Interest expense		22			2			—			104			128			5			133
Income tax expense (benefit)		129			60			10			(40	)		159			28			187
Income (loss) excluding net realized gains (losses)	$	379		$	221		$	266		$	(171	)	$	695		$	174		$	869
Net realized gains (losses)		15			(7	)		26			(8	)		26			98			124
Tax effect of net realized gains (losses)		—			5			1			—			6			(26	)		(20	)
Net income (loss)	$	394		$	219		$	293		$	(179	)	$	727		$	246		$	973
September 30, 2002
Gross premiums written	$	4,476		$	2,911		$	774		$	—		$	8,161		$	1,299		$	9,460
Net premiums written		2,100			1,920			683			—			4,703			1,269			5,972
Net premiums earned		1,733			1,722			459			—			3,914			835			4,749
Losses and loss expenses		1,176			1,083			193			—			2,452			690			3,142
Policy acquisition costs		147			382			83			—			612			58			670
Administrative expenses		244			282			26			79			631			42			673
Underwriting income (loss)	$	166		$	(25	)	$	157		$	(79	)	$	219		$	45		$	264
Life underwriting income		—			—			5			—			5			—			5
Net investment income—property and casualty		306			77			63			(6	)		440			141			581
Other income (expense)		—			3			1			(26	)		(22	)		—			(22	)
Interest expense		24			2			1			109			136			10			146
Income tax expense (benefit)		115			9			1			(60	)		65			24			89
Income (loss) excluding net realized gains (losses)	$	333		$	44		$	224		$	(160	)	$	441		$	152		$	593
Net realized gains (losses)		(107	)		(32	)		(57	)		(78	)		(274	)		(127	)		(401	)
Tax effect of net realized gains (losses)		16			10			—			—			26			27			53
Net income (loss)	$	242		$	22		$	167		$	(238	)	$	193		$	52		$	245

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ACE Limited

Segment Results—Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Insurance-North American

	3Q-03		2Q-03			1Q-03			4Q-02			3Q-02			YTD 2003			YTD 2002			Full Year 2002
Gross premiums written	$	1,819	$	1,648		$	1,664		$	1,640		$	1,783		$	5,131		$	4,476		$	6,116
Net premiums written		1,065		969			933			819			869			2,967			2,100			2,919
Net premiums earned		990		920			753			742			654			2,663			1,733			2,475
Losses and loss expenses		712		637			512			1,024			453			1,861			1,176			2,200
Policy acquisition costs		95		101			83			69			55			279			147			216
Administrative expenses		103		102			88			97			86			293			244			341
Underwriting income (loss)	$	80	$	80		$	70		$	(448	)	$	60		$	230		$	166		$	(282	)
Net investment income—property and casualty		100		103			103			100			101			306			306			406
Other income (expense)		—		—			(6	)		1			—			(6	)		—			1
Interest expense		7		7			8			8			7			22			24			32
Income tax expense (benefit)		48		42			39			(119	)		41			129			115			(4	)
Income (loss) excluding net realized gains (losses)	$	125	$	134		$	120		$	(236	)	$	113		$	379		$	333		$	97
Net realized gains (losses)		8		25			(18	)		(92	)		(55	)		15			(107	)		(199	)
Tax effect of net realized gains (losses)		—		(3	)		3			27			4			—			16			43
Net income (loss)	$	133	$	156		$	105		$	(301	)	$	62		$	394		$	242		$	(59	)
Combined ratio
Loss and loss expense ratio		71.9%		69.2%			68.0%			137.9%			69.2%			69.9%			67.9%			88.9%
Policy acquisition cost ratio		9.6%		10.9%			11.0%			9.4%			8.3%			10.4%			8.5%			8.7%
Administrative expense ratio		10.4%		11.1%			11.6%			13.0%			13.2%			11.0%			14.0%			13.8%
Combined ratio		91.9%		91.2%			90.6%			160.3%			90.7%			91.3%			90.4%			111.4%
Large losses and other items
Large losses (before tax)	$	20	$	—		$	—		$	516	(1)	$	—		$	20		$	—		$	516	(1)
% Change Versus Prior Year Period
Gross premiums written		2%		15%			32%			49%			35%			15%			31%			35%
Net premiums written		23%		35%			82%			75%			58%			41%			38%			47%
Net premiums earned		51%		52%			59%			63%			37%			54%			27%			36%
Other Ratios
Net premiums written/gross premiums written		59%		59%			56%			50%			49%			58%			47%			48%

(1) Reported in press release on January 27, 2003.

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ACE Limited

Segment Results—Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Insurance - Overseas General

	3Q-03			2Q-03		1Q-03			4Q-02			3Q-02			YTD 2003			YTD 2002			Full Year 2002
Gross premiums written	$	1,200		$	1,244	$	1,406		$	1,203		$	1,008		$	3,850		$	2,911		$	4,114
Net premiums written		872			916		981			796			690			2,769			1,920			2,716
Net premiums earned		882			860		814			671			647			2,556			1,722			2,393
Losses and loss expenses		529			518		494			372			446			1,541			1,083			1,455
Policy acquisition costs		170			163		152			151			140			485			382			533
Administrative expenses		121			121		114			108			107			356			282			390
Underwriting income (loss)	$	62		$	58	$	54		$	40		$	(46	)	$	174		$	(25	)	$	15
Net investment income—property and casualty		40			38		35			31			28			113			77			108
Other income (expense)		(3	)		—		(1	)		(1	)		(1	)		(4	)		3			2
Interest expense		1			1		—			1			1			2			2			3
Income tax expense (benefit)		12			25		23			(3	)		(4	)		60			9			6
Income (loss) excluding net realized gains (losses)	$	86		$	70	$	65		$	72		$	(16	)	$	221		$	44		$	116
Net realized gains (losses)		4			2		(13	)		(5	)		(21	)		(7	)		(32	)		(37	)
Tax effect of net realized gains (losses)		—			—		5			2			7			5			10			12
Net income (loss)	$	90		$	72	$	57		$	69		$	(30	)	$	219		$	22		$	91
Combined ratio
Loss and loss expense ratio		59.9%			60.3%		60.7%			55.5%			68.9%			60.3%			62.9%			60.8%
Policy acquisition cost ratio		19.3%			18.9%		18.7%			22.4%			21.8%			19.0%			22.2%			22.3%
Administrative expense ratio		13.7%			14.0%		14.0%			16.2%			16.5%			13.9%			16.3%			16.3%
Combined ratio		92.9%			93.2%		93.4%			94.1%			107.2%			93.2%			101.4%			99.4%
Large losses and other items
Large losses (before tax)	$	10		$	—	$	—		$	—		$	68	(1)	$	10		$	68		$	68	(1)
% Change Versus Prior Year Period
Gross premiums written		19%			32%		46%			30%			50%			32%			23%			25%
Net premiums written		26%			49%		60%			28%			63%			44%			25%			26%
Net premiums earned		36%			52%		60%			31%			45%			48%			20%			23%
Other Ratios
Net premiums written/gross premiums written		73%			74%		70%			66%			68%			72%			66%			66%

(1) Reported in press release on September 18, 2002. Total after tax of $90M includes $61M in Overseas General and $29M in Global Reinsurance.

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ACE Limited

Segment Results—Consecutive Quarters—2

(in millions of U.S. dollars)

(Unaudited)

Insurance—Overseas General

	3Q-03		2Q-03		1Q-03		4Q-02		3Q-02		YTD 2003		YTD 2002		Full Year 2002
Gross premiums written
ACE Global Markets	$	351	$	422	$	346	$	511	$	325	$	1,119	$	940	$	1,451
ACE International		849		822		1,060		692		683		2,731		1,971		2,663
Total	$	1,200	$	1,244	$	1,406	$	1,203	$	1,008	$	3,850	$	2,911	$	4,114
Net premiums written
ACE Global Markets	$	253	$	295	$	256	$	282	$	196	$	804	$	505	$	787
ACE International		619		621		725		514		494		1,965		1,415		1,929
Total	$	872	$	916	$	981	$	796	$	690	$	2,769	$	1,920	$	2,716
Net premiums earned
ACE Global Markets	$	244	$	256	$	248	$	177	$	181	$	748	$	485	$	662
ACE International		638		604		566		494		466		1,808		1,237		1,731
Total	$	882	$	860	$	814	$	671	$	647	$	2,556	$	1,722	$	2,393
Net premiums written/gross premiums written
ACE Global Markets		72.1%		69.9%		74.0%		55.2%		60.3%		71.8%		53.7%		54.2%
ACE International		72.9%		75.5%		68.4%		74.3%		72.3%		72.0%		71.8%		72.4%
Total NPW/GPW		72.7%		73.6%		69.8%		66.2%		68.5%		71.9%		66.0%		66.0%
Loss ratio
ACE Global Markets		61.2%		61.4%		61.2%		51.3%		69.7%		61.3%		62.8%		59.7%
ACE International		59.4%		59.8%		60.4%		56.9%		68.6%		59.9%		62.9%		61.2%
Total loss ratio		59.9%		60.3%		60.7%		55.5%		68.9%		60.3%		62.9%		60.8%
Expense ratio
ACE Global Markets		35.7%		35.7%		36.7%		52.1%		46.8%		36.1%		48.8%		49.6%
ACE International		32.0%		31.7%		30.9%		33.9%		35.0%		31.6%		34.6%		34.4%
Total expense ratio		33.0%		32.9%		32.7%		38.6%		38.3%		32.9%		38.5%		38.6%
Combined ratio
ACE Global Markets		96.9%		97.1%		97.9%		103.4%		116.5%		97.4%		111.6%		109.3%
ACE International		91.4%		91.5%		91.3%		90.8%		103.6%		91.5%		97.5%		95.6%
Total combined ratio		92.9%		93.2%		93.4%		94.1%		107.2%		93.2%		101.4%		99.4%

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ACE Limited

Segment Results—Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Global Reinsurance

	3Q-03		2Q-03		1Q-03		4Q-02		3Q-02			YTD 2003		YTD 2002			Full Year 2002
Property and casualty
Gross premiums written	$	276	$	349	$	462	$	113	$	186		$	1,087	$	774		$	887
Net premiums written		217		345		443		94		131			1,005		683			777
Net premiums earned		274		269		248		218		194			791		459			677
Losses and loss expenses		134		143		116		111		101			393		193			304
Policy acquisition costs		56		51		46		40		37			153		83			123
Administrative expenses		16		14		15		14		11			45		26			40
P&C underwriting income (loss)	$	68	$	61	$	71	$	53	$	45		$	200	$	157		$	210
Life
Gross premiums written	$	49	$	46	$	49	$	50	$	58		$	144	$	115		$	165
Net premiums written		47		44		47		47		57			138		112			159
Net premiums earned		46		42		48		46		57			136		112			158
Losses and loss expenses		45		44		48		52		60			137		106			158
Policy acquisition costs		5		2		4		1		3			11		15			16
Administrative expenses		—		1		1		1		2			2		5			6
Net investment income		10		8		7		8		7			25		19			27
Life underwriting income (loss)	$	6	$	3	$	2	$	—	$	(1	)	$	11	$	5		$	5
Total underwriting income	$	74	$	64	$	73	$	53	$	44		$	211	$	162		$	215
Net investment income—property and casualty		23		21		19		19		20			63		63			82
Other income (expense)		1		—		1		—		1			2		1			1
Interest expense		—		—		—		—		—			—		1			1
Income tax expense (benefit)		3		3		4		—		(1	)		10		1			1
Income (loss) excluding net realized gains (losses)	$	95	$	82	$	89	$	72	$	66		$	266	$	224		$	296
Net realized gains (losses)		10		13		3		—		(27	)		26		(57	)		(57	)
Tax effect of net realized gains (losses)		—		1		—		—		—			1		—			—
Net income (loss)	$	105	$	96	$	92	$	72	$	39		$	293	$	167		$	239
P&C combined ratio
Loss and loss expense ratio		48.9%		53.1%		46.7%		51.1%		52.0%			49.6%		42.0%			44.9%
Policy acquisition cost ratio		20.4%		18.8%		18.6%		18.2%		19.2%			19.3%		18.1%			18.1%
Administrative expense ratio		5.7%		5.3%		6.0%		6.5%		5.2%			5.7%		5.6%			5.9%
P&C combined ratio		75.0%		77.2%		71.3%		75.8%		76.4%			74.6%		65.7%			68.9%
Large losses and other items
Large losses (before tax)	$	12	$	30	$	—	$	—	$	32	(1)	$	42	$	32		$	32	(1)

(1) Reported in press release on September 18, 2002. Total after tax of $90M million includes $61M in Overseas General and $29M in Global Reinsurance.

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ACE Limited

Segment Results—Consecutive Quarters—2

(in millions of U.S. dollars)

(Unaudited)

Global Reinsurance—Property & Casualty

	3Q-03		2Q-03		1Q-03		4Q-02			3Q-02		YTD 2003		YTD 2002		Full Year 2002
% Change Versus Prior Year Period
Gross premiums written		48%		63%		24%		242%			98%		40%		81%		93%
Net premiums written		66%		75%		25%		422%			264%		47%		103%		120%
Net premiums earned		41%		79%		116%		140%			177%		72%		97%		109%
Other Ratios
Net premiums written/gross premiums written		79%		99%		96%		83%			70%		92%		88%		88%
Global Reinsurance—By Division
Gross premiums written
Tempest Europe	$	60	$	97	$	123	$	34		$	36	$	280	$	196	$	230
Tempest USA		147		133		100		86			69		380		148		234
Tempest Bermuda		69		119		239		(7	)		81		427		430		423
Total GPW	$	276	$	349	$	462	$	113		$	186	$	1,087	$	774	$	887
Net premiums written
Tempest Europe	$	52	$	94	$	115	$	18		$	27	$	261	$	164	$	182
Tempest USA		144		132		99		86			69		375		148		234
Tempest Bermuda		21		119		229		(10	)		35		369		371		361
Total NPW	$	217	$	345	$	443	$	94		$	131	$	1,005	$	683	$	777
Net premiums earned
Tempest Europe	$	55	$	63	$	69	$	45		$	38	$	187	$	97	$	142
Tempest USA		127		112		86		69			53		325		113		182
Tempest Bermuda		92		94		93		104			103		279		249		353
Total NPE	$	274	$	269	$	248	$	218		$	194	$	791	$	459	$	677
Net premiums written/gross premiums written
Tempest Europe		86.7%		96.9%		93.5%		52.9%			75.0%		93.2%		83.7%		79.1%
Tempest USA		98.0%		99.2%		99.0%		100.0%			100.0%		98.7%		100.0%		100.0%
Tempest Bermuda		30.4%		100.0%		95.8%		142.9%			43.2%		86.4%		86.3%		85.3%
Total NPW/GPW		78.6%		98.9%		95.9%		83.2%			70.4%		92.5%		88.2%		87.6%

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ACE Limited

Segment Results—Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Financial Services

	3Q-03			2Q-03			1Q-03			4Q-02		3Q-02			YTD 2003			YTD 2002			Full Year 2002
Gross premiums written	$	107		$	118		$	532		$	238	$	493		$	757		$	1,299		$	1,537
Net premiums written		105			132			526			228		476			763			1,269			1,497
Net premiums earned		205			215			209			292		373			629			835			1,127
Losses and loss expenses		144			161			161			257		328			466			690			947
Policy acquisition costs		17			17			11			14		18			45			58			72
Administrative expenses		22			20			18			15		15			60			42			57
Underwriting income (loss)	$	22		$	17		$	19		$	6	$	12		$	58		$	45		$	51
Net investment income		49			49			51			51		46			149			141			192
Other income		(1	)		1			—			1		—			—			—			1
Interest expense		2			1			2			2		3			5			10			12
Income tax expense		11			8			9			6		7			28			24			30
Income (loss) excluding net realized gains (losses)	$	57		$	58		$	59		$	50	$	48		$	174		$	152		$	202
Net realized gains (losses)		29			72			(3	)		—		(77	)		98			(127	)		(126	)
Tax effect of net realized  gains (losses)		(6	)		(20	)		—			—		19			(26	)		27			26
Net income (loss)	$	80		$	110		$	56		$	50	$	(10	)	$	246		$	52		$	102
Combined ratio
Loss and loss expense ratio		70.2%			74.9%			77.0%			88.2%		88.0%			74.0%			82.6%			84.0%
Policy acquisition cost ratio		8.7%			7.8%			5.2%			5.0%		4.6%			7.2%			6.9%			6.4%
Administrative expense ratio		10.6%			9.5%			8.6%			4.6%		4.2%			9.6%			5.1%			5.0%
Combined ratio		89.5%			92.2%			90.8%			97.8%		96.8%			90.8%			94.6%			95.4%
Large losses and other items
Loss portfolio transfers(1)	$	4		$	—		$	—		$	99	$	187		$	4		$	212		$	311
% Change Versus Prior Year Period
Gross premiums written		-78%			-63%			9%			-18%		28%			-42%			9%			4%
Net premiums written		-78%			-58%			11%			-43%		81%			-40%			20%			2%
Net premiums earned		-45%			-6%			-11%			-19%		0%			-25%			-22%			-21%
Other Ratios
Net premiums written/gross  premiums written		98%			112%			99%			96%		97%			101%			98%			97%

(1) Total premiums typically included in gross premiums written, net premiums written, and net premiums earned in the quarter it is written; usually accrued at 100% loss ratio.

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ACE Limited

Segment Results—Consecutive Quarters—2

(in millions of U.S. dollars)

(Unaudited)

Financial Services

	3Q-03			2Q-03			1Q-03		4Q-02		3Q-02		YTD 2003		YTD 2002		Full Year 2002
Gross premiums written
Financial guaranty	$	112		$	119		$	121	$	97	$	147	$	352	$	294	$	391
Financial solutions		(5	)		(1	)		411		141		346		405		1,005		1,146
Total GPW	$	107		$	118		$	532	$	238	$	493	$	757	$	1,299	$	1,537
Net premiums written
Financial guaranty	$	111		$	119		$	120	$	96	$	146	$	350	$	291	$	387
Financial solutions		(6	)		13			406		132		330		413		978		1,110
Total NPW	$	105		$	132		$	526	$	228	$	476	$	763	$	1,269	$	1,497
Net premiums earned
Financial guaranty	$	80		$	82		$	78	$	81	$	46	$	240	$	201	$	282
Financial solutions		125			133			131		211		327		389		634		845
Total NPE	$	205		$	215		$	209	$	292	$	373	$	629	$	835	$	1,127
Loss ratio
Financial guaranty		46.4%			49.7%			50.1%		73.0%		31.2%		48.7%		52.5%		58.4%
Financial solutions		85.4%			90.5%			92.9%		94.1%		96.0%		89.7%		92.1%		92.6%
Total loss ratio		70.2%			74.9%			77.0%		88.2%		88.0%		74.1%		82.6%		84.0%
Expense ratio
Financial guaranty		33.7%			35.3%			27.6%		17.8%		38.1%		32.3%		27.4%		24.6%
Financial solutions		10.1%			6.1%			5.7%		6.4%		4.7%		7.3%		7.2%		7.0%
Total expense ratio		19.3%			17.3%			13.8%		9.6%		8.8%		16.8%		12.0%		11.4%
Combined ratio
Financial guaranty		80.1%			85.0%			77.7%		90.8%		69.3%		81.0%		79.9%		83.0%
Financial solutions		95.5%			96.6%			98.6%		100.5%		100.7%		97.0%		99.3%		99.6%
Total combined ratio		89.5%			92.2%			90.8%		97.8%		96.8%		90.9%		94.6%		95.4%

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ACE Limited

Financial Guaranty Profile

(in millions of U.S. dollars)

(Unaudited)

	Gross Par Written (7)						Net Par Outstanding/Average Ratings
	Three months ended			Nine months ended
Sector	September 30, 2003						September 30, 2003				December 31, 2002
	Par Outstanding		% of total	Par Outstanding		% of total	Par Outstanding		% of total	Average Rating	Par Outstanding		% of total	Average Rating
Municipal Exposure
Tax Backed	$	579	9%	$	1,611	12%	$	20,067	23%	A+	$	19,637	24%	A+
Municipal Utilities		863	14%		1,233	10%		10,691	13%	A+		10,390	13%	A+
Special Revenue		747	12%		1,077	8%		8,876	10%	A		8,596	10%	A
Healthcare		159	3%		428	3%		5,604	7%	A+		5,798	7%	A
Structured Municipal (1)		—	0%		—	0%		3,378	4%	AAA		3,523	4%	AAA
Other Municipal (2)		273	4%		475	4%		2,523	3%	A-		2,151	3%	A-
Total Municipal	$	2,621	42%	$	4,824	37%	$	51,139	60%	A+	$	50,095	61%	A
Non-Municipal Exposure
Senior Layer CDO’s (3)	$	2,267	36%	$	3,772	29%	$	16,494	19%	AA+	$	12,727	16%	AA+
Consumer Receivables (4)		584	9%		2,220	17%		8,185	9%	A		8,388	10%	A
Single Name Corporate CDS		20	0%		150	1%		2,854	3%	A+		4,454	5%	A+
Commercial Receivables (5)		719	11%		1,489	12%		5,079	6%	A+		3,464	4%	A+
Other Structured Finance (6)		92	2%		454	4%		1,570	2%	A+		2,051	3%	A
Funded Equity CDO’s (3)		—	0%		8	0%		511	1%	NM		586	1%	NM
Total Non-Municipal	$	3,682	58%	$	8,093	63%	$	34,693	40%	AA-	$	31,670	39%	AA-
Total Exposure	$	6,303	100%	$	12,917	100%	$	85,832	100%		$	81,765	100%

(1) Structured Municipal: includes excess of loss reinsurance on portfolios of municipal credits where the company attached in excess of the AAA rating level.

(2) Other Municipal: primarily includes first mortgage bonds on investor-owned utilities and government-sponsored project finance.

(3) For ACE, collateralized debt obligations (CDO’s) are structured financings backed by a pool of investment grade assets. These financings are typically structured in multiple tranches (layers) from equity (first loss) through super senior (high excess). Losses on defaulted pool assets are allocated successively first to the equity tranche then to higher rated tranches. Market supply and demand factors influence pricing and the amount and position in the structure where ACE chooses to participate.

(4) Consumer Receivables: principally includes auto loan receivables, residential mortgage-backed securities and credit card receivables.

(5) Commercial Receivables: principally includes equipment leases and commercial mortgage-backed securities.

(6) Other Structured Finance: predominantly trade receivable securitization, secured structured lending, and future flow transactions.

(7) Gross par approximates net par as the company is a net line writer.

Note—Ratings are internally determined based on rating agency guidelines

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ACE Limited

Financial Guaranty Profile—2

(in millions of U.S. dollars)

(Unaudited)

Distribution by Ratings of Financial Guaranty Portfolio

	At September 30, 2003
	Net Par Outstanding		% of total
AAA	$	24,932	29%
AA		17,422	20%
A		29,353	34%
BBB		12,161	14%
Below investment grade		1,453	2%
Funded equity		511	1%
Total	$	85,832	100%

Geographic Distribution of Financial Guaranty Portfolio as of September 30, 2003

	Net Par Outstanding		% of total
Domestic
California	$	6,890	8.0%
New York		5,472	6.4%
Texas		3,188	3.7%
Illinois		2,759	3.2%
Florida		2,735	3.2%
Pennsylvania		2,093	2.4%
New Jersey		1,909	2.2%
Massachusetts		1,699	2.0%
Puerto Rico		1,513	1.8%
Washington		1,203	1.4%
Other—Muni		17,302	20.2%
Other—Non Muni		32,887	38.3%
Total Domestic	$	79,650	92.8%
Overall Net Par Outstanding
International
United Kingdom	$	2,448	2.9%
Australia		374	0.4%
Italy		351	0.4%
France		313	0.4%
Brazil		286	0.3%
Other		2,411	2.8%
Total International	$	6,182	7.2%
Net Par Outstanding	$	85,832	100%

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ACE Limited

Financial Services Portfolio

25 Largest Municipal Exposures

(in millions of U.S. dollars)

(Unaudited)

Obligor Name	Net Par In Force (1)		Rating
California State General Obligation & Leases	$	913	BBB
Long Island Power Authority		731	A-
New Jersey State General Obligation & Leases		725	AA
New York City General Obligation		696	A
Denver Colorado Airport System		637	A
Chicago Illinois General Obligation		595	A+
Puerto Rico Electric Power Authority		555	A-
Massachusetts State GO & Bay Transportation & Leases		541	AA-
New York State Metro Trans Auth—Trans Revenue		539	A
New York City Municipal Water Finance Authority		510	AA
San Francisco California Airport		505	A
New York State General Obligation & Leases		493	AA
Jefferson County Alabama Sewer		491	A
Energy Northwest (FKA WPPSS)		468	AA-
Puerto Rico General Obligation & Leases		430	A-
Houston Texas Water & Sewer System		408	A+
Dade County Florida Water & Sewer System		373	A
Los Angeles County Metro Trans—Sales Tax—1st		365	AA
Mental Health Services Facilities—New York		323	AA-
Intermountain Power Agency		320	A+
Illinois State General Obligation & Leases		317	AA
Chicago Illinois Public Building—Board of Education		316	A+
Municipal Electric Authority of Georgia—Senior		307	A+
New Jersey State Turnpike		298	A-
District of Columbia General Obligation		285	A-

(1) Excludes Net Par In Force for transactions insured by an AAA monoline financial guaranty company

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ACE Limited

Financial Services Portfolio

(in millions of U.S. dollars)

(Unaudited)

25 Largest Asset-Backed Exposures (Non—Municipal)

Obligor Name	Net Par In Force		Rating
Absolute CDO OF ABS	$	594	AAA
Triplas CDO OF ABS		571	AAA
Sears Credit Card Master Trust 2002-3 Class A—Credit Cards		550	AAA
SALS 2002-6 (Super Senior)—Synthetic CDO		540	AAA
Taurus 2001-06—Synthetic CDO		506	A+
Bistro 2001-09—AAA Tranche—Synthetic CDO		450	AAA
Dresdner 2001—1—Synthetic CDO		500	AAA
Houston CDO Portfolio 2000-1		470	AA
Stars 2001-3—Synthetic CDO		440	AAA
Merrill Lynch Dots 4—Synthetic CDO		430	AAA
Providian Gateway Master Trust—Credit Cards		422	BB+
CDO ^2—CDO of CDOs		421	AAA
Merrill Lynch Synthetic CDO Taurus 8		417	AAA
Magrathea V—Synthetic CDO		360	AAA
Lehman Sprint 2001-1 Super Senior—Synthetic CDO		352	AAA
Taurus 2001-01—Synthetic CDO		347	AAA
Lehman Synthetic CDO Portfolio 2000-1		320	AAA
ING Equity Trust (Pilgrim Principal Protection)		308	AAA
Bistro 2000-07 Class A-1—Synthetic CDO		300	AAA
Halcyon Synthetic CDO		278	AAA
Europa II Limited Class A1—Synthetic CDO		266	AAA
EMMOCA IV Portfolio—Synthetic CDO		250	AA+
Metris Master Credit Card Trust—Credit Cards		244	BB
Lusitano Global Synthetic CDO Class A-2		218	AAA
TIAA Commercial Real Estate CDO 2002-1 Limited		201	AAA

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ACE Limited

Financial Services Portfolio

(in millions of U.S. dollars)

(Unaudited)

Largest Single Name Corporate CDS

Obligor Name	Net Par In Force (1)		Rating
General Electric Company	$	110	AAA
General Motors Corporation		60	BBB
ABN AMRO Bank NV		53	AA-
Japan Republic Sovereign Obligation		50	AA-
American International Group, Inc. (AIG)		50	AAA
Fortis NV		48	A+
Allianz AG		47	AA-
FNMA—Fannie Mae		45	AAA
France Telecom		40	BBB
Merrill Lynch & Company		40	A+
Deutsche Telekom AG		40	BBB+

	Gross Par Written (2)
	Three months ended		Nine months ended		Net Par Outstanding
Rating	September 30, 2003
AAA	$	—	$	30	$	558
AA		—		40		602
A		20		60		1,240
BBB		—		20		391
Below investment grade		—		—		63
Total	$	20	$	150	$	2,854

(1) Excludes Net Par In Force for transactions insured by an AAA monoline financial guaranty company

(2) Gross par approximates net par as the company is a net line writer

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ACE Limited

Financial Services Portfolio

(in millions of U.S. dollars)

(Unaudited)

Maturity Profile of Select Par Insured Categories

	(Outstanding Net Par)
	2003 (1)		2004		2005		2006		2007
Senior Layer CDO’s
Beginning outstanding par	$	16,494	$	16,494	$	16,153	$	13,806	$	11,214
Scheduled runoff amount		—		341		2,347		2,592		3,061
Ending outstanding par	$	16,494	$	16,153	$	13,806	$	11,214	$	8,153
Single Name Corporate CDS
Beginning outstanding par	$	2,854	$	2,650	$	2,063	$	1,081	$	889
Scheduled runoff amount		204		587		982		192		260
Ending outstanding par	$	2,650	$	2,063	$	1,081	$	889	$	629
Funded Equity CDO’s
Beginning outstanding par	$	511	$	511	$	511	$	511	$	341
Scheduled runoff amount		—		—		—		170		291
Ending outstanding par	$	511	$	511	$	511	$	341	$	50

(1) Beginning balance as of September 30, 2003

	Gross Par Written (2)				Net Par Outstanding
CDO’s	Three months ended		Nine months ended
Rating	Sept. 30, 2003
AAA	$	2,267	$	3,750	$	12,619
AA		—		6		1,939
A		—		11		982
BBB		—		5		831
Below investment grade		—		—		123
Funded Equity		—		8		511
Total	$	2,267	$	3,780	$	17,005

(2) Gross par approximates net par as the company is a net line writer

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ACE Limited

Loss Reserve Rollforward

(in millions of U.S. dollars)

(Unaudited)

	Total									Ongoing									Run-off (1)
	Unpaid Losses									Unpaid Losses									Unpaid Losses
	Gross			Ceded			Net			Gross			Ceded			Net			Gross			Ceded			Net
Balance at December 31, 2001	$	20,728		$	10,629		$	10,099		$	13,001		$	5,381		$	7,620		$	7,236		$	4,757		$	2,479
Losses and loss expenses incurred		1,599			746			853			1,465			623			842			134			123			11
Losses and loss expenses paid		(1,792	)		(816	)		(976	)		(1,501	)		(686	)		(815	)		(291	)		(130	)		(161	)
Other (incl. foreign exch. revaluation)		(20	)		26			(46	)		(20	)		26			(46	)		—			—			—
Balance at March 31, 2002	$	20,515		$	10,585		$	9,930		$	12,945		$	5,344		$	7,601		$	7,079		$	4,750		$	2,329
Losses and loss expenses incurred		1,806			845			961			1,668			717			951			138			128			10
Losses and loss expenses paid		(1,739	)		(699	)		(1,040	)		(1,434	)		(574	)		(860	)		(305	)		(125	)		(180	)
Other (incl. foreign exch. revaluation)		79			26			53			79			26			53			—			—			—
Balance at June 30, 2002	$	20,661		$	10,757		$	9,904		$	13,258		$	5,513		$	7,745		$	6,912		$	4,753		$	2,159
Losses and loss expenses incurred		2,177			849			1,328			2,166			843			1,323			11			6			5
Losses and loss expenses paid		(1,348	)		(586	)		(762	)		(1,173	)		(558	)		(615	)		(175	)		(28	)		(147	)
Other (incl. foreign exch. revaluation)		151			11			140			151			11			140			—			—			—
Balance at September 30, 2002	$	21,641		$	11,031		$	10,610		$	14,402		$	5,809		$	8,593		$	6,748		$	4,731		$	2,017
Losses and loss expenses incurred		4,530			2,766			1,764			2,400			1,115			1,285			2,130			1,651			479
Losses and loss expenses paid		(2,023	)		(851	)		(1,172	)		(1,628	)		(668	)		(960	)		(395	)		(183	)		(212	)
Other (incl. foreign exch. revaluation)		167			51			116			167			51			116			—			—			—
Balance at December 31, 2002	$	24,315		$	12,997		$	11,318		$	15,341		$	6,307		$	9,034		$	8,483		$	6,199		$	2,284
Losses and loss expenses incurred		2,390			1,107			1,283			2,365			1,104			1,261			25			3			22
Losses and loss expenses paid		(2,155	)		(984	)		(1,171	)		(1,910	)		(893	)		(1,017	)		(245	)		(91	)		(154	)
Other (incl. foreign exch. revaluation)		86			16			70			79			16			63			7			—			7
Balance at March 31, 2003	$	24,636		$	13,136		$	11,500		$	15,875		$	6,534		$	9,341		$	8,270		$	6,111		$	2,159
Losses and loss expenses incurred		2,511			1,052			1,459			2,463			1,020			1,443			48			32			16
Losses and loss expenses paid		(2,415	)		(1,357	)		(1,058	)		(1,964	)		(1,134	)		(830	)		(451	)		(223	)		(228	)
Other (incl. foreign exch. revaluation)		208			123			85			208			123			85			—			—			—
Balance at June 30, 2003	$	24,940		$	12,954		$	11,986		$	16,582		$	6,543		$	10,039		$	7,867		$	5,920		$	1,947
Losses and loss expenses incurred		2,552			1,033			1,519			2,472			977			1,495			80			56			24
Losses and loss expenses paid		(1,833	)		(863	)		(970	)		(1,557	)		(663	)		(894	)		(276	)		(200	)		(76	)
Other (incl. foreign exch. revaluation)		(22	)		(19	)		(3	)		(12	)		(19	)		7			(10	)		—			(10	)
Balance at September 30, 2003	$	25,637		$	13,105		$	12,532		$	17,485		$	6,838		$	10,647		$	7,661		$	5,776		$	1,885

(1) The run-off reserves primarily include Brandywine group, the Commercial Insurance Service—Middle Market Worker’s Comp. reserves and the pre-1997 Westchester Specialty reserves. Prior year split between gross and ceded reserves and loss activity in ongoing and run-off categories has been revised to properly reflect intercompany reinsurance eliminations.

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ACE Limited

Asbestos and Environmental Reserves

(in millions of U.S. dollars)

(Unaudited)

	Asbestos									Asbestos
	Gross			Ceded			Net			Gross 3 year survival ratio	Gross 1 year survival ratio
Balance at December 31, 2002	$	3,192		$	2,746		$	446		11.3x	12.0x
Prior period development		—			—			—
Losses and loss expenses paid		(44	)		(18	)		(26	)
Balance at March 31, 2003	$	3,148		$	2,728		$	420
Prior period development		—			—			—
Losses and loss expenses paid		(65	)		(26	)		(39	)
Balance at June 30, 2003	$	3,083		$	2,702		$	381
Prior period development		—			—			—
Losses and loss expenses paid		(56	)		(31	)		(25	)
Balance at September 30, 2003	$	3,027		$	2,671		$	356

	Environmental & Other Latent Exposures
	Gross			Ceded			Net
Balance at December 31, 2002	$	1,352		$	949		$	403
Prior period development		—			—			—
Losses and loss expenses paid		(45	)		(8	)		(37	)
Balance at March 31, 2003	$	1,307		$	941		$	366
Prior period development		—			—			—
Losses and loss expenses paid		(75	)		(24	)		(51	)
Balance at June 30, 2003	$	1,232		$	917		$	315
Prior period development		—			—			—
Losses and loss expenses paid		(36	)		(18	)		(18	)
Balance at September 30, 2003	$	1,196		$	899		$	297

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ACE Limited

Reinsurance Recoverable Analysis

(in millions of U.S. dollars)

(Unaudited)

Net Reinsurance Recoverable by Division

	September 30 2003			June 30 2003			March 31 2003			December 31 2002
Reinsurance recoverable on paid losses & loss expenses
Active operations	$	863		$	869		$	950		$	951
Brandywine (1)		410			417			397			385
Westchester (2)		24			17			25			27
Total	$	1,297		$	1,303		$	1,372		$	1,363
Reinsurance recoverable on unpaid losses & loss expenses
Active operations	$	8,299		$	7,965		$	7,997		$	7,839
Brandywine (1)		4,873			5,044			5,218			5,237
Westchester (2)		498			505			496			491
Total	$	13,670		$	13,514		$	13,711		$	13,567
Gross reinsurance recoverable
Active operations	$	9,162		$	8,834		$	8,947		$	8,790
Brandywine (1)		5,283			5,461			5,615			5,622
Westchester (2)		522			522			521			518
Total	$	14,967		$	14,817		$	15,083		$	14,930
Bad debt reserve
Active operations	$	(443	)	$	(434	)	$	(449	)	$	(431	)
Brandywine (1)		(463	)		(463	)		(473	)		(478	)
Westchester (2)		(29	)		(29	)		(29	)		(30	)
Total	$	(935	)	$	(926	)	$	(951	)	$	(939	)
Net reinsurance recoverable
Active operations	$	8,719		$	8,400		$	8,498		$	8,359
Brandywine (1)		4,820			4,998			5,142			5,144
Westchester (2)		493			493			492			488
Total	$	14,032		$	13,891		$	14,132		$	13,991

(1) The Company’s obligations with respect to further funding of the Brandywine run-off are limited pursuant to the Brandywine Restructuring Order under an $800 million aggregate excess of loss reinsurance agreement. (Refer to the “Asbestos and Environmental Claims” section of the “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” incorporated into our filed Form 10-K for the year ended December 31, 2002 for additional information about the order and other Company obligations.) At September 30, 2003, approximately $492 million in losses and recoverable bad debt reserves were ceded to the aggregate excess of loss reinsurance agreement leaving a remaining limit of approximately $308 million.

(2) As part of the Westchester acquisition, National Indemnity provided reinsurance protection for all losses occurring prior to 1997. At September 30, 2003, the remaining limit in the reinsurance cover was approximately $600 million.

        Note: Active operations include the run-off operations of CIS.

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ACE Limited

Reinsurance Recoverable Analysis—2

(in millions of U.S. dollars)

(Unaudited)

Reinsurance Recoverable for Active Operations

	June 30, 2003
Categories	Recoverable		Bad Debt		% of Gross
Top 10 reinsurers	$	4,054	$	68	1.7%
Other reinsurers balances >$20 million		2,020		136	6.7%
Other reinsurers balances <$20 million		780		52	6.7%
Mandatory pools and government agencies		745		4	0.5%
Structured settlements		274		1	0.4%
Captives		695		3	0.4%
Other		266		170	63.9%
Total	$	8,834	$	434	4.9%

At June 30, 2003, $5.6 billion of the active operations’ recoverables were from rated reinsurers, of which 87% were rated A- or better by Standard & Poor’s. The Company held collateral of $2.1 billion, of which $1.4 billion was matched and usable against existing recoverables.

Top 10 Reinsurers (net of collateral)	Other Reinsurers Balances Greater Than $20 million (net of collateral)
American International Group	ABB Group	FM Global Group
AXA	AIOI Insurance	Groupama
Berkshire Hathaway Insurance Group	Allianz Group	Independence Blue Cross (Amerihealth)
		ING - Internationale Nederlanden Group
GE Global Insurance Group (Employers Re)	Arch Capital	Liberty Mutual Insurance Companies
Hannover	AVIVA	Nisshin Fire and Marine
Lloyd’s of London	Chubb Insurance Group	Overseas Partners Ltd.
Munich Re	CIGNA	PMA Capital Insurance Company
St. Paul Companies	CNA Insurance Companies	QBE Insurance
Swiss Re Group	Converium Group	RenaissanceRe Holdings Ltd
XL Capital Group	DaimlerChrysler Group	Royal & Sun Alliance Insurance Group plc
	Dorinco Reinsurance Co.	SCOR Group
	Electric Insurance Company	Toa Reinsurance Company
	EQUITAS	Trenwick Group
	Everest Re Group	WR Berkley Corp
	Fairfax Financial	Zurich Financial Services Group

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ACE Limited

Reinsurance Recoverable Analysis—3

(in millions of U.S. dollars)

(Unaudited)

Consolidated Reinsurance Recoverable

	June 30, 2003
Categories	Recoverable		Bad Debt		% of Gross
Top 10 reinsurers	$	7,728	$	93	1.2%
Other reinsurers balances >$20 million		3,139		233	7.4%
Other reinsurers balances <$20 million		985		70	7.1%
Mandatory pools and government agencies		777		4	0.5%
Structured settlements		651		3	0.5%
Captives		720		5	0.7%
Other		817		518	63.4%
Total	$	14,817	$	926	6.2%

At June 30, 2003, $10.0 billion of consolidated recoverables were from rated reinsurers, of which 91% were rated A- or better by Standard & Poor’s.

Top 10 Reinsurers (net of collateral)	Other Reinsurers Balances Greater Than $20 million (net of collateral)
American International Group	ABB Group	Independence Blue Cross (Amerihealth)
AXA	AIOI Insurance	ING—Internationale Nederlanden Group
Berkshire Hathaway Insurance Group	Allianz Group	IRB—Brasil Resseguros S.A.
EQUITAS	Arch Capital	Liberty Mutual Insurance Companies
GE Global Insurance Group	AVIVA	Markel Corporation Group
Hannover	Chubb Insurance Group	Nisshin Fire and Marine
Lloyd’s of London	CIGNA	Overseas Partners Ltd.
Munich Re	CNA Insurance Companies	PMA Capital Insurance Company
St. Paul Companies	Converium Group	QBE Insurance
Swiss Re Group	DaimlerChrysler Group	RenaissanceRe Holdings Ltd
	Dominion Ins. Co. Ltd.	Royal & Sun Alliance Insurance Group plc
	Dorinco Reinsurance Co.	SCOR Group
	Electric Insurance Company	Sompo Japan
	Everest Re Group	Toa Reinsurance Company
	Fairfax Financial	Travelers Property Casualty Group
	FM Global Group	Trenwick Group
	Gerling Group	White Mountains Insurance Group
	Great American P&C Insurance Companies	WR Berkley Corp
	Groupama	XL Capital Group
	Hartford Insurance Group	Zurich Financial Services Group

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ACE Limited

Reinsurance Recoverable Analysis—4

(in millions of U.S. dollars)

(Unaudited)

Detail on Reinsurance Recoverable on Paid Losses and Loss Expenses

	General Collections (1)		Other (2)		Total
Gross balance at December 31, 2002	$	848	$	515	$	1,363
Bad debt reserve at 12/31/02		43		335		378
% of gross		5.1%		65.0%		27.7%
Net balance at December 31, 2002		805		180		985
Gross balance at March 31, 2003	$	848	$	524	$	1,372
Bad debt reserve at 3/31/03		54		333		387
% of gross		6.4%		63.5%		28.2%
Net balance at March 31, 2003		794		191		985
Gross balance at June 30, 2003	$	795	$	508	$	1,303
Bad debt reserve at 6/30/03		51		327		378
% of gross		6.4%		64.4%		29.0%
Net balance at June 30, 2003		744		181		925
Gross balance at September 30, 2003	$	765	$	532	$	1,297
Bad debt reserve at 9/30/03		46		339		385
% of gross		6.0%		63.7%		29.7%
Net balance at September 30, 2003	$	719	$	193	$	912

(1) General collections balances represent amounts in process of collection in the normal course of business, for which we have no indication of dispute or credit issues. We provide bad debt reserves based primarily on the application of historical loss.

(2) Other includes amounts recoverable that are in dispute, or are from companies who are in supervision, rehabilitation or liquidation. Our estimation of this reserve considers the credit quality of the reinsurer, and whether we have received collateral or other credit protections such as parental guarantees.

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ACE Limited

Investment Portfolio—1

(in millions of U.S. dollars)

(Unaudited)

	September 30 2003		June 30 2003		March 31 2003		December 31 2002
Market Value
Fixed maturities	$	17,413	$	16,884	$	15,044	$	14,420
Securities on loan		596		546		521		293
Short-term investments		2,520		2,048		2,081		1,885
Cash		431		576		477		663
Total	$	20,960	$	20,054	$	18,123	$	17,261
Asset Allocation by Market Value
Treasury	$	1,010	$	886	$	859	$	842
Agency		1,170		1,383		1,074		973
Corporate		7,718		7,796		7,117		6,459
Mortgage-backed securities		4,235		3,825		3,415		3,302
Asset-backed securities		519		439		338		352
Municipal		1,329		1,346		1,220		1,201
Non-US		2,028		1,755		1,542		1,584
Cash & cash equivalent		2,951		2,624		2,558		2,548
Total	$	20,960	$	20,054	$	18,123	$	17,261
Credit Quality by Market Value
AAA	$	10,376	$	9,841	$	8,808	$	8,566
AA		3,661		3,623		3,265		2,880
A		3,366		3,162		3,027		2,920
BBB		1,742		1,592		1,464		1,314
BB		764		782		697		662
B		973		939		791		843
Other		78		115		71		76
Total	$	20,960	$	20,054	$	18,123	$	17,261
Cost/Amortized Cost
Fixed maturities	$	16,713	$	15,974	$	14,370	$	13,791
Securities on loan		549		498		494		286
Short term investments		2,520		2,048		2,081		1,885
Cash		431		576		477		663
Subtotal		20,213		19,096		17,422		16,625
Equity securities		371		400		414		442
Other investments		625		626		657		622
Total	$	21,209	$	20,122	$	18,493	$	17,689
Avg. duration of fixed maturities, adj. for int. rate swaps		3.4 years		3.2 years		3.1 years		3.1 years
Avg. market yield of fixed maturities		4.0%		3.8%		4.2%		4.4%
Avg. credit quality		AA		AA		AA		AA

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ACE Limited

Investment Portfolio—2

(in millions of U.S. dollars)

(Unaudited)

Investment portfolio

Top 10 Exposures—Fixed Maturity Investments and Single Name Credit Default Swaps

	September 30, 2003
General Electric	$	293
General Motors		192
Citigroup Inc		189
Verizon Communications		123
AIG		117
HSBC Holdings Plc		110
Ford Motor Co		104
Goldman Sachs Group		97
Morgan Stanley		95
Merrill Lynch		86

	June 30, 2003
General Electric	$	289
General Motors		199
Citigroup Inc		173
Verizon Communications		141
HSBC Holdings Plc		119
AIG		118
Merrill Lynch		116
Goldman Sachs Group		103
Morgan Stanley		102
Ford Motor Co		101

	March 31, 2003
General Electric	$	287
General Motors		170
Citigroup Inc		168
Verizon Communications		143
AIG		118
Ford Motor Co		113
Merrill Lynch		110
Morgan Stanley		108
Goldman Sachs Group		101
HSBC Holdings Plc		100

	December 31, 2002
General Electric	$	258
General Motors		171
Citigroup Inc		154
Verizon Communications		127
AIG		123
Ford Motor Co		123
Bank of America		119
Wachovia Corp		106
Wells Fargo		105
JP Morgan Chase		105

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ACE Limited

Realized and Unrealized Gains (Losses)

(in millions of U.S. dollars)

(Unaudited)

	Three months ended September 30, 2003									Nine months ended September 30, 2003
	Net Realized Gains (Losses) (1)			Net Unrealized Gains (Losses)			Net Impact			Net Realized Gains (Losses) (1)			Net Unrealized Gains (Losses)			Net Impact
Investment Portfolio Gains (Losses)
Fixed maturities	$	16		$	(220	)	$	(204	)	$	77		$	90		$	167
Interest rate swaps		5			—			5			(9	)		—			(9	)
Equity securities		1			27			28			(53	)		140			87
Equity and fixed income derivatives		8			—			8			28			—			28
Foreign exchange gains (losses)		3			—			3			18			—			18
Other		(2	)		4			2			(13	)		9			(4	)
Total inv. portfolio gains (losses)	$	31		$	(189	)	$	(158	)	$	48		$	239		$	287
Credit default swaps (FAS 133 adjustment)		26			—			26			76			—			76
Total gains (losses)	$	57		$	(189	)	$	(132	)	$	124		$	239		$	363
Income tax (expense) benefit		(6	)		48			42			(20	)		(28	)		(48	)
Net gains (losses)	$	51		$	(141	)	$	(90	)	$	104		$	211		$	315

(1) The quarter includes impairments of $6M for fixed maturities and $7M for equities and $4M for other. Year to date includes impairments of $25M for fixed maturities and $61M for equities and $20M for other.

	Three months ended September 30, 2002									Nine months ended September 30, 2002
	Net Realized Gains (Losses) (2)			Net Unrealized Gains (Losses)			Net Impact			Net Realized Gains (Losses) (2)			Net Unrealized Gains (Losses)			Net Impact
Investment Portfolio Gains (Losses)
Fixed maturities	$	(16	)	$	282		$	266		$	(54	)	$	606		$	552
Interest rate swaps		(56	)		—			(56	)		(79	)		—			(79	)
Equity securities		(55	)		(55	)		(110	)		(55	)		(119	)		(174	)
Equity and fixed income derivatives		(57	)		—			(57	)		(118	)		—			(118	)
Foreign exchange gains (losses)		(2	)		—			(2	)		(1	)		—			(1	)
Other		2			(1	)		1			3			(8	)		(5	)
Total inv. portfolio gains (losses)	$	(184	)	$	226		$	42		$	(304	)	$	479		$	175
Credit default swaps (FAS 133 adjustment)		(51	)		—			(51	)		(97	)		—			(97	)
Total gains (losses)	$	(235	)	$	226		$	(9	)	$	(401	)	$	479		$	78
Income tax (expense) benefit		30			(66	)		(36	)		53			(128	)		(75	)
Net gains (losses)	$	(205	)	$	160		$	(45	)	$	(348	)	$	351		$	3

(2) The quarter includes impairments of $33M for fixed maturities and $53M for equities. Year to date includes impairments of $76M for fixed maturities and $54M for equities.

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ACE Limited

Capital Structure

(in millions of U.S. dollars)

	September 30 2003			June 30 2003			March 31 2003			December 31 2002			December 31 2001
Total short-term debt	$	146		$	146		$	146		$	146		$	495
Total long-term debt (1)		1,749			1,749			1,749			1,749			1,349
Total debt	$	1,895		$	1,895		$	1,895		$	1,895		$	1,844
Total trust preferreds (2)	$	475		$	475		$	475		$	475		$	875
Mezzanine equity (3)	$	—		$	—		$	311		$	311		$	311
Perpetual preferred (4)	$	557		$	557		$	—		$	—		$	—
Ordinary shareholders’ equity		7,789			7,621			6,702			6,389			6,107
Total shareholders’ equity	$	8,346		$	8,178		$	6,702		$	6,389		$	6,107
Total capitalization	$	10,716		$	10,548		$	9,383		$	9,070		$	9,137
Tangible shareholders’ equity (5)	$	5,635		$	5,467		$	3,991		$	3,672		$	3,335
Leverage ratios
Debt/ total capitalization		17.7	%		18.0	%		20.2	%		20.9	%		20.2	%
Debt plus trust preferreds/ total capitalization		22.1	%		22.5	%		25.3	%		26.1	%		29.8	%
Debt/ tangible equity		33.6	%		34.7	%		47.5	%		51.6	%		55.3	%
Debt plus trust preferreds and mezzanine equity/ tangible equity		42.1	%		43.4	%		67.2	%		73.0	%		90.9	%
Debt plus total preferred stock/ total capitalization		27.3	%		27.7	%		25.3	%		26.1	%		29.8	%

(1) $50 million of ACE INA subordinated notes due 2009 was repaid in both the second and third quarters of 2002. An additional $500 million of Senior Debt was issued by ACE Limited in March 2002.

(2) $400 million of ACE INA Rhino Preferred Securities due 2002 was repaid in the second and third quarters of 2002.

(3) The FELINE PRIDES converted in the second quarter of 2003.

(4) Preferred shares $575 million, net of issuance costs $18 million.

(5) Tangible equity is equal to shareholders’ equity less goodwill.

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ACE Limited

Non-GAAP Financial Measures and Comprehensive Income

(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 GAAP. A reconciliation of book value per share to diluted book value per ordinary share is provided on page 33. The following non-GAAP measure is a common performance measurement and is defined as net income (loss) excluding net realized gains (losses) on investments and the tax effect of net realized gains (losses) on investments. 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) on investments because the amount of these gains (losses) is heavily influenced by, and fluctuates in part, according to the availability of market opportunities. We believe these amounts are largely independent of our business and including them would distort the analysis of trends. Income excluding net realized gains (losses) should not be viewed as a substitute for net income determined in accordance with generally accepted accounting principles (GAAP).

	3Q-03			2Q-03			1Q-03			4Q-02			3Q-02			YTD 2003			YTD 2002			Full Year 2002
Net income (loss), as reported	$	355		$	371		$	247		$	(168	)	$	(57	)	$	973		$	245		$	77
Net realized gains (losses)		57			107			(40	)		(88	)		(235	)		124			(401	)		(489	)
Tax effect of net realized gains (losses)		(6	)		(22	)		8			19			30			(20	)		53			72
Income (loss) excluding net realized gains (losses) and the cumulative effect of adopting a new accounting standard	$	304		$	286		$	279		$	(99	)	$	148		$	869		$	593		$	494
Consolidated Statement of Comprehensive Income
Net income (loss)	$	355		$	371		$	247		$	(168	)	$	(57	)	$	973		$	245		$	77
Net unrealized appreciation (depreciation) on investments
Unrealized appreciation (depreciation) on investments		(165	)		354			112			131			198			301			227			358
Reclassification adjustment for net realized gains (losses) included in net income		(24	)		(14	)		(24	)		55			28			(62	)		43			98
Cumulative translation adjustment		(1	)		57			26			(4	)		4			82			4			—
Minimum pension liability adjustment		(3	)		(59	)		—			—			—			(62	)		—			—
Income tax (expense) benefit related to other comprehensive income items		48			(63	)		(16	)		(27	)		(69	)		(31	)		(91	)		(118	)
Other comprehensive income (loss)		(145	)		275			98			155			161			228			183			338
Comprehensive income (loss)	$	210		$	646		$	345		$	(13	)	$	104		$	1,201		$	428		$	415

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ACE Limited

Diluted Book Value per Ordinary Share

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

(Unaudited)

Reconciliation of Book Value per Ordinary Share to Diluted Book Value per Ordinary Share

	September 30 2003			June 30 2003			March 30 2003		December 31 2002
Shareholders’ equity	$	8,346		$	8,178		$	6,702	$	6,389
Net proceeds from assumed conversions of options		277			291			226		138
Proceeds from issuance of preferred shares		(557	)		(557	)		—		—
Conversion of mezzanine equity		—			—			311		311
Numerator for diluted book value per share calculation		8,066			7,912			7,239		6,838
Less: goodwill		2,711			2,711			2,711		2,717
Numerator for diluted tangible book value per share	$	5,355		$	5,201		$	4,528	$	4,121
Ordinary shares outstanding—end of period		278,480,910			277,755,290			264,491,819		262,679,356
Shares issued from assumed conversions of options		12,028,816			12,669,243			11,697,607		8,560,131
Shares issued on conversion of mezzanine equity		—			—			11,814,373		11,814,373
Denominator for diluted and diluted tangible book value		290,509,726			290,424,533			288,003,799		283,053,860
Book value per ordinary share	$	27.97		$	27.44		$	25.34	$	24.32
Diluted book value per ordinary share	$	27.76		$	27.24		$	25.14	$	24.16
Diluted tangible book value per ordinary share	$	18.43		$	17.91		$	15.72	$	14.56

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ACE Limited

Statutory Accounting Principals to GAAP Reconciliation

(in millions of U.S. dollars)

(Unaudited)

Reconciliation of Reinsurance Recoverable

A significant amount of detail on a large portion of our reinsurance recoverables are disclosed in our US statutory annual reports. The following is a reconciliation of the amount reported in these reports to our total recoverable as of December 31, 2002 reported for GAAP purposes:

Total amounts reported for statutory purposes	$	8,611
Less: the portion of the total balance that is intercompany and therefore eliminated for GAAP purposes		(2,732	)
Plus: amounts ceded to NICO which are not reported as reinsurance recoverables for statutory purposes		2,767
Plus: the amount of reserve and recoverable discounting included for statutory purposes which is added back for GAAP purposes		1,701
Total GAAP recoverables disclosed in US statutory reports		10,347
Structured settlements		730
Other legal entities (1)		3,853
Total amounts reported for GAAP purposes (2)	$	14,930
Percentage disclosed in detail in US statutory annual reports		69	%

(1) Not subject to US statutory reporting requirements

(2) The variance between the Statutory and GAAP balance relates to differences in accounting rules. Statutory rules allow the inclusion of affiliated balances, and the discounting of certain reserves and related recoverables. The statutory balance also excludes retroactive reinsurance contracts (NICO).

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ACE Limited

Glossary

Annualized ROE:	Annualized return on ordinary shareholders’ equity income (loss) excluding net realized gains (losses) less perpetual preferred and mezzanine equity dividend divided by average ordinary shareholders’ equity for the period. To annualize a quarterly rate multiply by four.
Combined ratio:	The sum of the loss and loss expense ratio, acquisition cost ratio and the administrative expense ratio for the property and casualty and financial services operations.
Diluted book value per ordinary share:	Ordinary shareholders’ equity and net proceeds from assumed conversions of outstanding in-the-money options divided by the sum of shares outstanding and the number of options assumed issued.
Diluted tangible book value per ordinary share:	Ordinary shareholders’ equity and net proceeds from assumed conversions of outstanding in-the-money options less goodwill divided by the sum of shares outstanding and the number of options assumed issued.
Effective tax rate:	Income tax expense divided by the sum of income tax expense and income (loss) excluding net realized gains (losses).
FAS 115:	Unrealized gains (losses) on investments and the deferred tax component included in shareholders’ equity.
Life underwriting income:	Net premium earned and net investment income less future policy benefits, acquisition costs and administrative expenses.
NM:	Not meaningful.
Return on ordinary shareholders’ equity (ROE):	Income (loss) excluding net realized gains (losses) less perpetual preferred securities and mezzanine equity dividends divided by average ordinary shareholders’ equity.
Ordinary shareholders’ equity:	Shareholders’ equity less perpetual preferred shares.
Property and casualty combined ratios:	Loss and loss expense ratios, policy acquisition cost ratios and administrative expense ratios exclude life reinsurance business and financial services segment.
Tangible equity:	Shareholders’ equity less goodwill.
Total capitalization:	Short-term debt, long-term debt, trust preferreds, mezzanine equity, perpetual preferred shares and shareholders’ equity.

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