UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

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¨ Preliminary Proxy Statement

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¨ Definitive Proxy Statement

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ACE Limited

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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ACE Limited 2010 Proxy Statement

Long-Term Incentive Plan Amendment

Agenda Item No. 8

May 6, 2010

What is Agenda Item No. 8 Asking

Shareholders to Vote On?

2

The primary effects of the amendment to the ACE Limited 2004

Long-Term Incentive Plan, or LTIP, would be:

11.6

million

share

increase

to

the

total

shares

available

for

issuance under the terms of the LTIP

6.0

million

share

increase

to

the

“sublimit”

of

shares

available for issuance as “full value awards”

(as defined in

the LTIP, e.g., restricted stock grants and restricted stock

units, as opposed to options)

Total potential dilution of approx. 7.3%, including current

overhang

below insurance industry averages (11.3-15.4%)

and

RiskMetrics

Group

growth

company

threshold

(10%)

counts new shares requested and current remaining

pool and outstanding awards

What Would be the Practical Impact of

the LTIP Amendment?

The LTIP Amendment would give the ACE Board discretion

to grant awards/shares under the LTIP in the future

This share pool increase would allow approximately 3 years

of awards following shareholder approval before a further

shareholder vote would be required

This 3-year estimate is based on assumed annual grants

consistent

with

past

practice

as

adjusted

to

reflect

company growth and other factors

3

What are the Benefits of the LTIP

Amendment?

Equity compensation has always been an important component

of executive and employee compensation at ACE.  Equity

compensation aligns employee compensation with shareholder

interests

and

it

properly

defers

value

to

the

medium-

or

long-

term.

Authorizing the LTIP share increase will provide the ACE Board

with a valuable tool to:

Attract

and

retain

employees

Motivate

employees

to

achieve

long-range

goals

Provide

incentive

compensation

opportunities

competitive

with ACE’s peers

Adapt

to continued evolution of executive and employee

compensation practices worldwide

Account

for

the

continued

growth

of

the

company

and

its

employee base

4

Advantages

of a 3-Year Time Horizon

Provides sufficient LTIP share replenishment to maintain a

clear, stable plan

to manage participants’

expectations

Allows

for

continued

and

consistent

use

of

equity

as

a

compensation tool aligned with best practices

Encourages

shareholder

value

creation

by

reinforcing

with

ACE employees the clear message that good financial

performance is fairly rewarded

5

Are there Safeguards Against Improper

or Excessive Equity Compensation?

Equity awards have been, and will be, reasonably stable and

based on performance factors set forth in the company’s proxy

statement

LTIP includes caps and limitations on annual grants to

individuals

LTIP prohibits:

Option repricing

Below grant date fair market value option exercise prices

LTIP includes minimum vesting provisions for restricted share

grants

ACE complies with NYSE/SEC stock plan requirements

ACE’s annual proxy fully discloses executive grants and

compensation practices

ACE’s SEC reports quantify/disclose executive and equity

compensation expenses

6

What Metrics are Important to Consider?

Third party proxy advisory firms have analyzed the proposed

LTIP amendment using various historical and other metrics

These metrics tend to bias strongly in favor of a constant

need to replenish = unreliability, instability and a short-

term focus

These metrics do not incorporate ACE’s positive financial

performance trends and averages

ACE’s equity awards are strongly linked to the company’s

financial results

ACE believes its historical equity award practices directly

contribute to successful financial performance, and that

ACE’s financial performance and strength give rationale to

historical and anticipated LTIP grant levels

7

What Metrics are Important to Consider?

Equity represents a significant percentage of senior executive 

compensation in the company:

Equity as % of Compensation

CEO

64%

NEO

55%

Equity grants/types are in line with relevant best practices:

50% of CEO restricted shares are performance based

33% of NEO restricted shares are performance based

Performance metrics are published annually

Mix of options, restricted grants, performance shares protect

against management focus on attaining single compensation

goal

8

ACE Financial Performance

ACE has established a strong track record of financial

performance

benefiting

its

shareholders.

Over

the

past

5

years:

Operating income has grown at a compound annual rate

of 22.5%

Shareholders’

equity has grown 14.8% while the

average return on equity has been 15.7%, an efficient

use of the company’s capital

Book value and tangible book value has grown at a

compound annual rate of 15% and 17%, respectively

Book value per share and tangible book value per share

have increased 12% and 15%, respectively

9

Burn Rate Reports

ACE historical “burn rate”

as published by proxy advisory

firms

RiskMetrics

Group

(RMG)

and

Glass

Lewis

shows

modest outlay of shares to plan participants

10

ACE’s burn rate equals Glass

Lewis 1.2% peer grp. median %

N/A

1.2

Glass Lewis

ACE “passes”

the RMG burn

rate test (2.31% industry

threshold), and is below the

RMG “de minimis”

level

(2.00%)

1.82

1.18

RMG

Notes

ACE 3-year adjusted**

burn rate %

ACE 3-year

burn rate %*

Firm

*ACE is in general agreement with basic burn rate analysis

**RMG’s

proprietary model applies a multiple to “full value awards”

Dilution Reports

ACE dilution from LTIP is modest compared to peers, as

reported by RMG and Glass Lewis

11

Glass Lewis calculation

includes ACE’s Employee

Stock Purchase Plan; but

these

shares

are

purchased,

not awarded

15.4%

9.1%

Glass Lewis

ACE is also below RMG’s

“growth company”

threshold

of 10.0%

11.34%

7.9%

RMG

Notes

Peer Average*

Reported ACE

Dilution %

Firm

*The organizations compile peer group calculations differently

RMG calculation is LTIP-specific.  Updated calculations based on

2/28/10 data in Proxy Statement equate to 7.3% dilution

Additional information

ACE Limited filed a definitive proxy statement with the SEC on April 5, 2010

(the “Proxy Statement”) in connection with its upcoming 2010 Annual

General Meeting scheduled for May 19, 2010.  This presentation is intended

to provide additional information solely with respect to Agenda Item No. 8

described in the Proxy Statement.

This

document

is

not

a

substitute

for

the

Proxy

Statement

or

any

other

documents

ACE

has

filed

or

will

file

with

the

SEC.

Shareholders

are

urged

to

read the Proxy Statement in its entirety.  The Proxy Statement is, and other

documents filed or to be filed by ACE with the SEC are or will be, available

free of charge at the SEC’s Web site (www.sec.gov) or from Investor

Relations, ACE Limited, 17 Woodbourne Avenue, Hamilton, HM 08,

Bermuda, Telephone: (441)

299-9283.

ACE and its directors, executive officers and other employees may be

deemed to be participants in the solicitation of proxies. Information regarding

ACE’s directors and executive officers and their interests is available in the

definitive proxy statement and the other relevant documents filed with the

SEC.

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