Shareholders' Equity

9 Months Ended

Sep. 30, 2011

Shareholders' Equity [Abstract]

Shareholders' Equity

8. Shareholders' equity

All of ACE's Common Shares are registered common shares under Swiss corporate law. Though the par value of Common Shares is stated in Swiss francs, ACE continues to use U.S. dollars as its reporting currency for preparing the consolidated financial statements. Under Swiss corporate law, dividends, including distributions through a reduction in par value (par value distributions) or from legal reserves, must be declared by ACE in Swiss francs though dividend payments are made by ACE in U.S. dollars. In light of a January 1, 2011 Swiss tax law change, at our May 2011 Annual General Meeting our shareholders approved a dividend for the following year from our capital contributions reserves (additional paid in capital), a subaccount of legal reserves. Dividends declared in the first quarter of 2011 of CHF 0.30 ($0.33) per Common Share were paid in the form of a par value distribution (under the method approved by our shareholders at our May 2010 Annual General Meeting) and had the effect of reducing par value per Common Share to CHF 30.27. Dividends declared in the second and third quarters of 2011 of CHF 0.29 ($0.35) and 0.31 ($0.35) per Common Share, respectively, were funded from capital contributions reserves (additional paid in capital) and paid from free reserves (retained earnings).

For the three and nine months ended September 30, 2010, dividends declared per Common Share amounted to CHF 0.32 ($0.33), and CHF 0.99 ($0.97), respectively, and were paid by way of a par value distribution.

Common Shares in treasury are used principally for issuance upon the exercise of employee stock options. At September 30, 2011, 6,442,119 Common Shares remain in treasury after net shares redeemed under employee share-based compensation plans.

ACE Limited securities repurchase authorization

In August 2011, the Board of Directors authorized the repurchase of up to $303 million of ACE's Common Shares through December 31, 2012. The amount authorized in August 2011 was in addition to the $197 million balance remaining under a $600 million share repurchase program approved in November 2010. These authorizations were granted to allow ACE to repurchase Common Shares to partially offset potential dilution from the exercise of stock options and the granting of restricted stock under share-based compensation plans. Such repurchases may be made in the open market, in privately negotiated transactions, block trades, accelerated repurchases and/or through option or other forward transactions.

Under the November 2010 authorization, ACE had repurchased 4.9 million of its outstanding Common Shares as of December 31, 2010 in a series of open market transactions for a cost of $303 million. During the three and nine months ended September 30, 2011, ACE repurchased an additional 1.6 million of its outstanding Common Shares in a series of open market transactions for a cost of $100 million. At September 30, 2011, $500 million in share repurchase authorization remained through December 31, 2012 pursuant to the November 2010 and August 2011 Board authorizations.