Chubb Ltd - FORM 8-K - EX-99.2 - SECOND QUARTER 2012 FINANCIAL SUPPLEMENT

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EX-99.1 - PRESS RELEASE - Chubb Ltd	d383140dex991.htm
8-K - FORM 8-K - Chubb Ltd	d383140d8k.htm

Exhibit 99.2

LOGO


Investor Contact		This report is for informational purposes only. It should be read in conjunction with documents filed by ACE Limited with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
Helen M. Wilson
Phone: (441) 299-9283
Fax: (441) 292-8675 email: investorrelations@acegroup.com		Cautionary Statement Regarding Forward-Looking Statements:
		Any forward-looking statements made in this financial supplement reflect ACE’s current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause actual results to differ materially from those set forth in these statements. For example, our forward-looking statements, such as statements concerning exposures, reserves and recoverables, could be affected by the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance receivable and credit developments among reinsurers.

		Our forward-looking statements could also be affected by competition, pricing and policy term trends, market acceptance, changes in demand, actual market developments, rating agency action, possible terrorism or the outbreak and effects of war. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

ACE Limited

Financial Supplement Table of Contents


		Page
I.	Financial Highlights
	- Consolidated Financial Highlights		1

II.	Consolidated Results
	- Consolidated Results - Consecutive Quarters		2
	- Summary Consolidated Balance Sheets		3
	- Consolidated Premiums and Income Excluding Net Realized Gains (Losses) by Line of Business		4 - 5

III.	Segment Results
	- Insurance - North American		6
	- Insurance - Overseas General		7
	- Global Reinsurance		8
	- Life		9

IV.	Balance Sheet Details
	- Loss Reserve Rollforward		10
	- Reinsurance Recoverable Analysis		11
	- Investment Portfolio		12 - 17
	- Net Realized and Unrealized Gains (Losses)		18
	- Capital Structure		19
	- Computation of Basic and Diluted Earnings Per Share		20

V.	Other Disclosures
	- Non-GAAP Financial Measures		21 - 22
	- Book Value and Book Value per Common Share		23
	- Glossary		24

ACE Limited

Consolidated Financial Highlights

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

(Unaudited)

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


	Three months ended June 30						% Change 2Q-12 vs.			Constant $		% Change 2Q-12 vs.			Six months ended June 30						% Change YTD-12 vs.			Constant $		% Change YTD-12 vs.
	2012			2011			2Q-11			2011 ⁽²⁾		2Q-11⁽²⁾			2012			2011			YTD-11			2011 ⁽²⁾		YTD-11 ⁽²⁾
Gross premiums written	$	5,653		$	5,423			4.2	%	$	5,336		5.9	%	$	10,440		$	10,067			3.7	%	$	9,955		4.9	%

Net premiums written	$	4,130		$	3,953			4.5	%	$	3,879		6.5	%	$	7,702		$	7,399			4.1	%	$	7,300		5.5	%

Net premiums earned	$	3,783		$	3,757			0.7	%	$	3,675		2.9	%	$	7,164		$	7,066			1.4	%	$	6,962		2.9	%

Net investment income	$	537		$	569			-5.5	%						$	1,081		$	1,113			-2.8	%

Net income	$	328		$	594			-44.7	%						$	1,301		$	844			54.0	%

Income excluding net realized gains (losses)⁽¹⁾	$	743		$	673			10.3	%						$	1,444		$	932			54.7	%

Comprehensive income	$	457		$	801			-42.9	%						$	1,728		$	1,239			39.5	%

Operating cash flow	$	811		$	1,060										$	1,383		$	2,063

P&C combined ratio
Loss and loss expense ratio		59.5	%		63.1	%										58.3	%		68.1	%
Underwriting and administrative expense ratio		29.2	%		29.6	%										30.6	%		30.4	%

Combined ratio		88.7	%		92.7	%										88.9	%		98.5	%
Annualized return on equity (ROE) calculated using income excluding net realized gains (losses)⁽¹⁾		12.6	%		12.2	%										12.5	%		8.5	%
Annualized ROE calculated using net income		5.1	%		10.1	%										10.4	%		7.2	%

Effective tax rate on income excluding net realized gains (losses) ⁽¹⁾		14.6	%		14.4	%										13.8	%		18.4	%
Effective tax rate		31.0	%		16.9	%										16.6	%		20.4	%

Diluted earnings per share

Income excluding net realized gains (losses) ⁽¹⁾	$	2.17		$	1.97			10.2	%						$	4.22		$	2.74			54.0	%

Net income	$	0.96		$	1.74			-44.8	%						$	3.80		$	2.48			53.2	%

Book value per common share⁽¹⁾															$	75.98		$	70.88			7.2	%
Tangible book value per common share ⁽¹⁾															$	61.75		$	56.60			9.1	%

Weighted average basic common shares outstanding		339.8			338.9											339.2			338.0
Weighted average diluted common shares outstanding		342.7			341.7											342.2			340.6

Debt/total capitalization																15.4	%		16.4	%

(1)	See Non-GAAP Financial Measures.

(2)	Prior periods on a constant dollar basis.

Adoption of New Accounting Pronouncement:

Shareholders’ equity and book value per common share at December 31, 2011 and June 30, 2011 and annualized ROE percentages for the three and six months ended June 30, 2011 have been retrospectively adjusted to reflect the adoption of new guidance issued by the Financial Accounting Standards Board related to the accounting for costs associated with acquiring or renewing insurance contracts. The adoption of this guidance decreased shareholders’ equity by $181 million as of December 31, 2011. The effect of the adoption of the new guidance on net income for the three and six months ended June 30, 2011 was a decrease of $12 million and $22 million, respectively.


Financial Highlights		Page 1

ACE Limited

Consolidated Results - Consecutive Quarters

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

(Unaudited)


ACE Limited Consolidated	2Q-12			1Q-12			4Q-11			3Q-11			2Q-11			YTD 2012			YTD 2011			Full Year 2011
Consolidated Results Excluding Life Segment
Gross premiums written	$	5,140		$	4,275		$	4,344		$	5,391		$	4,910		$	9,415		$	9,106		$	18,841
Net premiums written		3,644			3,084			3,134			3,855			3,460			6,728			6,470			13,459
Net premiums earned		3,309			2,908			3,361			4,010			3,273			6,217			6,157			13,528
Losses and loss expenses		1,968			1,656			2,132			2,603			2,067			3,624			4,192			8,927
Policy acquisition costs		531			506			546			577			527			1,037			1,010			2,133
Administrative expenses		436			432			447			439			440			868			865			1,751

Underwriting income excluding Life segment ⁽¹⁾		374			314			236			391			239			688			90			717
Life underwriting income excluding investment income and gains (losses) from fair value changes in separate account assets ⁽²⁾		55			24			27			82			54			79			100			209
Net investment income		537			544			565			564			569			1,081			1,113			2,242
Net realized gains (losses)		(394	)		260			83			(760	)		(73	)		(134	)		(118	)		(795	)
Interest expense		62			62			63			62			62			124			125			250
Other income (expense): ⁽²⁾
Gains (losses) from fair value changes in separate account assets		(14	)		18			3			(39	)		—			4			—			(36	)
Other		(20	)		(15	)		4			(50	)		(12	)		(35	)		1			(45	)
Income tax expense		148			110			120			165			121			258			217			502

Net income (loss)		328			973			735			(39	)		594			1,301			844			1,540

Net realized gains (losses)		(394	)		260			83			(760	)		(73	)		(134	)		(118	)		(795	)
Net realized gains (losses) in other income (expense)⁽³⁾		1			18			16			(28	)		2			19			36			24
Tax expense on net realized gains (losses)		22			6			12			2			8			28			6			20

Income excluding net realized gains (losses) ⁽¹⁾	$	743		$	701		$	648		$	751		$	673		$	1,444		$	932		$	2,331

% Change versus prior year period ⁽⁴⁾
Net premiums written as reported		5.3	%		2.5	%		4.9	%		33.0	%		15.0	%		4.0	%		4.8	%		11.6	%
Net premiums earned as reported		1.1	%		0.8	%		6.4	%		33.1	%		15.9	%		1.0	%		8.0	%		13.9	%
Net premiums written constant $		7.4	%														5.4	%
Net premiums earned constant $		3.4	%														2.5	%
Other ratios
Net premiums written/gross premiums written		71	%		72	%		72	%		72	%		70	%		71	%		71	%		71	%
Effective tax rate on income excluding net realized gains (losses) ⁽¹⁾		14.6	%		13.0	%		14.4	%		17.7	%		14.4	%		13.8	%		18.4	%		17.1	%

P&C combined ratio ⁽⁴⁾
Loss and loss expense ratio		59.5	%		56.9	%		63.4	%		64.9	%		63.1	%		58.3	%		68.1	%		66.0	%
Policy acquisition cost ratio		16.1	%		17.4	%		16.3	%		14.4	%		16.1	%		16.7	%		16.3	%		15.8	%
Administrative expense ratio		13.1	%		14.9	%		13.3	%		10.9	%		13.5	%		13.9	%		14.1	%		12.9	%

Combined ratio		88.7	%		89.2	%		93.0	%		90.2	%		92.7	%		88.9	%		98.5	%		94.7	%

P&C expense ratio		29.2	%		32.3	%		29.6	%		25.3	%		29.6	%		30.6	%		30.4	%		28.7	%
P&C expense ratio excluding A&H		25.3	%		28.4	%		25.5	%		21.0	%		25.1	%		26.8	%		26.2	%		24.7	%
Large losses and other items (before tax) ⁽⁴⁾
Reinstatement premiums (expensed) collected	$	—		$	—		$	—		$	26		$	8		$	—		$	(66	)	$	(40	)
Catastrophe losses	$	55		$	19		$	155		$	147		$	142		$	74		$	557		$	859
Prior period development (PPD) - unfavorable (favorable) ⁽⁵⁾	$	(113	)	$	(93	)	$	(123	)	$	(194	)	$	(146	)	$	(206	)	$	(239	)	$	(556	)
Loss and loss expense ratio excluding catastrophe losses and PPD ^{(1) (5)}		61.2	%		59.5	%		62.5	%		66.7	%		63.4	%		60.4	%		62.3	%		63.6	%

(1)	See Non-GAAP Financial Measures.

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

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

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

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


Consolidated Results		Page 2

ACE Limited

Summary Consolidated Balance Sheets

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

(Unaudited)


	June 30 2012			March 31 2012			December 31 2011
Assets
Fixed maturities available for sale, at fair value	$	44,386		$	43,468		$	41,967
Fixed maturities held to maturity, at amortized cost		7,782			8,117			8,447
Equity securities, at fair value		729			679			647
Short-term investments, at fair value		2,260			2,099			2,301
Other investments		2,524			2,429			2,314

Total investments		57,681			56,792			55,676

Cash		617			715			614
Securities lending collateral		2,247			2,204			1,375
Insurance and reinsurance balances receivable		4,985			4,487			4,387
Reinsurance recoverable on losses and loss expenses		11,752			12,057			12,389
Deferred policy acquisition costs		1,710			1,649			1,548
Value of business acquired		637			669			676
Prepaid reinsurance premiums		1,775			1,643			1,541
Goodwill and other intangible assets		4,826			4,860			4,799
Deferred tax assets		557			568			673
Investments in partially-owned insurance companies		339			346			352
Other assets		3,575			3,759			3,291

Total assets	$	90,701		$	89,749		$	87,321

Liabilities
Unpaid losses and loss expenses	$	36,850		$	37,247		$	37,477
Unearned premiums		7,044			6,664			6,334
Future policy benefits		4,436			4,358			4,274
Insurance and reinsurance balances payable		3,490			3,454			3,542
Securities lending payable		2,253			2,211			1,385
Payable for securities purchased		692			569			287
Accounts payable, accrued expenses, and other liabilities		5,104			4,615			4,770
Short-term debt		1,401			1,531			1,251
Long-term debt		3,360			3,360			3,360
Trust preferred securities		309			309			309

Total liabilities		64,939			64,318			62,989

Shareholders’ equity
Total shareholders’ equity, excl. AOCI		23,424			23,222			22,421
Accumulated other comprehensive income (AOCI)		2,338			2,209			1,911

Total shareholders’ equity		25,762			25,431			24,332

Total liabilities and shareholders’ equity	$	90,701		$	89,749		$	87,321

Book value per common share ⁽¹⁾	$	75.98		$	75.09		$	72.22
% change over prior quarter		1.2	%		4.0	%		3.0	%
Tangible book value per common share ⁽¹⁾	$	61.75		$	60.74		$	57.97
% change over prior quarter		1.7	%		4.8	%		3.7	%

(1)	See Non-GAAP Financial Measures.


Consol Bal Sheet		Page 3

ACE Limited

Consolidated Premiums and Income Excluding Net Realized Gains (Losses) by Line of Business

(in millions of U.S. dollars)

(Unaudited)

ACE Limited Consolidated


	2Q-12		% of Total Consolidated			2Q-11		% of Total Consolidated			% Change 2Q-12 vs. 2Q-11			YTD 2012		% of Total Consolidated			YTD 2011		% of Total Consolidated			% Change YTD-12 vs. YTD-11
Net premiums written
Property and all other	$	1,227		30	%	$	1,092		28	%		12.4	%	$	2,339		30	%	$	2,053		28	%		13.9	%
Agriculture		492		12	%		495		13	%		-0.5	%		611		8	%		613		8	%		-0.2	%
Casualty		1,286		31	%		1,240		31	%		3.7	%		2,500		33	%		2,547		34	%		-1.8	%

Subtotal		3,005		73	%		2,827		72	%		6.3	%		5,450		71	%		5,213		70	%		4.5	%
Personal accident (A&H) ⁽¹⁾		883		21	%		882		22	%		0.1	%		1,765		23	%		1,754		24	%		0.6	%
Life		242		6	%		244		6	%		-0.8	%		487		6	%		432		6	%		12.7	%

Total consolidated	$	4,130		100	%	$	3,953		100	%		4.5	%	$	7,702		100	%	$	7,399		100	%		4.1	%

Net premiums earned
Property and all other	$	1,013		27	%	$	940		25	%		7.8	%	$	1,983		28	%	$	1,775		25	%		11.7	%
Agriculture		384		10	%		356		10	%		7.8	%		443		6	%		434		6	%		2.1	%
Casualty		1,289		34	%		1,352		36	%		-4.7	%		2,559		36	%		2,732		39	%		-6.3	%

Subtotal		2,686		71	%		2,648		71	%		1.4	%		4,985		70	%		4,941		70	%		0.5	%
Personal accident (A&H) ⁽¹⁾		871		23	%		878		23	%		-0.8	%		1,723		24	%		1,715		24	%		0.5	%
Life		226		6	%		231		6	%		-2.2	%		456		6	%		410		6	%		11.2	%

Total consolidated	$	3,783		100	%	$	3,757		100	%		0.7	%	$	7,164		100	%	$	7,066		100	%		1.4	%

Income excluding net realized gains (losses)

Property, casualty, and all other	$	555		75	%	$	498		74	%		11.4	%	$	1,071		74	%	$	606		65	%		76.7	%
Agriculture		30		4	%		14		2	%		116.9	%		55		4	%		25		3	%		120.0	%
Personal accident (A&H) ⁽¹⁾		121		16	%		119		18	%		3.0	%		240		17	%		227		24	%		6.4	%
Life		37		5	%		42		6	%		-11.9	%		78		5	%		74		8	%		5.4	%

Total consolidated	$	743		100	%	$	673		100	%		10.2	%	$	1,444		100	%	$	932		100	%		54.7	%

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


Line of Business		Page 4

ACE Limited

Consolidated Premiums and Income Excluding Net Realized Gains (Losses)

by Line of Business, Adjusted for Foreign Exchange

(in millions of U.S. dollars)

(Unaudited)

ACE Limited Consolidated Constant Dollar


	2Q-12		Constant $ 2Q-11⁽²⁾		Constant $ % Change 2Q-12 vs. 2Q-11 ⁽²⁾			YTD 2012		Constant $ YTD 2011 ⁽²⁾		Constant $ % Change YTD-12 vs. YTD-11 ⁽²⁾
Net premiums written
Property, casualty, agriculture, and all other	$	3,005	$	2,788		7.8	%	$	5,450	$	5,159		5.6	%
Personal accident (A&H) ⁽¹⁾		883		854		3.5	%		1,765		1,718		2.7	%
Life		242		237		2.1	%		487		423		15.1	%

Total consolidated	$	4,130	$	3,879		6.5	%	$	7,702	$	7,300		5.5	%

Net premiums earned
Property, casualty, agriculture, and all other	$	2,686	$	2,602		3.2	%	$	4,985	$	4,883		2.1	%
Personal accident (A&H) ⁽¹⁾		871		848		2.7	%		1,723		1,677		2.7	%
Life		226		226		0.0	%		456		402		13.4	%

Total consolidated	$	3,783	$	3,676		2.9	%	$	7,164	$	6,962		2.9	%

Income excluding net realized gains (losses)
Property, casualty, agriculture, and all other	$	585	$	508		15.2	%	$	1,126	$	614		83.4	%
Personal accident (A&H) ⁽¹⁾		121		113		6.6	%		240		221		8.3	%
Life		37		43		-14.0	%		78		74		5.4	%

Total consolidated	$	743	$	664		12.0	%	$	1,444	$	909		58.8	%

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

(2)	Prior periods on a constant dollar basis.


Line of Business 2		Page 5

ACE Limited

Segment Results - Consecutive Quarters

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

(Unaudited)

Insurance - North American


	2Q-12			1Q-12			4Q-11			3Q-11			2Q-11			YTD 2012			YTD 2011			Full Year 2011
Gross premiums written	$	2,856		$	2,012		$	2,394		$	3,294		$	2,714		$	4,868		$	4,672		$	10,360
Net premiums written		1,860			1,293			1,624			2,207			1,735			3,153			3,020			6,851
Net premiums earned		1,652			1,287			1,662			2,299			1,604			2,939			2,950			6,911
Losses and loss expenses		1,163			849			1,211			1,838			1,233			2,012			2,227			5,276
Policy acquisition costs		157			127			157			174			145			284			281			612
Administrative expenses		153			147			144			153			147			300			295			592

Underwriting income		179			164			150			134			79			343			147			431

Net investment income		271			274			284			291			300			545			595			1,170
Net realized gains (losses)		18			(1	)		26			(2	)		21			17			10			34
Interest expense		3			3			4			4			3			6			7			15
Other income (expense)		(10	)		1			3			(21	)		(3	)		(9	)		13			(5	)
Income tax expense		107			91			91			120			95			198			184			395

Net income		348			344			368			278			299			692			574			1,220

Net realized gains (losses)		18			(1	)		26			(2	)		21			17			10			34
Net realized gains (losses) in other income (expense)		5			15			10			(9	)		3			20			27			28
Tax expense on net realized gains (losses)		10			4			10			1			7			14			8			19

Income excluding net realized gains (losses) ⁽¹⁾	$	335		$	334		$	342		$	290		$	282		$	669		$	545		$	1,177

Combined ratio
Loss and loss expense ratio		70.4	%		66.0	%		72.8	%		80.0	%		76.9	%		68.5	%		75.5	%		76.3	%
Policy acquisition cost ratio		9.5	%		9.9	%		9.5	%		7.6	%		9.0	%		9.7	%		9.5	%		8.9	%
Administrative expense ratio		9.3	%		11.4	%		8.7	%		6.6	%		9.2	%		10.1	%		10.0	%		8.6	%

Combined ratio		89.2	%		87.3	%		91.0	%		94.2	%		95.1	%		88.3	%		95.0	%		93.8	%

Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	—		$	—		$	—		$	7		$	—		$	—		$	(12	)	$	(5	)
Catastrophe losses	$	49		$	16		$	42		$	119		$	110		$	65		$	186		$	347
Prior period development (PPD) - unfavorable (favorable) ⁽²⁾	$	(59	)	$	(60	)	$	(31	)	$	(58	)	$	(71	)	$	(119	)	$	(106	)	$	(195	)
Loss and loss expense ratio excluding catastrophe losses and PPD ^{(1) (2)}		71.1	%		69.3	%		72.2	%		77.6	%		74.4	%		70.3	%		72.5	%		74.1	%

% Change versus prior year period
Net premiums written		7.2	%		0.6	%		6.9	%		52.7	%		20.7	%		4.4	%		6.6	%		18.2	%
Net premiums earned		3.0	%		-4.4	%		10.0	%		59.2	%		21.0	%		-0.4	%		9.4	%		22.3	%

Other ratios
Net premiums written/gross premiums written		65	%		64	%		68	%		67	%		64	%		65	%		65	%		66	%

(1)	See Non-GAAP Financial Measures.

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


Insurance-North American		Page 6

ACE Limited

Segment Results - Consecutive Quarters

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

(Unaudited)

Insurance - Overseas General


	2Q-12			1Q-12			4Q-11			3Q-11			2Q-11			YTD 2012			YTD 2011			Full Year 2011
Gross premiums written	$	1,952		$	1,984		$	1,818		$	1,843		$	1,898		$	3,936		$	3,806		$	7,467
Net premiums written		1,475			1,528			1,378			1,398			1,443			3,003			2,853			5,629
Net premiums earned		1,420			1,391			1,450			1,471			1,415			2,811			2,693			5,614
Losses and loss expenses		703			705			785			671			721			1,408			1,573			3,029
Policy acquisition costs		332			335			346			353			335			667			636			1,335
Administrative expenses		233			229			241			236			239			462			462			939

Underwriting income		152			122			78			211			120			274			22			311

Net investment income		128			131			140			138			137			259			268			546
Net realized gains (losses)		26			20			51			1			(10	)		46			(19	)		33
Interest expense		1			1			1			2			1			2			2			5
Other income (expense)		(6	)		—			3			(10	)		5			(6	)		7			—
Income tax expense		51			38			52			56			39			89			56			164

Net income		248			234			219			282			212			482			220			721

Net realized gains (losses)		26			20			51			1			(10	)		46			(19	)		33
Net realized gains (losses) in other income (expense)		(3	)		3			2			(10	)		1			—			6			(2	)
Tax expense (benefit) on net realized gains (losses)		7			3			3			1			—			10			(3	)		1

Income excluding net realized gains (losses) ⁽¹⁾	$	232		$	214		$	169		$	292		$	221		$	446		$	230		$	691

Combined ratio
Loss and loss expense ratio		49.6	%		50.7	%		54.1	%		45.6	%		51.0	%		50.1	%		58.4	%		54.0	%
Policy acquisition cost ratio		23.4	%		24.1	%		23.8	%		24.1	%		23.6	%		23.7	%		23.6	%		23.8	%
Administrative expense ratio		16.3	%		16.4	%		16.6	%		15.9	%		17.0	%		16.5	%		17.2	%		16.7	%

Combined ratio		89.3	%		91.2	%		94.5	%		85.6	%		91.6	%		90.3	%		99.2	%		94.5	%

Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	—		$	—		$	1		$	17		$	3		$	—		$	(60	)	$	(42	)
Catastrophe losses	$	5		$	2		$	98		$	34		$	10		$	7		$	197		$	329
Prior period development (PPD) - unfavorable (favorable)	$	(39	)	$	(22	)	$	(80	)	$	(126	)	$	(40	)	$	(61	)	$	(84	)	$	(290	)
Loss and loss expense ratio excluding catastrophe losses and PPD ⁽¹⁾		51.9	%		52.1	%		53.0	%		52.5	%		53.2	%		52.0	%		53.1	%		52.9	%

% Change versus prior year period
Net premiums written as reported		2.2	%		8.4	%		3.9	%		18.3	%		12.6	%		5.2	%		6.4	%		8.5	%
Net premiums earned as reported		0.3	%		8.8	%		5.1	%		13.3	%		13.9	%		4.4	%		8.8	%		9.0	%
Net premiums written constant $		6.7	%														8.3	%
Net premiums earned constant $		5.5	%														7.9	%

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

(1)	See Non-GAAP Financial Measures.


Insurance-Overseas General		Page 7

ACE Limited

Segment Results - Consecutive Quarters

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

(Unaudited)

Global Reinsurance


	2Q-12			1Q-12			4Q-11			3Q-11			2Q-11			YTD 2012			YTD 2011			Full Year 2011
Gross premiums written	$	332		$	279		$	132		$	254		$	298		$	611		$	628		$	1,014
Net premiums written		309			263			132			250			282			572			597			979
Net premiums earned		237			230			249			240			254			467			514			1,003
Losses and loss expenses		102			102			136			94			112			204			391			621
Policy acquisition costs		42			43			42			50			47			85			93			185
Administrative expenses		13			12			14			12			14			25			26			52

Underwriting income		80			73			57			84			81			153			4			145

Net investment income		70			71			74			70			71			141			143			287
Net realized gains (losses)		(17	)		13			6			(29	)		(14	)		(4	)		(27	)		(50	)
Interest expense		1			1			1			—			1			2			1			2
Other income (expense)		(3	)		5			3			(7	)		(1	)		2			5			1
Income tax expense		—			6			5			7			8			6			18			30

Net income		129			155			134			111			128			284			106			351

Net realized gains (losses)		(17	)		13			6			(29	)		(14	)		(4	)		(27	)		(50	)
Net realized gains (losses) in other income (expense)		(3	)		5			3			(6	)		(2	)		2			2			(1	)
Tax expense (benefit) on net realized gains (losses)		—			—			—			(1	)		—			—			—			(1	)

Income excluding net realized gains (losses) ⁽¹⁾	$	149		$	137		$	125		$	145		$	144		$	286		$	131		$	401

Combined ratio
Loss and loss expense ratio		42.5	%		44.4	%		54.8	%		39.2	%		44.1	%		43.5	%		76.1	%		62.0	%
Policy acquisition cost ratio		17.8	%		18.7	%		17.0	%		20.6	%		18.5	%		18.3	%		18.1	%		18.4	%
Administrative expense ratio		5.8	%		5.2	%		5.3	%		5.6	%		5.3	%		5.3	%		4.9	%		5.2	%

Combined ratio		66.1	%		68.3	%		77.1	%		65.4	%		67.9	%		67.1	%		99.1	%		85.6	%

Large losses and other items (before tax)
Reinstatement premiums (expensed) collected	$	—		$	—		$	(1	)	$	2		$	5		$	—		$	6		$	7
Catastrophe losses	$	1		$	1		$	15		$	(6	)	$	22		$	2		$	174		$	183
Prior period development (PPD) - unfavorable (favorable)⁽²⁾	$	(15	)	$	(11	)	$	(12	)	$	(10	)	$	(35	)	$	(26	)	$	(49	)	$	(71	)
Loss and loss expense ratio excluding catastrophe losses and PPD ^{(1) (2)}		48.3	%		48.7	%		53.2	%		49.1	%		50.1	%		48.5	%		52.2	%		51.7	%

% Change versus prior year period
Net premiums written as reported		9.4	%		-16.5	%		-7.7	%		-8.1	%		-2.4	%		-4.2	%		-9.5	%		-8.9	%
Net premiums earned as reported		-6.5	%		-11.5	%		-7.1	%		-11.4	%		-0.8	%		-9.0	%		-3.4	%		-6.3	%

Net premiums written constant $		9.9	%														-3.6	%
Net premiums earned constant $		-5.9	%														-8.6	%

Other ratios
Net premiums written/gross premiums written		93	%		94	%		100	%		99	%		95	%		93	%		95	%		97	%

(1)	See Non-GAAP Financial Measures.

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


Global Reinsurance		Page 8

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Life


	2Q-12			1Q-12			4Q-11			3Q-11			2Q-11			YTD 2012			YTD 2011			Full Year 2011
Gross premiums written	$	513		$	512		$	520		$	509		$	513		$	1,025		$	961		$	1,990
Net premiums written		486			488			496			488			493			974			929			1,913
Net premiums earned		474			473			470			480			484			947			909			1,859
Losses and loss expenses		151			148			154			142			159			299			297			593
Policy benefits ⁽¹⁾		102			147			119			83			108			249			199			401
(Gains) losses from fair value changes in separate account assets ⁽¹⁾		14			(18	)		(3	)		39			—			(4	)		—			36
Policy acquisition costs		88			76			86			92			85			164			161			339
Administrative expenses		78			78			84			81			78			156			152			317
Net investment income		62			61			60			60			60			123			106			226

Life underwriting income ⁽²⁾		103			103			90			103			114			206			206			399

Net realized gains (losses):
Mark-to-market on guaranteed living benefits derivative (net of related hedges)		(397	)		197			(10	)		(706	)		(67	)		(200	)		(67	)		(783	)
Foreign exchange gains (losses) and all other		(24	)		34			17			(26	)		(1	)		10			(14	)		(23	)
Interest expense		3			3			2			3			3			6			6			11
Other income (expense) ⁽¹⁾		(5	)		(9	)		1			(10	)		(11	)		(14	)		(17	)		(26	)
Income tax expense		19			11			9			13			14			30			28			50

Net income (loss)		(345	)		311			87			(655	)		18			(34	)		74			(494	)

Net realized gains (losses)		(421	)		231			7			(732	)		(68	)		(190	)		(81	)		(806	)
Net realized gains (losses) in other income (expense)		2			(5	)		1			(2	)		(1	)		(3	)		—			(1	)
Tax expense (benefit) on net realized gains (losses)		5			(1	)		—			1			1			4			1			2

Income excluding net realized gains (losses) ⁽³⁾	$	79		$	84		$	79		$	80		$	88		$	163		$	156		$	315

% Change versus prior year period
Net premiums written as reported		-1.2	%		11.9	%		14.5	%		23.1	%		19.7	%		4.8	%		13.8	%		16.2	%
Net premiums earned as reported		-1.9	%		11.3	%		13.7	%		17.5	%		18.5	%		4.2	%		12.5	%		14.1	%

Net premiums written constant $		0.5	%														6.1	%
Net premiums earned constant $		-0.3	%														5.4	%

(1)

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

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

(3)	See Non-GAAP Financial Measures.


Life		Page 9

ACE Limited

Loss Reserve Rollforward

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

(Unaudited)


	Unpaid Losses									Net Paid to
	Gross			Ceded			Net			Incurred Ratio
Balance at December 31, 2010	$	37,391		$	12,149		$	25,242
Losses and loss expenses incurred		3,820			1,557			2,263
Losses and loss expenses paid		(2,847	)		(884	)		(1,963	)		87	%
Other (incl. foreign exch. revaluation)		479			161			318

Balance at March 31, 2011	$	38,843		$	12,983		$	25,860
Losses and loss expenses incurred		2,752			526			2,226
Losses and loss expenses paid		(2,730	)		(872	)		(1,858	)		83	%
Other (incl. foreign exch. revaluation)		86			30			56

Balance at June 30, 2011	$	38,951		$	12,667		$	26,284
Losses and loss expenses incurred		3,207			462			2,745
Losses and loss expenses paid		(3,366	)		(992	)		(2,374	)		86	%
Other (incl. foreign exch. revaluation)		(316	)		(95	)		(221	)

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

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

Balance at March 31, 2012	$	37,247		$	11,318		$	25,929
Losses and loss expenses incurred		2,851			732			2,119
Losses and loss expenses paid		(2,916	)		(893	)		(2,023	)		95	%
Other (incl. foreign exch. revaluation)		(332	)		(171	)		(161	)

Balance at June 30, 2012	$	36,850		$	10,986		$	25,864

Add net recoverable on paid losses		—			766			(766	)

Balance including net recoverable on paid losses	$	36,850		$	11,752		$	25,098


Loss Reserve Rollforward		Page 10

ACE Limited

Reinsurance Recoverable Analysis

(in millions of U.S. dollars)

(Unaudited)

Net Reinsurance Recoverable by Division


	June 30			March 31			December 31
	2012			2012			2011
Reinsurance recoverable on paid losses and loss expenses
Active operations	$	584		$	573		$	629
Brandywine		248			234			232
Other Run-off		38			42			41

Total	$	870		$	849		$	902

Reinsurance recoverable on unpaid losses and loss expenses
Active operations	$	9,500		$	9,605		$	9,805
Brandywine		1,510			1,721			1,775
Other Run-off		343			362			386

Total	$	11,353		$	11,688		$	11,966

Gross reinsurance recoverable
Active operations	$	10,084		$	10,178		$	10,434
Brandywine		1,758			1,955			2,007
Other Run-off		381			404			427

Total	$	12,223		$	12,537		$	12,868

Provision for uncollectible reinsurance ⁽¹⁾
Active operations	$	(294	)	$	(300	)	$	(299	)
Brandywine		(158	)		(161	)		(160	)
Other Run-off		(19	)		(19	)		(20	)

Total	$	(471	)	$	(480	)	$	(479	)

Net reinsurance recoverable
Active operations	$	9,790		$	9,878		$	10,135
Brandywine		1,600			1,794			1,847
Other Run-off		362			385			407

Total	$	11,752		$	12,057		$	12,389

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


Reinsurance Recoverable		Page 11

ACE Limited

Investment Portfolio

(in millions of U.S. dollars)

(Unaudited)


	June 30					March 31					December 31
	2012					2012					2011
Market Value
Fixed maturities available for sale	$	44,386				$	43,468				$	41,967
Fixed maturities held to maturity		8,062					8,348					8,605
Short-term investments		2,260					2,099					2,301

Total	$	54,708				$	53,915				$	52,873

Asset Allocation by Market Value
Treasury	$	2,614		5	%	$	2,451		5	%	$	2,361		5	%
Agency		1,816		3	%		1,811		3	%		1,725		3	%
Corporate and asset-backed		17,581		32	%		17,618		33	%		17,030		32	%
Mortgage-backed		12,725		23	%		12,800		24	%		13,237		25	%
Municipal ⁽¹⁾		3,495		7	%		3,295		6	%		2,888		6	%
Non-U.S.		14,217		26	%		13,841		26	%		13,331		25	%
Short-term investments		2,260		4	%		2,099		3	%		2,301		4	%

Total	$	54,708		100	%	$	53,915		100	%	$	52,873		100	%


Note: Insured municipal bonds represent $691 million, or 20% of our municipal bond holdings.

Credit Quality by Market Value
AAA	$	9,132		17	%	$	9,115		17	%	$	9,284		18	%
AA		20,931		38	%		20,665		38	%		20,562		39	%
A		10,400		19	%		10,523		20	%		10,106		19	%
BBB		6,243		11	%		6,244		12	%		6,152		12	%
BB		4,298		8	%		4,009		7	%		3,755		7	%
B		3,217		6	%		2,828		5	%		2,428		4	%
Other		487		1	%		531		1	%		586		1	%

Total	$	54,708		100	%	$	53,915		100	%	$	52,873		100	%

Cost/Amortized Cost
Fixed maturities available for sale	$	42,316				$	41,661				$	40,450
Fixed maturities held to maturity		7,782					8,117					8,447
Short-term investments		2,260					2,099					2,301

Subtotal		52,358					51,877					51,198
Equity securities		724					662					671
Other investments		2,297					2,221					2,112

Total	$	55,379				$	54,760				$	53,981

Avg. duration of fixed maturities		3.8 years					3.9 years					3.7 years
Avg. market yield of fixed maturities ⁽²⁾		2.8	%				3.0	%				3.1	%
Avg. credit quality ⁽³⁾		A/Aa					A/Aa					A/Aa
Avg. yield on invested assets⁽⁴⁾		3.9	%				4.0	%				4.2	%

(1)	The rating of the municipal portfolio is AA with 12% of our holdings pre-funded with AA/Aaa Federal securities. The portfolio is highly diversified predominantly in State general obligation bonds and essential service revenue bonds, including education and utilities (water, power, and sewers).

(2)	Weighted average yield to maturity of our fixed income portfolio based on the market prices of the holdings as of that date.

(3)	We use a split rating due to S&P's downgrade of U.S. Treasury and Agency securities.

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


Investments		Page 12

ACE Limited

Investment Portfolio - 2

(in millions of U.S. dollars)

(Unaudited)

Mortgage-backed Fixed Income Portfolio

Mortgage-backed securities


	S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
Market Value at June 30, 2012
Agency residential mortgage-backed (RMBS)	$	—	$	10,942	$	—	$	—	$	—	$	10,942
Non-agency RMBS		145		6		24		10		399		584
Commercial mortgage-backed		1,164		18		10		7		—		1,199

Total mortgage-backed securities at market value	$	1,309	$	10,966	$	34	$	17	$	399	$	12,725


	S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
Amortized Cost at June 30, 2012
Agency RMBS	$	—	$	10,480	$	—	$	—	$	—	$	10,480
Non-agency RMBS		145		6		24		11		476		662
Commercial mortgage-backed		1,090		16		9		6		—		1,121

Total mortgage-backed securities at amortized cost	$	1,235	$	10,502	$	33	$	17	$	476	$	12,263

Mortgage-backed securities total $12.7 billion, are rated predominantly AA and comprise 23% of the fixed income portfolio. This compares to a 32% mortgage-backed weighting in representative indices of the U.S. fixed income market. The minimum rating for initial purchases of mortgage-backed securities is AA for agency mortgages and AAA for non-agency mortgages.

Securities issued by Federal agencies with implied or explicit government guarantees total $10.9 billion and represent 95% of the residential mortgage-backed portfolio.

Non-agency residential mortgage-backed securities are backed by prime collateral, and broadly diversified in over 47,000 loans. The portfolio’s original loan-to-value ratio is approximately 67% with an average FICO score of 730. With this conservative loan-to-value ratio and subordinated collateral of 5%, the cumulative 5-year foreclosure rate would have to rise to 15% before principal is significantly impaired. The foreclosure rate of ACE's non-agency RMBS portfolio at June 30, 2012 was 8%.

Commercial mortgage-backed securities of $1.2 billion are rated predominantly AAA, broadly diversified with over 13,000 loans and seasoned with 47% of the portfolio issued before 2006 and 38% of the portfolio issued after 2009. The average loan-to-value ratio is approximately 64% with a debt service coverage ratio in excess of 1.9 and weighted average subordinated collateral of 30%. The cumulative foreclosure rate would have to rise to 42% before principal is impaired. The foreclosure rate of ACE's commercial mortgage-backed securities portfolio at June 30, 2012 was about 2.3%.


Investments 2		Page 13

ACE Limited

Investment Portfolio - 3

(in millions of U.S. dollars)

(Unaudited)

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

Market Value at June 30, 2012


	S&P Credit Rating
	Investment Grade
	AAA		AA		A		BBB		Total
Asset-backed	$	231	$	86	$	1	$	—	$	318
Banks		—		21		2,142		355		2,518
Basic Materials		—		—		105		224		329
Communications		—		—		600		740		1,340
Consumer, Cyclical		—		91		273		234		598
Consumer, Non-Cyclical		59		495		798		540		1,892
Diversified Financial Services		—		68		229		118		415
Energy		79		14		208		602		903
Industrial		—		400		323		138		861
Utilities		—		14		488		526		1,028
All Others		47		195		365		483		1,090

Total	$	416	$	1,384	$	5,532	$	3,960	$	11,292

U.S. Investment Grade Corporate Fixed Income Portfolio

The average credit quality of ACE's US investment grade bond portfolio is high at A.

ACE prohibits investments in complex structured securities (e.g., CDOs, CLOs) and over-the-counter derivatives and does not permit the use of portfolio leverage.

Corporate bond holdings are highly diversified across industries and geographies. Issuer limits are based on credit rating (AA 2%, A 1%, BBB 0.5% of total portfolio) and are monitored on a daily basis by ACE via an internal compliance system.

Market Value at June 30, 2012


	S&P Credit Rating
	Below Investment Grade
	BB		B		CCC		Total
Asset-backed	$	4	$	5	$	4	$	13
Banks		1		9		—		10
Basic Materials		213		126		4		343
Communications		435		522		9		966
Consumer, Cyclical		439		448		25		912
Consumer, Non-Cyclical		729		617		7		1,353
Diversified Financial Services		54		81		6		141
Energy		738		326		15		1,079
Industrial		378		316		8		702
Utilities		272		51		10		333
All Others		197		236		4		437

Total	$	3,460	$	2,737	$	92	$	6,289

U.S. Below Investment Grade Corporate Fixed Income Portfolio

ACE manages high yield bonds as a distinct and separate asset class from investment grade bonds. ACE’s allocation to high yield bonds is explicitly set by internal management and is targeted to securities in the upper tier of credit quality (BB/B). Our minimum rating for initial purchase is BB/B.

Six external investment managers are responsible for high yield security selection and portfolio construction.

ACE’s high yield managers have a conservative approach to credit selection and very low historical default experience.

Securities holdings are highly diversified across industries and are subject to a 1.5% issuer limit as a percentage of high yield allocation. The portfolio comprises over 750 issuers with our largest current issuer exposure at $95 million. ACE monitors position limits on a daily basis through an internal compliance system.

Derivative and structured securities (e.g., credit default swaps, CLOs) are not permitted in high yield portfolios.


Investments 3		Page 14

ACE Limited

Investment Portfolio - 4

(in millions of U.S. dollars)

(Unaudited)

Non-U.S. Fixed Income Portfolio

June 30, 2012


	Market Value by S&P Credit Rating												Amortized Cost
	AAA		AA		A		BBB		BB and below		Total		Amortized Cost
United Kingdom	$	1,191	$	—	$	—	$	—	$	—	$	1,191	$	1,152
Canada		939		—		—		—		—		939		906
Republic of Korea		—		—		488		—		—		488		456
Germany		409		—		—		—		—		409		401
Japan		—		378		—		—		—		378		376
Province of Ontario		—		230		—		—		—		230		219
Federative Republic of Brazil		—		—		—		201		—		201		196
Kingdom of Thailand		—		—		140		20		—		160		156
Province of Quebec		—		—		157		—		—		157		146
Commonwealth of Australia		149		1		—		—		—		150		134
France		—		134		—		—		—		134		130
State of Queensland		75		57		—		—		—		132		123
Swiss Confederation		128		—		—		—		—		128		121
People’s Republic of China		70		50		—		—		—		120		117
Federation of Malaysia		—		—		117		—		—		117		116
United Mexican States		—		—		35		70		—		105		98
State of New South Wales		77		—		—		—		—		77		72
Taiwan		—		76		—		—		—		76		75
State of Victoria		60		—		—		—		—		60		56
Socialist Republic of Vietnam		—		—		—		—		54		54		50
Republic of Indonesia		—		—		—		—		50		50		49
Russian Federation		—		—		—		47		—		47		47
Republic of Colombia		—		—		—		40		—		40		39
Republic of Austria		—		40		—		—		—		40		39
Dominion of New Zealand		—		39		—		—		—		39		38
Other Non-U.S. Government		241		211		96		60		126		734		707

Non-U.S. Government Securities	$	3,339	$	1,216	$	1,033	$	438	$	230	$	6,256	$	6,019
Eurozone Non-U.S. Corporate ⁽¹⁾		640		334		507		477		411		2,369		2,304
Other Non-U.S. Corporate		767		591		2,339		1,284		611		5,592		5,344

	$	4,746	$	2,141	$	3,879	$	2,199	$	1,252	$	14,217	$	13,667

(1)	Excludes United Kingdom

Non-U.S. Fixed Income Portfolio

ACE’s non-U.S. investment grade fixed income portfolios are currency-matched with the insurance liabilities of ACE’s non-U.S. operations.

78% of ACE’s non-U.S. fixed income portfolios are denominated in G7 currencies.

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


Investments 4		Page 15

ACE Limited

Investment Portfolio - 5

(in millions of U.S. dollars)

(Unaudited)

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

June 30, 2012


	Market Value by Industry										Amortized Cost
	Bank		Financial		Industrial		Utility		Total		Amortized Cost
Netherlands	$	225	$	133	$	320	$	124	$	802	$	770
France		98		37		115		146		396		392
Germany		284		2		76		7		369		356
Luxembourg		11		2		243		95		351		347
Euro Supranational		197		—		—		—		197		189
Ireland		12		1		87		17		117		110
Spain		10		4		18		5		37		42
Italy		25		—		6		3		34		32
Austria		20		—		7		1		28		27
Finland		13		1		8		2		24		26
Belgium		—		—		12		1		13		12
Portugal		—		—		1		—		1		1

Eurozone Non-U.S. Corporate Securities	$	895	$	180	$	893	$	401	$	2,369	$	2,304

Note: ACE has no investments in Greece

Top 10 Exposures - Eurozone Banks (Excluding United Kingdom)


June 30, 2012	Market Value		Amortized Cost		Rating
European Investment Bank	$	166	$	160	AAA
KFW		156		150	AAA
Rabobank Nederland NV		109		104	AA
Deutsche Bank AG		46		45	A+
Bank Nederlandse Gemeenten		41		40	AAA
ABN AMRO Group NV		32		30	A+
Nederlandse Waterschapsbank NV		28		27	AAA
Credit Agricole Groupe		27		27	A
BNP Paribas SA		25		24	AA-
Erste Abwicklungsanstalt		23		23	AA-

Top 10 Exposures - Eurozone Corporate (Excluding United Kingdom)


June 30, 2012	Market Value		Amortized Cost		Rating
EDF SA	$	79	$	79	A+
ING Groep NV		77		78	A
Intelsat SA		73		71	B
Deutsche Telekom AG		69		63	BBB+
Royal Dutch Shell PLC		64		59	AA
LyondellBasell Industries NV		55		51	BB+
France Telecom SA		41		39	A-
Gazprom OAO		40		38	BBB
General Electric Co		38		35	AA+
Liberty Global Inc		38		35	B+


Investments 5		Page 16

ACE Limited

Investment Portfolio - 6

(in millions of U.S. dollars)

(Unaudited)

Investment portfolio

Top 25 Exposures - Fixed Maturity Investments


June 30, 2012	Market Value		Rating
1 General Electric Co	$	430	AA+
2 JP Morgan Chase & Co		426	A
3 Citigroup Inc		350	A-
4 Bank of America Corp		314	A-
5 The Goldman Sachs Group Inc		307	A-
6 Verizon Communications Inc		278	A-
7 Morgan Stanley		267	A-
8 AT&T INC		223	A-
9 Wells Fargo & Co		203	A+
10 HSBC Holdings Plc		197	A+
11 Comcast Corp		164	BBB+
12 Kraft Foods Inc		164	BBB
13 Lloyds Banking Group Plc		162	A-
14 Royal Bank of Scotland Group Plc		156	A-
15 Time Warner Cable Inc		138	BBB
16 Barclays Plc		136	A
17 ConocoPhillips		127	A
18 BP Plc		123	A
19 Pfizer Inc		121	AA
20 UBS AG		121	A
21 American Express Co		120	BBB+
22 Credit Suisse Group		116	A
23 Anheuser-Busch InBev NV		111	A
24 Rabobank Nederland NV		109	AA
25 Enterprise Products Partners LP		105	BBB


Investments 6		Page 17

ACE Limited

Net Realized and Unrealized Gains (Losses)

(in millions of U.S. dollars)

(Unaudited)


	Three months ended June 30, 2012									Six months ended June 30, 2012
	Net Realized Gains (Losses)⁽¹⁾			Net Unrealized Gains (Losses)			Net Impact			Net Realized Gains (Losses) ⁽¹⁾			Net Unrealized Gains (Losses)		Net Impact
Fixed maturities	$	68		$	251		$	319		$	102		$	494	$	596
Fixed income derivatives		(49	)		—			(49	)		(7	)		—		(7	)

Total fixed maturities		19			251			270			95			494		589

Public equity		(5	)		(9	)		(14	)		(4	)		29		25
Private equity		(6	)		16			10			17			23		40

Total equity		(11	)		7			(4	)		13			52		65

Mark-to-market gains (losses) from derivative transactions ⁽²⁾		(396	)		—			(396	)		(204	)		—		(204	)
Foreign exchange gains (losses) ⁽²⁾		(9	)		—			(9	)		(14	)		—		(14	)
Other		3			(3	)		—			1			1		2
Partially-owned entities ⁽³⁾		1			—			1			(6	)		—		(6	)
Income tax expense		22			47			69			28			96		124

Net gains	$	(415	)	$	208		$	(207	)	$	(143	)	$	451	$	308

(1)

Other-than-temporary impairments for the quarter includes $1 million for fixed maturities, $5 million for private equity, and $4 million for public equity. Year to date other-than-temporary impairments includes $8 million for fixed maturities, $7 million for private equity, and $5 million for public equity.

(2)

Includes $397 million of realized losses from variable annuity reinsurance for the quarter which includes $467 million in mark-to-market losses from derivative transactions, net of $70 million of gains on applicable hedges. The variable annuity reinsurance foreign exchange losses for the quarter were $29 million. For the year, the $200 million of realized losses from variable annuity reinsurance includes $39 million in mark-to-market losses from derivative transactions and $161 million of losses on applicable hedges. The variable annuity reinsurance foreign exchange gains for the year were $6 million.

(3)	Partially-owned entities are investments where we hold more than an insignificant percentage of the investee's shares. The net income or loss is included in other income (expense).


	Three months ended June 30, 2011								Six months ended June 30, 2011
	Net Realized Gains (Losses)⁽⁴⁾			Net Unrealized Gains (Losses)		Net Impact			Net Realized Gains (Losses) ⁽⁴⁾			Net Unrealized Gains (Losses)		Net Impact
Fixed maturities	$	74		$	202	$	276		$	123		$	163	$	286
Fixed income derivatives		(48	)		—		(48	)		(68	)		—		(68	)

Total fixed maturities		26			202		228			55			163		218

Public Equity		4			6		10			11			8		19
Private equity		(3	)		12		9			30			56		86

Total equity		1			18		19			41			64		105

Mark-to-market gains (losses) from derivative transactions ⁽⁵⁾		(69	)		—		(69	)		(70	)		—		(70	)
Foreign exchange gains (losses) ⁽⁵⁾		(30	)		—		(30	)		(109	)		—		(109	)
Other		(1	)		3		2			(2	)		6		4
Partially-owned entities ⁽⁶⁾		2			2		4			3			2		5
Income tax expense		8			74		82			6			60		66

Net gains (losses)	$	(79	)	$	151	$	72		$	(88	)	$	175	$	87

(4)	Other-than-temporary impairments for the quarter of $8 million include $5 million for fixed maturities and $3 million for other investments. Year to date other-than-temporary impairments of $12 million include $9 million for fixed maturities, and $3 million for private equity.

(5)

Includes $67 million of realized losses from variable annuity reinsurance for the quarter which includes $70 million in mark-to-market losses from derivative transactions, net of $3 million of gains on applicable hedges. The variable annuity reinsurance foreign exchange losses for the quarter were $5 million. For the year, the $67 million of realized losses from variable annuity reinsurance includes $1 million in mark-to-market gains from derivative transactions and $68 million of losses on applicable hedges. The variable annuity reinsurance foreign exchange losses for the year were $18 million.

(6)	Partially-owned entities are investments where we hold more than an insignificant percentage of the investee's shares. The net income or loss is included in other income (expense).


Investment Gains (Losses)		Page 18

ACE Limited

Capital Structure

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

(Unaudited)


	June 30			March 31			December 31			December 31
	2012			2012			2011			2010
Total short-term debt ⁽¹⁾	$	1,401		$	1,531		$	1,251		$	1,300
Total long-term debt		3,360			3,360			3,360			3,358

Total debt	$	4,761		$	4,891		$	4,611		$	4,658

Total trust preferred securities	$	309		$	309		$	309		$	309

Total shareholders' equity	$	25,762		$	25,431		$	24,332		$	22,835

Total capitalization	$	30,832		$	30,631		$	29,252		$	27,802
Tangible capital ⁽²⁾	$	26,006		$	25,771		$	24,453		$	23,138

Leverage ratios
Debt/ total capitalization		15.4	%		16.0	%		15.8	%		16.8	%
Debt plus trust preferred securities/ total capitalization		16.4	%		17.0	%		16.8	%		17.9	%
Debt/ tangible capital		18.3	%		19.0	%		18.9	%		20.1	%
Debt plus trust preferred securities/ tangible capital		19.5	%		20.2	%		20.1	%		21.5	%

Note: As of June 30, 2012, there was $1.5 billion usage of credit facilities on a total commitment of $2.4 billion.

(1)	Repurchase agreements in the amount of $850 million matured during the quarter, and there were new repurchase agreements in the amount of $850 million.

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


Capital Structure		Page 19

Computation of Basic and Diluted Earnings Per Share

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

(Unaudited)


	Three months ended June 30						Six months ended June 30
	2012			2011			2012			2011
Numerator
Income to common shares, excl. net realized gains (losses) ⁽¹⁾	$	743		$	673		$	1,444		$	932
Net realized gains (losses), net of income tax		(415	)		(79	)		(143	)		(88	)

Net income	$	328		$	594		$	1,301		$	844

Rollforward of Common Shares Outstanding
Shares - beginning of period		338,653,382			337,173,864			336,927,276			334,942,852
Repurchase of shares		—			—			(100,000	)		—
Shares issued, excluding option exercises		87,454			39,662			1,124,163			1,396,408
Issued for option exercises		320,049			698,798			1,109,446			1,573,064

Shares - end of period		339,060,885			337,912,324			339,060,885			337,912,324

Denominator
Weighted average shares outstanding		339,766,067			338,920,580			339,164,449			338,021,487
Effect of other dilutive securities		2,907,971			2,768,388			3,006,950			2,596,909

Adj. wtd. avg. shares outstanding and assumed conversions		342,674,038			341,688,968			342,171,399			340,618,396

Basic earnings per share
Income excluding net realized gains (losses) ⁽¹⁾	$	2.18		$	1.98		$	4.25		$	2.76
Net realized gains (losses), net of income tax		(1.22	)		(0.23	)		(0.42	)		(0.26	)

Net income	$	0.96		$	1.75		$	3.83		$	2.50

Diluted earnings per share
Income excluding net realized gains (losses) ⁽¹⁾	$	2.17		$	1.97		$	4.22		$	2.74
Net realized gains (losses), net of income tax		(1.21	)		(0.23	)		(0.42	)		(0.26	)

Net income	$	0.96		$	1.74		$	3.80		$	2.48

(1)	See Non-GAAP Financial Measures.


Earnings per share		Page 20

ACE Limited

Non-GAAP Financial Measures

(in millions of U.S. dollars)

(Unaudited)

Regulation G - Non-GAAP Financial Measures

In presenting our results, we have included and discussed certain non-GAAP measures. These non-GAAP measures, which may be defined differently by other companies, are important for an understanding of our overall results of operations. However, they should not be viewed as a substitute for measures determined in accordance with generally accepted accounting principles (GAAP). A reconciliation of book value per common share is provided on page 23.

In presenting our segment operating results, we have shown our performance with reference to underwriting results. Underwriting results are calculated by subtracting losses and loss expenses, policy benefits, policy acquisition costs, and administrative expenses from net premiums earned. We use underwriting results and operating ratios to monitor the results of our operations without the impact of certain factors, including investment income, other income and expenses, interest and income tax expense, and net realized gains (losses). Life underwriting income includes net investment income and gains (losses) from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP.

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

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

Income excluding net realized gains (losses), net of tax, is a common performance measurement for insurance companies and non-GAAP measure. We believe this presentation enhances the understanding of our results of operations by highlighting the underlying profitability of our insurance business. We exclude net realized gains (losses) and net realized gains (losses) included in other income (expense) related to partially owned entities because the amount of these gains (losses) is heavily influenced by, and fluctuates in part according to, the availability of market opportunities. Income excluding net realized gains (losses) should not be viewed as a substitute for net income determined in accordance with GAAP.

The following table presents the reconciliation of Net income to Income excluding net realized gains (losses):


														YTD			YTD			Full Year
	2Q-12			1Q-12		4Q-11		3Q-11			2Q-11			2012			2011			2011
Net income (loss), as reported	$	328		$	973	$	735	$	(39	)	$	594		$	1,301		$	844		$	1,540
Net realized gains (losses)		(394	)		260		83		(760	)		(73	)		(134	)		(118	)		(795	)
Net realized gains (losses) in other income (expense) ⁽¹⁾		1			18		16		(28	)		2			19			36			24
Income tax expense on net realized gains (losses)		22			6		12		2			8			28			6			20

Income excluding net realized gains (losses)	$	743		$	701	$	648	$	751		$	673		$	1,444		$	932		$	2,331

(1)	Realized gains (losses) on partially-owned entities, which are investments where we hold more than an insignificant percentage of the investee's shares. The net income or loss is included in other income (expense).


Reconciliation Non-GAAP		Page 21

ACE Limited

Non-GAAP Financial Measures - 2

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

(Unaudited)

Regulation G - Non-GAAP Financial Measures (continued)

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


																YTD			YTD			Full Year
	2Q-12			1Q-12			4Q-11			3Q-11			2Q-11			2012			2011			2011
Tax expense, as reported	$	148		$	110		$	120		$	165		$	121		$	258		$	217		$	502
Tax expense on net realized gains (losses)		22			6			12			2			8			28			6			20

Tax expense, adjusted	$	126		$	104		$	108		$	163		$	113		$	230		$	211		$	482

Income before tax, as reported	$	476		$	1,083		$	855		$	126		$	715		$	1,559		$	1,061		$	2,042
Less: realized gains (losses)		(394	)		260			83			(760	)		(73	)		(134	)		(118	)		(795	)
Less: realized gains (losses) in other income (expense)		1			18			16			(28	)		2			19			36			24

Income excluding net realized gains (losses) before tax	$	869		$	805		$	756		$	914		$	786		$	1,674		$	1,143		$	2,813

Effective tax rate		31.0	%		10.2	%		14.1	%		131.9	%		16.9	%		16.6	%		20.4	%		24.6	%
Adjustment for tax impact of net realized gains (losses)		-16.4	%		2.8	%		0.3	%		-114.2	%		-2.5	%		-2.8	%		-2.0	%		-7.5	%

Effective tax rate on income excluding net realized gains (losses)		14.6	%		13.0	%		14.4	%		17.7	%		14.4	%		13.8	%		18.4	%		17.1	%

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


							YTD			YTD			Full Year
	2Q-12			2Q-11			2012			2011			2011
Net income	$	328		$	594		$	1,301		$	844		$	1,540
Income excluding net realized gains (losses)	$	743		$	673		$	1,444		$	932		$	2,331
Equity - beginning of period, as reported	$	25,431		$	23,228		$	24,332		$	22,835		$	22,835
Less: unrealized gains (losses) on investments, net of deferred tax		1,958			1,423			1,715			1,399			1,399

Equity - beginning of period, as adjusted	$	23,473		$	21,805		$	22,617		$	21,436		$	21,436

Equity - end of period, as reported	$	25,762		$	23,952		$	25,762		$	23,952		$	24,332
Less: unrealized gains (losses) on investments, net of deferred tax		2,166			1,574			2,166		$	1,574			1,715

Equity - end of period, as adjusted	$	23,596		$	22,378		$	23,596		$	22,378		$	22,617

Average equity, as reported	$	25,597		$	23,590		$	25,047		$	23,394		$	23,584
Average equity, as adjusted	$	23,535		$	22,092		$	23,107		$	21,907		$	22,027
Annualized ROE calculated using income excluding net realized gains (losses)		12.6	%		12.2	%		12.5	%		8.5	%		10.6	%
Annualized ROE calculated using net income		5.1	%		10.1	%		10.4	%		7.2	%		6.5	%


Reconciliation Non-GAAP 2		Page 22

ACE Limited

Book Value and Book Value per Common Share

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

(Unaudited)

Reconciliation of Book Value per Common Share


	June 30			March 31			December 31			June 30
	2012			2012			2011			2011
Shareholders’ equity	$	25,762		$	25,431		$	24,332		$	23,952
Less: goodwill and other intangible assets		4,826			4,860			4,799			4,826

Numerator for tangible book value per share	$	20,936		$	20,571		$	19,533		$	19,126

Book value - % change over prior quarter⁽¹⁾		1.3	%		4.5	%		3.2	%		3.1	%
Tangible book value - % change over prior quarter ⁽¹⁾		1.8	%		5.3	%		3.9	%		3.2	%
Denominator		339,060,885			338,653,382			336,927,276			337,912,324

Book value per common share	$	75.98		$	75.09		$	72.22		$	70.88
Tangible book value per common share	$	61.75		$	60.74		$	57.97		$	56.60

Reconciliation of Book Value
Shareholders’ equity, beginning of quarter	$	25,431		$	24,332		$	23,581		$	23,228
Income excluding net realized gains (losses)		743			701			648			673
Net realized gains (losses), net of tax		(415	)		272			87			(79	)
Net unrealized gains (losses), net of tax		208			243			189			151
Repurchase of shares		—			(7	)		(32	)		—
Dividend declared on common shares		(168	)		(200	)		(118	)		(119	)
Cumulative translation, net of tax		(79	)		56			(123	)		56
Pension liability		—			(1	)		6			—
Other⁽²⁾		42			35			94			42

	$	25,762		$	25,431		$	24,332		$	23,952

(1)	At June 30, 2012, book value increased 5.9% and tangible book value increased 7.2% from December 31, 2011.

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


Reconciliation Book Value		Page 23

ACE Limited

Glossary

ACE Limited Consolidated comprises all segments including Corporate and Other.

Annualized return on equity calculated using income excluding net realized gains (losses): Income excluding net realized gains (losses), net of tax, divided by average shareholders’ equity for the period excluding unrealized gains (losses) on investments, net of tax. To annualize a quarterly rate multiply by four.

Book value per common share: Shareholders’ equity divided by the shares outstanding.

Combined Insurance: Combined Insurance Company of America, acquired April 1, 2008.

Combined ratio: The sum of the loss and loss expense ratio, acquisition cost ratio and the administrative expense ratio excluding life business. Calculated on a GAAP basis.

Effective tax rate on income excluding net realized gains (losses): Income tax expense excluding tax expense (benefit) on net realized gains (losses) divided by income excluding net realized gains (losses) before tax.

G7: A group of seven industrialized nations including Canada, France, Germany, Italy, Japan, United Kingdom, and the United States.

Life underwriting income: Net premiums earned and net investment income less policy benefits, acquisition costs, and administrative expenses. In addition, Life underwriting income includes gains/losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP.

NM: Not meaningful.

Tangible book value per common share: Shareholders’ equity less goodwill and other intangible assets divided by the shares outstanding.

Tangible capital: Total capitalization less goodwill and other intangible assets.

Total capitalization: Short-term debt, long-term debt, trust preferreds, and shareholders’ equity.


Glossary		Page 24

Chubb Ltd - FORM 8-K - EX-99.2 - SECOND QUARTER 2012 FINANCIAL SUPPLEMENT - July 24, 2012

Attached files

Chubb Ltd Reports