Chubb Ltd - FORM 8-K - EX-99.2

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8-K - 8-K - Chubb Ltd	d759971d8k.htm
EX-99.1 - EX-99.1 - Chubb Ltd	d759971dex991.htm

Exhibit 99.2

LOGO


Investor Contact Helen M. Wilson Phone: (441) 299-9283 email: investorrelations@acegroup.com		This report is for informational purposes only. It should be read in conjunction with documents filed by ACE Limited with the Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
		Cautionary Statement Regarding Forward-Looking Statements:
		Any forward-looking statements made in this financial supplement reflect ACE’s current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties which may cause actual results to differ materially from those set forth in these statements. For example, our forward-looking statements, such as statements concerning exposures, reserves and recoverables, could be affected by the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, new theories of liability, judicial, legislative, regulatory and other governmental developments, litigation tactics and developments, investigation developments and actual settlement terms, the amount and timing of reinsurance receivable and credit developments among reinsurers.
		Our forward-looking statements could also be affected by competition, pricing and policy term trends, market acceptance, changes in demand, actual market developments, rating agency action, possible terrorism or the outbreak and effects of war. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the dates on which they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

ACE Limited

Financial Supplement Table of Contents


		Page
I.	Financial Highlights
	- Consolidated Financial Highlights		1

II.	Consolidated Results
	- Consolidated Results—Consecutive Quarters		2
	- Summary Consolidated Balance Sheets		3
	- Consolidated Premiums and Operating Income by Line of Business		4

III.	Global P&C Results
	- Global P&C Results—Consecutive Quarters		5

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

V.	Balance Sheet Details
	- Loss Reserve Rollforward		12
	- Reinsurance Recoverable Analysis		13
	- Investment Portfolio		14 - 17
	- Net Realized and Unrealized Gains (Losses)		18
	- Capital Structure		19
	- Computation of Basic and Diluted Earnings Per Share		20

VI.	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.


												Constant $															Constant $
							% Change					% Change									% Change						% Change
	Three months ended June 30						2Q-14 vs.			Constant $		2Q-14 vs.			Six months ended June 30						YTD-14 vs.			Constant $			YTD-14 vs.
	2014			2013			2Q-13			2013 ⁽¹⁾		2Q-13 ⁽¹⁾			2014			2013			YTD-13			2013 ⁽¹⁾			YTD-13 ⁽¹⁾
Gross premiums written	$	6,006		$	6,030			-0.4	%	$	5,990		0.3	%	$	11,380		$	10,993			3.5	%	$	10,874			4.7	%
Net premiums written	$	4,559		$	4,391			3.8	%	$	4,362		4.5	%	$	8,744		$	8,189			6.8	%	$	8,097			8.0	%
P&C net premiums written ⁽²⁾	$	4,061		$	3,904			4.0	%	$	3,885		4.5	%	$	7,752		$	7,200			7.7	%	$	7,132			8.7	%
Global P&C net premiums written ⁽³⁾	$	3,673		$	3,451			6.4	%	$	3,432		7.0	%	$	7,170		$	6,634			8.1	%	$	6,566			9.2	%
Net premiums earned	$	4,332		$	4,067			6.5	%	$	4,049		7.0	%	$	8,302		$	7,640			8.7	%	$	7,550			10.0	%
Net investment income	$	556		$	534			4.2	%						$	1,109		$	1,065			4.1	%
Operating income	$	825		$	790			4.5	%						$	1,602		$	1,536			4.3	%
Net income	$	779		$	891			-12.5	%						$	1,513		$	1,844			-18.0	%
Comprehensive income (loss)	$	1,348		$	(499	)		NM							$	2,456		$	217			NM
Operating cash flow	$	846		$	895										$	2,096		$	1,808
P&C combined ratio ⁽⁴⁾
Loss and loss expense ratio		58.2	%		58.7	%										58.0	%		58.0	%
Underwriting and administrative expense ratio		29.3	%		29.2	%										30.2	%		30.1	%

Combined ratio		87.5	%		87.9	%										88.2	%		88.1	%
Operating return on equity (ROE)		11.8	%		12.3	%										11.5	%		12.1	%
ROE		10.4	%		12.9	%										10.2	%		13.5	%
Operating effective tax rate		13.7	%		11.2	%										12.7	%		11.0	%
Effective tax rate		14.6	%		11.5	%										13.0	%		11.4	%
Diluted earnings per share
Operating income	$	2.42		$	2.29			5.7	%						$	4.69		$	4.46			5.2	%
Net income	$	2.28		$	2.59			-12.0	%						$	4.43		$	5.36			-17.4	%

																					% Change 2Q-14 vs. 2Q-13			December 31 2013			% Change 2Q-14 vs. 4Q-13
Book value per common share															$	90.19		$	80.26			12.4	%	$	84.83			6.3	%
Tangible book value per common share															$	73.77		$	64.40			14.5	%	$	68.93			7.0	%
Tangible book value per common share excluding 2014 acquisition ⁽⁵⁾															$	74.15		$	64.40			15.1	%	$	68.93			7.6	%
Weighted average basic common shares outstanding		337.8			341.0											338.4			340.9
Weighted average diluted common shares outstanding		341.1			344.1											341.6			344.0
Debt plus trust preferred securities/ tangible capital																20.0	%		21.6	%					20.4	%

(1)	Prior periods on a constant dollar basis.

(2)	P&C net premiums written is defined as consolidated net premiums written excluding net premiums written of the company’s Life segment. See non-GAAP financial measures.

(3)	Global P&C net premiums written is defined as consolidated net premiums written excluding net premiums written of the company’s Life and Insurance – North American Agriculture segments. See non-GAAP financial measures.

(4)	Loss and loss expense ratio and combined ratio include the impact of realized gains and losses from fair value changes on crop derivatives. See non-GAAP financial measures.

(5)	For 2014, tangible book value per common share excludes the impact from goodwill and intangibles relating to the acquisition of The Siam Commercial Samaggi Insurance PCL of $126 million.


Financial Highlights		Page 1

ACE Limited

Consolidated Results - Consecutive Quarters

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

(Unaudited)

ACE Limited Consolidated


	2Q-14			1Q-14			4Q-13			3Q-13			2Q-13			YTD 2014			YTD 2013			Full Year 2013
Consolidated Results (Including Corporate) Excluding Life Segment ⁽¹⁾
Gross premiums written	$	5,480		$	4,852		$	4,936		$	5,863		$	5,518		$	10,332		$	9,953		$	20,752
Net premiums written		4,061			3,691			3,712			4,141			3,904			7,752			7,200			15,053
Net premiums earned		3,842			3,486			3,882			4,143			3,587			7,328			6,683			14,708
Adjusted losses and loss expenses ⁽²⁾		2,234			2,012			2,378			2,515			2,105			4,246			3,874			8,767
Policy acquisition costs		637			617			605			592			570			1,254			1,104			2,301
Administrative expenses		493			467			483			478			478			960			907			1,868

Underwriting income		478			390			416			558			434			868			798			1,772
Net investment income		490			489			493			461			471			979			939			1,893
Interest expense		69			68			67			68			69			137			125			260
Other income (expense) - operating ⁽³⁾		(26	)		(23	)		(23	)		(29	)		(31	)		(49	)		(53	)		(105	)
Income tax expense		120			88			81			140			91			208			169			390

Operating income (including Corporate) excluding Life segment		753			700			738			782			714			1,453			1,390			2,910
Life segment operating income		72			77			86			75			76			149			146			307

Consolidated operating income		825			777			824			857			790			1,602			1,536			3,217
Adjusted net realized gains (losses) ⁽²⁾		(81	)		(102	)		154			41			104			(183	)		310			505
Net realized gains (losses) related to unconsolidated entities		36			51			25			22			12			87			45			92
Income tax expense (benefit) on adjusted net realized gains (losses)		1			(8	)		5			4			15			(7	)		47			56

Consolidated net income	$	779		$	734		$	998		$	916		$	891		$	1,513		$	1,844		$	3,758

% Change versus prior year period ⁽¹⁾
Net premiums written as reported		4.0	%		12.0	%		18.2	%		-2.0	%		7.1	%		7.7	%		7.0	%		6.8	%
Net premiums earned as reported		7.1	%		12.6	%		15.5	%		-1.0	%		8.4	%		9.6	%		7.5	%		6.9	%
Net premiums written constant $		4.5	%		13.7	%		19.8	%		-0.9	%		8.6	%		8.7	%		7.8	%		7.8	%
Net premiums earned constant $		7.4	%		14.8	%		17.0	%		-0.1	%		9.7	%		10.8	%		8.3	%		7.9	%
Other ratios
Net premiums written/gross premiums written ⁽¹⁾		74	%		76	%		75	%		71	%		71	%		75	%		72	%		73	%
Operating effective tax rate		13.7	%		11.5	%		9.2	%		14.9	%		11.2	%		12.7	%		11.0	%		11.6	%
P&C combined ratio ⁽⁴⁾
Loss and loss expense ratio		58.2	%		57.7	%		61.3	%		60.7	%		58.7	%		58.0	%		58.0	%		59.6	%
Policy acquisition cost ratio		16.6	%		17.7	%		15.6	%		14.3	%		15.9	%		17.1	%		16.5	%		15.7	%
Administrative expense ratio		12.7	%		13.4	%		12.4	%		11.5	%		13.3	%		13.1	%		13.6	%		12.7	%

Combined ratio		87.5	%		88.8	%		89.3	%		86.5	%		87.9	%		88.2	%		88.1	%		88.0	%

Combined ratio excluding catastrophe losses and PPD		88.7	%		88.9	%		91.5	%		89.8	%		89.2	%		88.8	%		89.3	%		90.0	%
P&C expense ratio		29.3	%		31.1	%		28.0	%		25.8	%		29.2	%		30.2	%		30.1	%		28.4	%
P&C expense ratio excluding A&H		26.0	%		27.5	%		24.0	%		21.9	%		25.7	%		26.7	%		26.5	%		24.5	%
Catastrophe reinstatement premiums collected - pre-tax	$	—		$	—		$	1		$	2		$	—		$	—		$	—		$	3
Catastrophe losses - pre-tax	$	80		$	53		$	37		$	80		$	81		$	133		$	113		$	230
Favorable prior period development (PPD) - pre-tax ⁽⁵⁾	$	(126	)	$	(62	)	$	(122	)	$	(210	)	$	(128	)	$	(188	)	$	(198	)	$	(530	)
Loss and loss expense ratio excluding catastrophe losses and PPD		59.4	%		57.5	%		63.5	%		64.1	%		60.0	%		58.5	%		59.3	%		61.8	%

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

(2)	(Gains) losses from fair value changes on crop derivatives are reclassified from Adjusted net realized gains (losses) to Adjusted losses and loss expenses for this presentation. Crop derivative gains for Q2 2014 and YTD 2014 were $8 million and $6 million, respectively.

(3)	Excludes portion of net realized investment gains and losses related to unconsolidated entities.

(4)	Loss and loss expense ratio and combined ratio include the impact of realized gains and losses from fair value changes on crop derivatives. See non-GAAP financial measures.

(5)	For YTD 2014, favorable prior period development includes $35 million of favorable net earned premium adjustments, all related to the Insurance – North American Agriculture segment.


Consolidated Results		Page 2

ACE Limited

Summary Consolidated Balance Sheets

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

(Unaudited)


	June 30 2014			March 31 2014			December 31 2013
Assets
Fixed maturities available for sale, at fair value	$	51,601		$	49,611		$	49,254
Fixed maturities held to maturity, at amortized cost		5,774			5,887			6,098
Equity securities, at fair value		907			851			837
Short-term investments, at fair value		2,108			2,526			1,763
Other investments		3,230			3,170			2,976

Total investments		63,620			62,045			60,928
Cash		594			847			579
Securities lending collateral		1,440			1,550			1,632
Insurance and reinsurance balances receivable		5,316			4,761			5,026
Reinsurance recoverable on losses and loss expenses		10,768			10,755			11,227
Deferred policy acquisition costs		2,562			2,402			2,313
Value of business acquired		514			517			536
Prepaid reinsurance premiums		1,867			1,721			1,675
Goodwill and other intangible assets		5,522			5,382			5,404
Deferred tax assets		234			516			616
Investments in partially-owned insurance companies		470			466			470
Other assets		4,540			4,217			4,104

Total assets	$	97,447		$	95,179		$	94,510

Liabilities
Unpaid losses and loss expenses	$	37,177		$	36,866		$	37,443
Unearned premiums		8,296			7,791			7,539
Future policy benefits		4,778			4,632			4,615
Insurance and reinsurance balances payable		3,794			3,734			3,628
Securities lending payable		1,441			1,551			1,633
Accounts payable, accrued expenses, and other liabilities		5,419			5,218			4,810
Short-term debt		1,851			1,901			1,901
Long-term debt		4,057			3,808			3,807
Trust preferred securities		309			309			309

Total liabilities		67,122			65,810			65,685
Shareholders’ equity
Total shareholders’ equity, excl. AOCI		28,230			27,843			27,673
Accumulated other comprehensive income (AOCI)		2,095			1,526			1,152

Total shareholders’ equity		30,325			29,369			28,825

Total liabilities and shareholders’ equity	$	97,447		$	95,179		$	94,510

Book value per common share	$	90.19		$	86.90		$	84.83
% change over prior quarter		3.8	%		2.4	%		2.2	%
Tangible book value per common share	$	73.77		$	70.97		$	68.93
% change over prior quarter		3.9	%		3.0	%		3.0	%


Consol Bal Sheet		Page 3

ACE Limited

Consolidated Premiums and Operating Income by Line of Business

(in millions of U.S. dollars)

(Unaudited)

ACE Limited Consolidated


												Constant $														Constant $
							% Change					% Change									% Change					% Change
							2Q-14 vs.			Constant $		2Q-14 vs.			YTD			YTD			YTD-14 vs.			Constant $		YTD-14 vs.
	2Q-14			2Q-13			2Q-13			2Q-13 ⁽²⁾		2Q-13 ⁽²⁾			2014			2013			YTD-13			YTD-13 ⁽²⁾		YTD-13 ⁽²⁾
Net premiums written
Property and all other	$	1,465		$	1,366			7.1	%						$	2,837		$	2,588			9.6	%
Casualty		1,494			1,412			5.8	%							2,949			2,720			8.4	%

Subtotal		2,959			2,778			6.5	%	$	2,770		6.7	%		5,786			5,308			9.0	%	$	5,274		9.7	%
Agriculture		388			453			-14.2	%		453		-14.2	%		582			566			3.0	%		566		3.0	%
Personal accident (A&H) ⁽¹⁾		961			925			3.9	%		909		5.7	%		1,878			1,839			2.1	%		1,795		4.6	%
Life		251			235			6.9	%		230		9.8	%		498			476			4.6	%		462		8.0	%

Total consolidated	$	4,559		$	4,391			3.8	%	$	4,362		4.5	%	$	8,744		$	8,189			6.8	%	$	8,097		8.0	%

% of Total Consolidated
Property and all other		32	%		31	%										32	%		32	%
Casualty		33	%		32	%										34	%		33	%

Subtotal		65	%		63	%										66	%		65	%
Agriculture		8	%		11	%										7	%		7	%
Personal accident (A&H) ⁽¹⁾		21	%		21	%										21	%		22	%
Life		6	%		5	%										6	%		6	%

Total consolidated		100	%		100	%										100	%		100	%

Net premiums earned
Property and all other	$	1,282		$	1,158			10.6	%						$	2,534		$	2,225			13.8	%
Casualty		1,542			1,454			6.0	%							3,022			2,807			7.7	%

Subtotal		2,824			2,612			8.1	%	$	2,610		8.2	%		5,556			5,032			10.4	%	$	4,994		11.2	%
Agriculture		330			351			-5.7	%		351		-5.7	%		433			403			7.6	%		403		7.6	%
Personal accident (A&H) ⁽¹⁾		934			880			6.1	%		870		7.4	%		1,828			1,754			4.2	%		1,715		6.6	%
Life		244			224			9.2	%		218		11.9	%		485			451			7.5	%		438		10.6	%

Total consolidated	$	4,332		$	4,067			6.5	%	$	4,049		7.0	%	$	8,302		$	7,640			8.7	%	$	7,550		10.0	%

% of Total Consolidated
Property and all other		29	%		28	%										31	%		29	%
Casualty		36	%		36	%										36	%		37	%

Subtotal		65	%		64	%										67	%		66	%
Agriculture		7	%		9	%										5	%		5	%
Personal accident (A&H) ⁽¹⁾		22	%		22	%										22	%		23	%
Life		6	%		5	%										6	%		6	%

Total consolidated		100	%		100	%										100	%		100	%

Operating income (loss)
Property, casualty, and all other	$	647		$	607			6.6	%	$	613		5.5	%	$	1,292		$	1,188			8.8	%	$	1,189		8.6	%
Agriculture		19			26			-25.4	%		26		-25.4	%		(6	)		33			NM			33		NM
Personal accident (A&H) ⁽¹⁾		125			123			2.0	%		121		3.7	%		239			247			-3.2	%		242		-1.1	%
Life		34			34			0.0	%		34		0.0	%		77			68			13.2	%		68		13.2	%

Total consolidated	$	825		$	790			4.5	%	$	794		3.9	%	$	1,602		$	1,536			4.3	%	$	1,532		4.6	%

% of Total Consolidated
Property, casualty, and all other		79	%		77	%										80	%		77	%
Agriculture		2	%		3	%										0	%		2	%
Personal accident (A&H) ⁽¹⁾		15	%		16	%										15	%		17	%
Life		4	%		4	%										5	%		4	%

Total consolidated		100	%		100	%										100	%		100	%

(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		Page 4

ACE Limited

Global P&C Results - Consecutive Quarters

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

(Unaudited)

Global P&C includes the company’s Insurance – North American P&C segment (refer to page 7), Insurance – Overseas General segment (refer to page 9), Global Reinsurance segment (refer to page 10), and Corporate (not separately disclosed in the Financial Supplement). Global P&C excludes the Insurance – North American Agriculture and Life segments.

Global P&C (Including Corporate)


																YTD			YTD			Full Year
	2Q-14			1Q-14			4Q-13			3Q-13			2Q-13			2014			2013			2013
Gross premiums written	$	4,879		$	4,618		$	4,719		$	4,417		$	4,769		$	9,497		$	8,955		$	18,091
Net premiums written		3,673			3,497			3,456			3,336			3,451			7,170			6,634			13,426
Net premiums earned		3,512			3,383			3,456			3,294			3,236			6,895			6,280			13,030
Losses and loss expenses		1,955			1,884			1,925			1,768			1,812			3,839			3,549			7,242
Policy acquisition costs		614			612			608			560			550			1,226			1,080			2,248
Administrative expenses		492			466			485			473			475			958			899			1,857

Underwriting income		451			421			438			493			399			872			752			1,683
Net investment income		484			482			486			455			464			966			926			1,867
Interest expense		69			68			66			68			69			137			125			259
Other income (expense)—operating ⁽¹⁾		(17	)		(15	)		(15	)		(21	)		(23	)		(32	)		(37	)		(73	)
Income tax expense		115			95			85			127			83			210			159			371

Global P&C operating income		734			725			758			732			688			1,459			1,357			2,847
Net realized gains (losses)		(9	)		(26	)		—			(3	)		67			(35	)		146			143
Net realized gains (losses) related to unconsolidated entities		38			53			27			24			8			91			36			87
Income tax expense (benefit) on net realized gains (losses)		1			(5	)		6			4			14			(4	)		45			55

Global P&C net income	$	762		$	757		$	779		$	749		$	749		$	1,519		$	1,494		$	3,022

% Change versus prior year period
Net premiums written as reported		6.4	%		9.9	%		13.1	%		8.9	%		9.5	%		8.1	%		8.5	%		9.7	%
Net premiums earned as reported		8.5	%		11.2	%		11.6	%		9.1	%		10.7	%		9.8	%		8.8	%		9.6	%
Net premiums written constant $		7.0	%		11.6	%		14.7	%		10.6	%		11.2	%		9.2	%		9.3	%		11.0	%
Net premiums earned constant $		8.8	%		13.4	%		13.1	%		10.5	%		12.2	%		11.0	%		9.7	%		10.8	%
Other ratios
Net premiums written/gross premiums written		75	%		76	%		73	%		76	%		72	%		75	%		74	%		74	%
Combined ratio
Loss and loss expense ratio		55.7	%		55.7	%		55.7	%		53.7	%		56.0	%		55.7	%		56.5	%		55.6	%
Policy acquisition cost ratio		17.5	%		18.1	%		17.6	%		17.0	%		17.0	%		17.8	%		17.2	%		17.3	%
Administrative expense ratio		13.9	%		13.8	%		14.1	%		14.3	%		14.7	%		13.9	%		14.3	%		14.2	%

Combined ratio		87.1	%		87.6	%		87.4	%		85.0	%		87.7	%		87.4	%		88.0	%		87.1	%

Combined ratio excluding catastrophe losses and PPD		88.7	%		89.0	%		89.9	%		88.9	%		89.2	%		88.8	%		89.4	%		89.4	%
Expense ratio		31.4	%		31.9	%		31.7	%		31.3	%		31.7	%		31.7	%		31.5	%		31.5	%
Expense ratio excluding A&H		28.2	%		28.4	%		27.9	%		27.6	%		28.3	%		28.3	%		28.0	%		27.9	%
Catastrophe reinstatement premiums collected—pre-tax	$	—		$	—		$	1		$	2		$	—		$	—		$	—		$	3
Catastrophe losses—pre-tax	$	71		$	52		$	35		$	78		$	78		$	123		$	110		$	223
Favorable prior period development (PPD)—pre-tax ⁽²⁾	$	(126	)	$	(100	)	$	(122	)	$	(200	)	$	(128	)	$	(226	)	$	(195	)	$	(517	)
Loss and loss expense ratio excluding catastrophe losses and PPD		57.3	%		57.1	%		58.3	%		57.7	%		57.6	%		57.2	%		57.9	%		58.0	%

(1)	Excludes portion of net realized investment gains and losses related to unconsolidated entities.

(2)	For Q2 2014 and YTD 2014, favorable prior period development is net of $1 million and $3 million, respectively, of profit-sharing commissions that are included in the expense ratio.


Global P&C		Page 5

ACE Limited

Insurance - North American

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

(Unaudited)

The table below combines the company’s Insurance – North American P&C segment (refer to page 7) and Insurance – North American Agriculture segment (refer to page 8) into total Insurance – North American business presentation for reference purposes only.

Insurance - North American


																YTD			YTD			Full Year
	2Q-14			1Q-14			4Q-13			3Q-13			2Q-13			2014			2013			2013
Gross premiums written	$	2,948		$	2,258		$	2,656		$	3,581		$	3,076		$	5,206		$	5,144		$	11,381
Net premiums written		2,023			1,612			1,858			2,305			1,982			3,635			3,379			7,542
Net premiums earned		1,872			1,590			1,937			2,293			1,779			3,462			3,169			7,399
Losses and loss expenses ⁽¹⁾		1,295			1,068			1,438			1,710			1,243			2,363			2,153			5,301
Policy acquisition costs		175			164			150			191			162			339			309			650
Administrative expenses		176			162			162			158			162			338			292			612

Underwriting income		226			196			187			234			212			422			415			836
Net investment income		271			277			273			260			257			548			514			1,047
Interest expense		2			3			2			3			3			5			1			6
Other income (expense)—operating		(4	)		(8	)		(7	)		(11	)		(12	)		(12	)		(19	)		(37	)
Income tax expense		94			76			69			88			87			170			174			331

Operating income		397			386			382			392			367			783			735			1,509
Net realized gains (losses) ⁽¹⁾		(11	)		(9	)		9			10			29			(20	)		55			74
Net realized gains (losses) related to unconsolidated entities		19			20			19			16			14			39			28			63
Income tax expense on net realized gains (losses)		2			—			10			5			12			2			21			36

Net income	$	403		$	397		$	400		$	413		$	398		$	800		$	797		$	1,610

Combined ratio
Loss and loss expense ratio		69.2	%		67.2	%		74.2	%		74.6	%		69.9	%		68.3	%		67.9	%		71.6	%
Policy acquisition cost ratio		9.3	%		10.3	%		7.7	%		8.4	%		9.1	%		9.8	%		9.7	%		8.8	%
Administrative expense ratio		9.4	%		10.2	%		8.5	%		6.8	%		9.1	%		9.7	%		9.3	%		8.3	%

Combined ratio		87.9	%		87.7	%		90.4	%		89.8	%		88.1	%		87.8	%		86.9	%		88.7	%

Combined ratio excluding catastrophe losses and PPD		87.6	%		87.2	%		91.1	%		90.1	%		87.7	%		87.4	%		87.7	%		89.3	%
Catastrophe reinstatement premiums expensed—pre-tax	$	—		$	—		$	—		$	—		$	(1	)	$	—		$	(1	)	$	(1	)
Catastrophe losses—pre-tax	$	45		$	33		$	14		$	23		$	53		$	78		$	64		$	101
Favorable prior period development (PPD)—pre-tax	$	(39	)	$	(30	)	$	(28	)	$	(29	)	$	(47	)	$	(69	)	$	(90	)	$	(147	)
Loss and loss expense ratio excluding catastrophe losses and PPD		68.9	%		66.2	%		75.0	%		75.0	%		69.7	%		67.7	%		68.9	%		72.4	%
% Change versus prior year period
Net premiums written		2.1	%		15.5	%		22.5	%		-9.1	%		6.6	%		7.6	%		7.1	%		4.6	%
Net premiums earned		5.2	%		14.4	%		20.4	%		-7.2	%		7.7	%		9.2	%		7.8	%		5.4	%
Other ratios
Net premiums written/gross premiums written		69	%		71	%		70	%		64	%		64	%		70	%		66	%		66	%

(1)	(Gains) losses from fair value changes on crop derivatives are reclassified from Net realized gains (losses) for this presentation.


Insurance - North American		Page 6

ACE Limited

Segment Results - Consecutive Quarters

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

(Unaudited)

Insurance - North American P&C


																YTD			YTD			Full Year
	2Q-14			1Q-14			4Q-13			3Q-13			2Q-13			2014			2013			2013
Gross premiums written	$	2,347		$	2,024		$	2,439		$	2,135		$	2,327		$	4,371		$	4,146		$	8,720
Net premiums written		1,635			1,418			1,602			1,500			1,529			3,053			2,813			5,915
Net premiums earned		1,542			1,487			1,511			1,444			1,428			3,029			2,766			5,721
Losses and loss expenses		1,016			940			985			963			950			1,956			1,828			3,776
Policy acquisition costs		152			159			153			159			142			311			285			597
Administrative expenses		175			161			164			153			159			336			284			601

Underwriting income		199			227			209			169			177			426			369			747
Net investment income		265			270			266			254			250			535			501			1,021
Interest expense		2			3			1			3			3			5			1			5
Other income (expense)—operating		5			—			1			(3	)		(4	)		5			(3	)		(5	)
Income tax expense		89			83			73			75			79			172			164			312

Operating income		378			411			402			342			341			789			702			1,446
Net realized gains (losses)		(11	)		(9	)		9			9			28			(20	)		54			72
Net realized gains (losses) related to unconsolidated entities		19			20			19			16			14			39			28			63
Income tax expense on net realized gains (losses)		2			—			10			4			12			2			21			35

Net income	$	384		$	422		$	420		$	363		$	371		$	806		$	763		$	1,546

Combined ratio
Loss and loss expense ratio		66.0	%		63.2	%		65.2	%		66.7	%		66.6	%		64.6	%		66.1	%		66.0	%
Policy acquisition cost ratio		9.8	%		10.7	%		10.1	%		11.1	%		9.9	%		10.3	%		10.3	%		10.4	%
Administrative expense ratio		11.3	%		10.8	%		10.9	%		10.5	%		11.1	%		11.0	%		10.3	%		10.5	%

Combined ratio		87.1	%		84.7	%		86.2	%		88.3	%		87.6	%		85.9	%		86.7	%		86.9	%

Combined ratio excluding catastrophe losses and PPD		87.3	%		87.1	%		87.2	%		88.3	%		87.3	%		87.2	%		87.6	%		87.6	%
Catastrophe reinstatement premiums expensed—pre-tax	$	—		$	—		$	—		$	—		$	(1	)	$	—		$	(1	)	$	(1	)
Catastrophe losses—pre-tax	$	36		$	32		$	12		$	21		$	50		$	68		$	61		$	94
Favorable prior period development (PPD)—pre-tax ⁽¹⁾	$	(39	)	$	(68	)	$	(28	)	$	(19	)	$	(47	)	$	(107	)	$	(87	)	$	(134	)
Loss and loss expense ratio excluding catastrophe losses and PPD		66.2	%		65.7	%		66.3	%		66.9	%		66.5	%		65.9	%		67.1	%		66.8	%
% Change versus prior year period
Net premiums written		6.9	%		10.5	%		11.8	%		9.3	%		11.8	%		8.5	%		10.7	%		10.6	%
Net premiums earned		7.9	%		11.2	%		12.3	%		10.6	%		12.7	%		9.5	%		10.8	%		11.1	%
Other ratios
Net premiums written/gross premiums written		70	%		70	%		66	%		70	%		66	%		70	%		68	%		68	%

(1)	For YTD 2014, favorable prior period development is net of $2 million of profit-sharing commissions that are included in the expense ratio.


Insurance - North American P&C		Page 7

ACE Limited

Segment Results - Consecutive Quarters

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

(Unaudited)

Insurance - North American Agriculture


																YTD			YTD			Full Year
	2Q-14			1Q-14			4Q-13			3Q-13			2Q-13			2014			2013			2013
Gross premiums written	$	601		$	234		$	217		$	1,446		$	749		$	835		$	998		$	2,661
Net premiums written		388			194			256			805			453			582			566			1,627
Net premiums earned		330			103			426			849			351			433			403			1,678
Losses and loss expenses ⁽¹⁾		279			128			453			747			293			407			325			1,525
Policy acquisition costs		23			5			(3	)		32			20			28			24			53
Administrative expenses		1			1			(2	)		5			3			2			8			11

Underwriting income (loss) ⁽²⁾		27			(31	)		(22	)		65			35			(4	)		46			89
Net investment income		6			7			7			6			7			13			13			26
Interest expense		—			—			1			—			—			—			—			1
Other income (expense)—operating		(9	)		(8	)		(8	)		(8	)		(8	)		(17	)		(16	)		(32	)
Income tax expense (benefit)		5			(7	)		(4	)		13			8			(2	)		10			19

Operating income (loss)		19			(25	)		(20	)		50			26			(6	)		33			63
Net realized gains (losses) excluding gains (losses) from fair value changes on crop derivatives ⁽¹⁾		—			—			—			1			1			—			1			2
Net realized gains (losses) related to unconsolidated entities		—			—			—			—			—			—			—			—
Income tax expense on net realized gains (losses)		—			—			—			1			—			—			—			1

Net income (loss)	$	19		$	(25	)	$	(20	)	$	50		$	27		$	(6	)	$	34		$	64

Combined ratio
Loss and loss expense ratio		84.4	%		124.6	%		106.3	%		88.0	%		83.4	%		93.9	%		80.6	%		90.9	%
Policy acquisition cost ratio		7.0	%		4.5	%		-0.5	%		3.8	%		5.6	%		6.4	%		5.8	%		3.2	%
Administrative expense ratio		0.4	%		1.2	%		-0.6	%		0.5	%		0.9	%		0.6	%		2.2	%		0.6	%

Combined ratio		91.8	%		130.3	%		105.2	%		92.3	%		89.9	%		100.9	%		88.6	%		94.7	%

Combined ratio excluding catastrophe losses and PPD		89.1	%		88.9	%		104.8	%		93.3	%		89.1	%		89.1	%		88.7	%		95.1	%
Catastrophe reinstatement premiums—pre-tax	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe losses—pre-tax	$	9		$	1		$	2		$	2		$	3		$	10		$	3		$	7
Unfavorable (favorable) prior period development (PPD)—pre-tax ⁽³⁾	$	—		$	38		$	—		$	(10	)	$	—		$	38		$	(3	)	$	(13	)
Loss and loss expense ratio excluding catastrophe losses and PPD		81.8	%		78.3	%		105.8	%		88.9	%		82.6	%		81.2	%		80.7	%		91.3	%
% Change versus prior year period
Net premiums written		-14.2	%		72.1	%		203.6	%		-30.8	%		-8.0	%		3.0	%		-7.4	%		-12.5	%
Net premiums earned		-5.7	%		96.8	%		62.3	%		-27.2	%		-8.8	%		7.6	%		-9.1	%		-10.4	%
Other ratios
Net premiums written/gross premiums written		65	%		83	%		118	%		56	%		60	%		70	%		57	%		61	%

(1)	(Gains) losses from fair value changes on crop derivatives are reclassified from Net realized gains (losses) for this presentation.

(2)	We assess the performance of our Insurance – North American Agriculture segment based on underwriting income which includes (gains) losses from fair value changes on crop derivatives.

(3)	For YTD 2014, unfavorable prior period development is net of $35 million of favorable net earned premium adjustments and $1 million of favorable profit-sharing commissions.


Insurance - North American Agriculture		Page 8

ACE Limited

Segment Results - Consecutive Quarters

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

(Unaudited)

Insurance - Overseas General


																YTD			YTD			Full Year
	2Q-14			1Q-14			4Q-13			3Q-13			2Q-13			2014			2013			2013
Gross premiums written	$	2,224		$	2,261		$	2,126		$	2,018		$	2,097		$	4,485		$	4,170		$	8,314
Net premiums written		1,760			1,771			1,699			1,571			1,630			3,531			3,250			6,520
Net premiums earned		1,709			1,612			1,700			1,611			1,563			3,321			3,022			6,333
Losses and loss expenses		830			817			835			712			768			1,647			1,515			3,062
Policy acquisition costs		402			386			405			349			360			788			699			1,453
Administrative expenses		256			250			258			263			251			506			487			1,008

Underwriting income		221			159			202			287			184			380			321			810
Net investment income		136			132			143			128			136			268			268			539
Interest expense		1			1			1			1			2			2			3			5
Other income (expense)—operating		(17	)		(9	)		(13	)		(16	)		(14	)		(26	)		(19	)		(48	)
Income tax expense		57			42			52			78			48			99			72			202

Operating income		282			239			279			320			256			521			495			1,094
Net realized gains (losses)		14			(10	)		(16	)		(8	)		8			4			42			18
Net realized gains (losses) related to unconsolidated entities		9			15			4			2			(3	)		24			3			9
Income tax expense (benefit) on net realized gains (losses)		(2	)		(5	)		(4	)		—			2			(7	)		24			20

Net income	$	307		$	249		$	271		$	314		$	259		$	556		$	516		$	1,101

Combined ratio
Loss and loss expense ratio		48.6	%		50.7	%		49.2	%		44.2	%		49.1	%		49.6	%		50.1	%		48.4	%
Policy acquisition cost ratio		23.5	%		23.9	%		23.8	%		21.6	%		23.0	%		23.7	%		23.1	%		22.9	%
Administrative expense ratio		15.0	%		15.5	%		15.1	%		16.4	%		16.1	%		15.3	%		16.2	%		15.9	%

Combined ratio		87.1	%		90.1	%		88.1	%		82.2	%		88.2	%		88.6	%		89.4	%		87.2	%

Combined ratio excluding catastrophe losses and PPD		89.3	%		90.5	%		91.6	%		89.4	%		90.5	%		89.9	%		90.6	%		90.5	%
Catastrophe reinstatement premiums—pre-tax	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe losses—pre-tax	$	26		$	17		$	17		$	33		$	17		$	43		$	38		$	88
Favorable prior period development (PPD)—pre-tax	$	(63	)	$	(23	)	$	(76	)	$	(149	)	$	(52	)	$	(86	)	$	(74	)	$	(299	)
Loss and loss expense ratio excluding catastrophe losses and PPD		50.8	%		51.1	%		52.6	%		51.4	%		51.3	%		50.9	%		51.3	%		51.7	%
% Change versus prior year period
Net premiums written as reported		8.0	%		9.3	%		15.1	%		13.5	%		10.5	%		8.7	%		8.2	%		11.2	%
Net premiums earned as reported		9.4	%		10.4	%		13.5	%		12.5	%		10.1	%		9.9	%		7.5	%		10.3	%
Net premiums written constant $		8.8	%		12.3	%		18.2	%		17.4	%		13.7	%		10.5	%		9.9	%		13.7	%
Net premiums earned constant $		9.8	%		14.6	%		16.5	%		15.4	%		13.0	%		12.1	%		9.3	%		12.7	%
Other ratios
Net premiums written/gross premiums written		79	%		78	%		80	%		78	%		78	%		79	%		78	%		78	%


Insurance - Overseas General		Page 9

ACE Limited

Segment Results - Consecutive Quarters

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

(Unaudited)

Global Reinsurance


																YTD			YTD			Full Year
	2Q-14			1Q-14			4Q-13			3Q-13			2Q-13			2014			2013			2013
Gross premiums written	$	308		$	333		$	154		$	264		$	345		$	641		$	639		$	1,057
Net premiums written		278			308			155			265			292			586			571			991
Net premiums earned		261			284			245			239			245			545			492			976
Losses and loss expenses		109			126			104			93			93			235			199			396
Policy acquisition costs		60			67			49			52			48			127			96			197
Administrative expenses		14			14			14			12			12			28			24			50

Underwriting income		78			77			78			82			92			155			173			333
Net investment income		80			77			71			66			71			157			143			280
Interest expense		2			1			1			2			1			3			2			5
Other income (expense) - operating		—			1			2			1			1			1			1			4
Income tax expense		10			10			5			16			7			20			15			36

Operating income		146			144			145			131			156			290			300			576
Net realized gains (losses)		(15	)		(8	)		7			(5	)		31			(23	)		51			53
Net realized gains (losses) related to unconsolidated entities		10			18			4			6			(3	)		28			5			15
Income tax expense on net realized gains (losses)		—			—			—			—			—			—			—			—

Net income	$	141		$	154		$	156		$	132		$	184		$	295		$	356		$	644

Combined ratio
Loss and loss expense ratio		41.7	%		44.4	%		42.5	%		38.9	%		37.7	%		43.1	%		40.3	%		40.5	%
Policy acquisition cost ratio		23.1	%		23.5	%		20.4	%		21.7	%		19.9	%		23.3	%		19.6	%		20.3	%
Administrative expense ratio		5.1	%		5.0	%		5.5	%		5.2	%		4.6	%		5.1	%		4.9	%		5.1	%

Combined ratio		69.9	%		72.9	%		68.4	%		65.8	%		62.2	%		71.5	%		64.8	%		65.9	%

Combined ratio excluding catastrophe losses and PPD		75.4	%		75.1	%		73.6	%		71.0	%		70.0	%		75.2	%		69.6	%		70.9	%
Catastrophe reinstatement premiums collected - pre-tax	$	—		$	—		$	1		$	2		$	1		$	—		$	1		$	4
Catastrophe losses - pre-tax	$	9		$	3		$	6		$	24		$	11		$	12		$	11		$	41
Favorable prior period development (PPD) - pre-tax	$	(24	)	$	(9	)	$	(18	)	$	(32	)	$	(29	)	$	(33	)	$	(34	)	$	(84	)
Loss and loss expense ratio excluding catastrophe losses and PPD		47.2	%		46.5	%		47.7	%		44.6	%		45.3	%		46.8	%		45.1	%		45.6	%
% Change versus prior year period
Net premiums written as reported		-4.9	%		10.3	%		5.5	%		-13.6	%		-5.3	%		2.5	%		-0.1	%		-3.3	%
Net premiums earned as reported		6.1	%		15.5	%		-3.7	%		-15.0	%		3.6	%		10.8	%		5.4	%		-2.6	%
Net premiums written constant $		-5.0	%		10.5	%		5.3	%		-13.5	%		-4.2	%		2.5	%		0.0	%		-3.3	%
Net premiums earned constant $		5.5	%		15.4	%		-3.6	%		-14.9	%		4.3	%		10.4	%		5.6	%		-2.5	%
Other ratios
Net premiums written/gross premiums written		90	%		92	%		101	%		100	%		85	%		91	%		89	%		94	%


Global Reinsurance		Page 10

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Life


																YTD			YTD			Full Year
	2Q-14			1Q-14			4Q-13			3Q-13			2Q-13			2014			2013			2013
Gross premiums written	$	526		$	522		$	526		$	510		$	512		$	1,048		$	1,040		$	2,076
Net premiums written		498			494			504			479			487			992			989			1,972
Net premiums earned		490			484			481			467			480			974			957			1,905
Losses and loss expenses		146			151			139			141			145			297			302			582
Policy benefits ⁽¹⁾		144			114			136			138			110			258			241			515
(Gains) losses from fair value changes in separate account assets ⁽¹⁾		(17	)		6			(9	)		(14	)		11			(11	)		7			(16	)
Policy acquisition costs		121			111			97			86			95			232			175			358
Administrative expenses		73			68			87			85			86			141			171			343
Net investment income		66			64			64			61			63			130			126			251

Life underwriting income ⁽²⁾		89			98			95			92			96			187			187			374
Interest expense		3			3			3			4			4			6			8			15
Other income (expense) - operating ⁽¹⁾		(2	)		(5	)		(4	)		(2	)		(7	)		(7	)		(12	)		(18	)
Income tax expense		12			13			2			11			9			25			21			34

Operating income		72			77			86			75			76			149			146			307
Net realized gains (losses):
Mark-to-market on guaranteed living benefits derivative (net of related hedges)		(70	)		(67	)		149			39			33			(137	)		111			299
Foreign exchange gains (losses) and all other		(2	)		(9	)		5			4			3			(11	)		52			61
Net realized gains (losses) related to unconsolidated entities		(2	)		(2	)		(2	)		(2	)		4			(4	)		9			5
Income tax expense (benefit) on net realized gains (losses)		—			(3	)		(1	)		(1	)		1			(3	)		2			—

Net income (loss)	$	(2	)	$	2		$	239		$	117		$	115		$	—		$	316		$	672

% Change versus prior year period
Net premiums written as reported		2.2	%		-1.6	%		-2.6	%		-1.9	%		0.2	%		0.2	%		1.6	%		-0.4	%
Net premiums earned as reported		2.2	%		1.3	%		-1.5	%		-2.7	%		0.9	%		1.8	%		1.0	%		-0.6	%
Net premiums written constant $ ⁽³⁾		4.4	%		1.1	%		-1.4	%		-1.0	%		0.4	%		2.7	%		1.5	%		0.2	%
Net premiums earned constant $		4.2	%		4.0	%		-0.4	%		-1.9	%		1.0	%		4.1	%		0.9	%		-0.1	%

(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)	Net premiums written and deposits breakdown:


					Constant $							Constant $
					% Change							% Change
			Constant $		2Q-14 vs.					Constant $		YTD-14 vs.
	2Q-14		2Q-13		2Q-13			YTD-14		YTD-2013		YTD-13
Life excluding life reinsurance ⁽⁴⁾	$	715	$	625		14.2	%	$	1,344	$	1,235		8.8	%
Life reinsurance including variable annuity		65		72		-8.0	%		132		146		-9.2	%

Total Life	$	780	$	697		11.9	%	$	1,476	$	1,381		6.9	%

(4)

Includes deposits collected on universal life and investment contracts of $282 million for Q2 2014 and $219 million for Q2 2013 on a constant-dollar basis. For the year-to-date period, includes deposits of $484 million for 2014 and $415 million for 2013 on a constant-dollar basis. Consistent with GAAP, premiums collected on universal life and investment contracts are considered deposits and excluded from revenues.


Life		Page 11

ACE Limited

Loss Reserve Rollforward

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

(Unaudited)


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

Balance at March 31, 2013	$	37,082		$	10,918		$	26,164
Losses and loss expenses incurred		3,007			757			2,250
Losses and loss expenses paid		(2,797	)		(941	)		(1,856	)		83	%
Other (incl. foreign exch. revaluation)		51			4			47

Balance at June 30, 2013	$	37,343		$	10,738		$	26,605
Losses and loss expenses incurred		3,617			962			2,655
Losses and loss expenses paid		(3,285	)		(942	)		(2,343	)		88	%
Other (incl. foreign exch. revaluation)		207			61			146

Balance at September 30, 2013	$	37,882		$	10,819		$	27,063
Losses and loss expenses incurred		3,322			805			2,517
Losses and loss expenses paid		(3,716	)		(993	)		(2,723	)		108	%
Other (incl. foreign exch. revaluation)		(45	)		(19	)		(26	)

Balance at December 31, 2013	$	37,443		$	10,612		$	26,831
Losses and loss expenses incurred		2,462			301			2,161
Losses and loss expenses paid		(3,059	)		(762	)		(2,297	)		106	%
Other (incl. foreign exch. revaluation)		20			16			4

Balance at March 31, 2014	$	36,866		$	10,167		$	26,699
Losses and loss expenses incurred		3,004			616			2,388
Losses and loss expenses paid		(2,878	)		(729	)		(2,149	)		90	%
Other (incl. foreign exch. revaluation)		185			56			129

Balance at June 30, 2014	$	37,177		$	10,110		$	27,067

Add net recoverable on paid losses		—			658			(658	)

Balance including net recoverable on paid losses	$	37,177		$	10,768		$	26,409


Loss Reserve Rollforward		Page 12

ACE Limited

Reinsurance Recoverable Analysis

(in millions of U.S. dollars)

(Unaudited)

Net Reinsurance Recoverable by Division


	June 30			March 31			December 31
	2014			2014			2013
Reinsurance recoverable on paid losses and loss expenses
Active operations	$	418		$	351		$	376
Brandywine and Other Run-off		353			357			356

Total	$	771		$	708		$	732

Reinsurance recoverable on unpaid losses and loss expenses
Active operations	$	9,193		$	9,184		$	9,576
Brandywine and Other Run-off		1,192			1,249			1,309

Total	$	10,385		$	10,433		$	10,885

Gross reinsurance recoverable
Active operations	$	9,611		$	9,535		$	9,952
Brandywine and Other Run-off		1,545			1,606			1,665

Total	$	11,156		$	11,141		$	11,617

Provision for uncollectible reinsurance ⁽¹⁾
Active operations	$	(251	)	$	(249	)	$	(251	)
Brandywine and Other Run-off		(137	)		(137	)		(139	)

Total	$	(388	)	$	(386	)	$	(390	)

Net reinsurance recoverable
Active operations	$	9,360		$	9,286		$	9,701
Brandywine and Other Run-off		1,408			1,469			1,526

Total	$	10,768		$	10,755		$	11,227

(1)	The provision for uncollectible reinsurance is based on a default analysis applied to gross reinsurance recoverables, net of approximately $2.4 billion of collateral.


Reinsurance Recoverable		Page 13

ACE Limited

Investment Portfolio

(in millions of U.S. dollars)

(Unaudited)


	June 30 2014					March 31 2014					December 31 2013
Market Value
Fixed maturities available for sale	$	51,601				$	49,611				$	49,254
Fixed maturities held to maturity		6,015					6,080					6,263
Short-term investments		2,108					2,526					1,763

Total fixed maturities	$	59,724				$	58,217				$	57,280

Asset Allocation by Market Value
Treasury	$	2,386		4	%	$	2,411		4	%	$	2,327		4	%
Agency		1,278		2	%		1,349		2	%		1,454		3	%
Corporate and asset-backed		19,959		33	%		19,650		34	%		19,475		34	%
Mortgage-backed		12,659		21	%		12,277		21	%		12,273		21	%
Municipal		4,872		8	%		4,599		8	%		4,500		8	%
Non-U.S.		16,462		28	%		15,405		27	%		15,488		27	%
Short-term investments		2,108		4	%		2,526		4	%		1,763		3	%

Total fixed maturities	$	59,724		100	%	$	58,217		100	%	$	57,280		100	%

Credit Quality by Market Value
AAA	$	9,073		15	%	$	9,410		16	%	$	8,677		15	%
AA		22,470		38	%		21,652		37	%		21,520		38	%
A		11,400		19	%		11,112		19	%		11,168		19	%
BBB		7,996		13	%		7,306		12	%		7,193		12	%
BB		4,435		7	%		4,451		8	%		4,418		8	%
B		4,126		7	%		3,965		7	%		3,940		7	%
Other		224		1	%		321		1	%		364		1	%

Total fixed maturities	$	59,724		100	%	$	58,217		100	%	$	57,280		100	%

Cost/Amortized Cost
Fixed maturities available for sale	$	49,719				$	48,282				$	48,406
Fixed maturities held to maturity		5,774					5,887					6,098
Short-term investments		2,108					2,526					1,763

Subtotal fixed maturities		57,601					56,695					56,267
Equity securities		874					845					841
Other investments		2,876					2,823					2,671

Total investment portfolio	$	61,351				$	60,363				$	59,779

Avg. duration of fixed maturities		4.0 years					4.0 years					4.0 years
Avg. market yield of fixed maturities		2.6	%				2.8	%				3.0	%
Avg. credit quality		A/Aa					A/Aa					A/Aa
Avg. yield on invested assets		3.7	%				3.7	%				3.8	%


Investments		Page 14

ACE Limited

Investment Portfolio - 2

(in millions of U.S. dollars)

(Unaudited)

Mortgage-backed Fixed Income Portfolio

Mortgage-backed securities


	S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
Market Value at June 30, 2014
Agency residential mortgage-backed (RMBS)	$	—	$	10,563	$	—	$	—	$	—	$	10,563
Non-agency RMBS		51		7		21		14		51		144
Commercial mortgage-backed		1,923		14		12		3		—		1,952

Total mortgage-backed securities at market value	$	1,974	$	10,584	$	33	$	17	$	51	$	12,659

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

Market Value at June 30, 2014


	S&P Credit Rating
	Investment Grade
	AAA		AA		A		BBB		Total
Asset-backed	$	463	$	92	$	—	$	—	$	555
Banks		—		—		2,232		347		2,579
Basic Materials		—		—		90		363		453
Communications		—		51		510		852		1,413
Consumer, Cyclical		—		96		314		433		843
Consumer, Non-Cyclical		51		589		940		689		2,269
Diversified Financial Services		—		79		269		92		440
Energy		32		36		189		758		1,015
Industrial		—		347		362		319		1,028
Utilities		—		11		611		466		1,088
All Others		55		138		611		532		1,336

Total	$	601	$	1,439	$	6,128	$	4,851	$	13,019

Market Value at June 30, 2014


	S&P Credit Rating
	Below Investment Grade
	BB		B		CCC		Total
Asset-backed	$	—	$	3	$	12	$	15
Banks		1		4		—		5
Basic Materials		145		140		8		293
Communications		551		462		5		1,018
Consumer, Cyclical		447		656		31		1,134
Consumer, Non-Cyclical		551		898		33		1,482
Diversified Financial Services		133		87		4		224
Energy		695		319		27		1,041
Industrial		371		360		12		743
Utilities		275		23		—		298
All Others		259		416		12		687

Total	$	3,428	$	3,368	$	144	$	6,940


Investments 2		Page 15

ACE Limited

Investment Portfolio - 3

(in millions of U.S. dollars)

(Unaudited)

Non-U.S. Fixed Income Portfolio

June 30, 2014

Non-U.S. Government Securities


	Market Value by S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
United Kingdom	$	1,123	$	—	$	—	$	—	$	—	$	1,123
Republic of Korea		—		764		48		—		—		812
Canada		560		—		—		—		—		560
United Mexican States		—		2		333		127		—		462
Kingdom of Thailand		—		—		311		66		—		377
Province of Ontario		—		359		—		—		—		359
Japan		—		302		—		—		—		302
Federative Republic of Germany		281		4		—		—		—		285
Province of Quebec		—		—		270		—		—		270
Federative Republic of Brazil		—		—		—		264		—		264
Other Non-U.S. Government Securities		712		1,144		247		303		367		2,773

Total	$	2,676	$	2,575	$	1,209	$	760	$	367	$	7,587


Non-U.S. Corporate Securities	Market Value by S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
United Kingdom	$	127	$	57	$	806	$	391	$	207	$	1,588
Canada		157		125		295		409		164		1,150
Australia		79		118		288		115		63		663
United States		2		127		100		225		166		620
France		62		62		223		133		101		581
Netherlands		33		273		125		96		22		549
Germany		166		31		135		112		33		477
Switzerland		50		17		61		118		51		297
Euro Supranational		237		52		—		—		—		289
Brazil		—		—		29		180		26		235
Other Non-U.S. Corporate Securities		133		394		924		534		441		2,426

Total	$	1,046	$	1,256	$	2,986	$	2,313	$	1,274	$	8,875

Non-U.S. Corporate Investment Portfolio

Countries represent the ultimate parent company’s country of risk. Non-U.S. corporate securities could be issued by foreign subsidiaries of U.S. corporations.


Investments 3		Page 16

ACE Limited

Investment Portfolio - 4

(in millions of U.S. dollars)

(Unaudited)

Fixed Maturity Investment Portfolio

Top 10 Global Corporate Exposures


	June 30, 2014	Market Value		Rating
1	JP Morgan Chase & Co	$	481	A
2	General Electric Co		407	AA+
3	Goldman Sachs Group Inc		360	A-
4	Wells Fargo & Co		291	A+
5	Verizon Communications Inc		274	BBB+
6	HSBC Holdings Plc		260	A+
7	Morgan Stanley		256	A-
8	Citigroup Inc		251	A-
9	Bank of America Corp		239	A-
10	AT&T INC		235	A-


Investments 4		Page 17

ACE Limited

Net Realized and Unrealized Gains (Losses)

(in millions of U.S. dollars)

(Unaudited)


	Three months ended June 30, 2014								Six months ended June 30, 2014
	Net Realized			Net Unrealized					Net Realized			Net Unrealized
	Gains			Gains		Net			Gains			Gains		Net
	(Losses)⁽¹⁾			(Losses)		Impact			(Losses) ⁽¹⁾			(Losses)		Impact
Fixed maturities	$	20		$	538	$	558		$	31		$	999	$	1,030
Fixed income derivatives		(15	)		—		(15	)		(40	)		—		(40	)

Total fixed maturities		5			538		543			(9	)		999		990

Public equity		1			24		25			(4	)		34		30
Private equity		36			6		42			92			48		140

Total equity		37			30		67			88			82		170

Mark-to-market losses from derivative transactions ⁽²⁾		(69	)		—		(69	)		(136	)		—		(136	)
Foreign exchange losses ⁽²⁾		(14	)		—		(14	)		(23	)		—		(23	)
Other		(1	)		—		(1	)		(8	)		—		(8	)
Partially-owned entities ⁽³⁾		(3	)		—		(3	)		(8	)		—		(8	)
Income tax expense (benefit)		1			115		116			(7	)		208		201

Net gains (losses)	$	(46	)	$	453	$	407		$	(89	)	$	873	$	784

(1)

Other-than-temporary impairments for the quarter includes $8 million for fixed maturities, $3 million for private equity, and $1 million for public equity. Year to date other-than-temporary impairments includes $13 million for fixed maturities, $3 million for private equity, and $7 million for public equity.

(2)

Includes $70 million of realized losses from variable annuity reinsurance for the quarter which comprises $2 million in mark-to-market gains from derivative transactions, net of $72 million of losses on applicable hedges. For the year, the $137 million of realized losses from variable annuity reinsurance comprises $46 million in mark-to-market losses from derivative transactions and $91 million of losses on applicable hedges. The variable annuity reinsurance foreign exchange losses for the year were $2 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, 2013									Six months ended June 30, 2013
	Net Realized			Net Unrealized						Net Realized		Net Unrealized
	Gains			Gains			Net			Gains		Gains			Net
	(Losses)⁽⁴⁾			(Losses)			Impact			(Losses) ⁽⁴⁾		(Losses)			Impact
Fixed maturities	$	31		$	(1,466	)	$	(1,435	)	$	67	$	(1,657	)	$	(1,590	)
Fixed income derivatives		40			—			40			58		—			58

Total fixed maturities		71			(1,466	)		(1,395	)		125		(1,657	)		(1,532	)

Public equity		7			(57	)		(50	)		6		(43	)		(37	)
Private equity		8			15			23			36		40			76

Total equity		15			(42	)		(27	)		42		(3	)		39

Mark-to-market gains from derivative transactions ⁽⁵⁾		32			—			32			110		—			110
Foreign exchange gains ⁽⁵⁾		(5	)		—			(5	)		71		—			71
Other		—			—			—			—		1			1
Partially-owned entities ⁽⁶⁾		3			—			3			7		—			7
Income tax expense (benefit)		15			(288	)		(273	)		47		(344	)		(297	)

Net gains (losses)	$	101		$	(1,220	)	$	(1,119	)	$	308	$	(1,315	)	$	(1,007	)

(4)	Other-than-temporary impairments for the quarter includes $6 million for fixed maturities and $1 million for private equity.Year to date other-than-temporary impairments includes $7 million for fixed maturities, $2 million for private equity, and $1 million for public equity.

(5)

Includes $33 million of realized gains from variable annuity reinsurance for the quarter which comprises $101 million in mark-to-market gains from derivative transactions, net of $68 million of losses on applicable hedges. For the year, the $111 million of realized gains from variable annuity reinsurance comprises $429 million in mark-to-market gains from derivative transactions, net of $318 million of losses on applicable hedges. The variable annuity reinsurance foreign exchange gains for the year were $41 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
	2014			2014			2013			2012
Total short-term debt ^{(1) (2)}	$	1,851		$	1,901		$	1,901		$	1,401
Total long-term debt ⁽³⁾		4,057			3,808			3,807			3,360

Total debt	$	5,908		$	5,709		$	5,708		$	4,761

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

Total shareholders’ equity	$	30,325		$	29,369		$	28,825		$	27,531

Total capitalization	$	36,542		$	35,387		$	34,842		$	32,601
Tangible capital ⁽⁴⁾	$	31,020		$	30,005		$	29,438		$	27,626
Leverage ratios
Debt/ total capitalization		16.2	%		16.1	%		16.4	%		14.6	%
Debt plus trust preferred securities/ total capitalization		17.0	%		17.0	%		17.3	%		15.6	%
Debt/ tangible capital		19.0	%		19.0	%		19.4	%		17.2	%
Debt plus trust preferred securities/ tangible capital		20.0	%		20.1	%		20.4	%		18.4	%

Note: As of June 30, 2014, there was $0.6 billion usage of credit facilities on a total commitment of $1.4 billion. We did not renew our $500 million bilateral letter of credit facility that expired in June 2014. We elected instead to satisfy our collateral obligations primarily with insurance trusts supported by our investment portfolio.

(1)	Repurchase agreements in the amount of $551 million matured during the quarter, and there were new repurchase agreements in the amount of $551 million.

(2)	In May 2014, we reclassified $450 million of 5.6 percent senior notes, due to mature in less than one year (May 2015), from Long-term debt to Short-term debt. In June 2014, $500 million of 5.875 percent senior notes matured and were fully paid.

(3)	During Q2 2014, we issued $700 million par value of 3.35 percent senior notes due May 2024.

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


Capital Structure		Page 19

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 June 30						Six months ended June 30
	2014			2013			2014			2013
Numerator
Operating income to common shares	$	825		$	790		$	1,602		$	1,536
Adjusted net realized gains (losses), net of income tax		(46	)		101			(89	)		308

Net income	$	779		$	891		$	1,513		$	1,844

Rollforward of Common Shares Outstanding
Shares - beginning of period		337,974,644			340,045,256			339,793,935			340,321,534
Repurchase of shares ⁽¹⁾		(2,306,000	)		(654,776	)		(5,793,882	)		(2,463,076	)
Shares issued, excluding option exercises		135,079			117,445			1,311,675			1,064,981
Issued for option exercises		421,866			578,344			913,861			1,162,830

Shares - end of period		336,225,589			340,086,269			336,225,589			340,086,269

Denominator
Weighted average shares outstanding		337,846,228			341,047,290			338,353,260			340,913,450
Effect of other dilutive securities		3,286,359			3,053,975			3,267,499			3,120,263

Adj. wtd. avg. shares outstanding and assumed conversions		341,132,587			344,101,265			341,620,759			344,033,713

Basic earnings per share
Operating income	$	2.44		$	2.31		$	4.73		$	4.50
Adjusted net realized gains (losses), net of income tax		(0.14	)		0.30			(0.26	)		0.91

Net income	$	2.30		$	2.61		$	4.47		$	5.41

Diluted earnings per share
Operating income	$	2.42		$	2.29		$	4.69		$	4.46
Adjusted net realized gains (losses), net of income tax		(0.14	)		0.30			(0.26	)		0.90

Net income	$	2.28		$	2.59		$	4.43		$	5.36

(1)	For the period July 1, 2014 through July 21, 2014 we repurchased 700 thousand shares totaling $73 million, pursuant to a plan adopted under SEC Rule 10b5-1 and in accordance with the provisions of SEC Rule 10b-18.


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 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 and financial condition. However, they should not be viewed as a substitute for measures determined in accordance with generally accepted accounting principles (GAAP).

We provide financial measures such as gross premiums written, net premiums written, net premiums earned, and operating income on a constant-dollar basis. We believe it is useful to evaluate the trends in these measures exclusive of the effect of fluctuations in exchange rates between the U.S. dollar and the currencies in which our international business is transacted, as these exchange rates could fluctuate significantly between periods and distort the analysis of trends. The impact is determined by assuming constant foreign exchange rates between periods by translating prior period results using the same local currency exchange rates as the comparable current period.

Adjusted net realized gains (losses) is a non-GAAP financial measure that excludes realized gains and losses from fair value changes on crop derivatives. These derivatives were purchased to provide economic benefit, in a manner similar to reinsurance protection, in the event that a significant decline in commodity pricing will impact underwriting results. We view changes in the fair value of these derivatives as part of the results of our underwriting operations and therefore realized gains and losses from these derivatives are reclassified to Adjusted losses and loss expenses (a non-GAAP financial measure). Adjusted losses and loss expenses include gains and losses from fair value changes on crop derivatives. P&C loss and loss expense ratio and P&C combined ratio (both non-GAAP financial measures) include adjusted losses and loss expenses in the ratio numerator. For the three months ended June 30, 2014, the GAAP combined ratio is 87.7% and the P&C combined ratio is 87.5%, including the impact of fair value changes on crop derivatives.

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). P&C underwriting income is a non-GAAP financial measure which includes Adjusted losses and loss expenses. Insurance – North American Agriculture underwriting income includes gains (losses) from fair value changes on crop derivatives. 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.

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

Other income (expense) – operating is a non-GAAP financial measure and excludes the portion of net realized gains and losses related to unconsolidated entities from other income (expense). These gains and losses are reported as Net realized gains (losses) and represent the non-operating activities of entities where we hold more than an insignificant percentage of the investee’s shares. We exclude these gains and losses from other income (expense) to enhance the understanding of our core results of operations as they are heavily influenced by, and fluctuate in part according to market conditions.

P&C combined ratio excluding catastrophe losses and prior period development (PPD) is a non-GAAP financial measure. The ratio numerator includes adjusted losses and loss expenses, policy acquisition costs, and administrative expenses adjusted to exclude catastrophe losses and PPD. The ratio denominator includes net premiums earned adjusted to exclude the amount of reinstatement premiums (expensed) collected and net earned premium adjustments on loss sensitive policies. We believe that excluding the impact of catastrophe losses and PPD provides a better evaluation of our core underwriting performance and enhances the understanding of the trends in our property & casualty business that may be obscured by these items.

P&C loss and loss expense ratio excluding the impact of catastrophe losses and PPD is a non-GAAP financial measure. The loss ratio numerator includes adjusted 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.

P&C expense ratio excluding accident and health (A&H) is a non-GAAP financial measure and excludes the impact of our A&H business from our consolidated expense ratio. The expense ratio for the A&H business is typically higher than our traditional P&C business, and we believe that this measure provides better comparison to our peer companies that may not have a significant A&H block of business.

Global P&C performance metrics are non-GAAP financial measures and comprise consolidated operating results (including corporate) and exclude the operating results of the company’s Life and Insurance – North American Agriculture segments. We believe that these measures are useful and meaningful to investors as they are used by management to assess the company’s global P&C operations which are the most economically similar. We exclude the Insurance – North American Agriculture and Life segments because the results of these businesses do not always correlate with the results of our global P&C operations.

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

Operating return on equity (ROE) or ROE calculated using operating income is an annualized non-GAAP financial measure and is calculated as operating income divided by average shareholders’ equity, as adjusted, for the period. To annualize a quarterly rate, multiply by four. Operating ROE is a useful measure as it enhances the understanding of the return on shareholders’ equity by highlighting the underlying profitability relative to shareholders’ equity excluding the effect of unrealized gains and losses on our investments.

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

Tangible book value per common share is a non-GAAP financial measure and is shareholders’ equity less goodwill and other intangible assets divided by the shares outstanding. We believe that goodwill and other intangible assets are not indicative of our underlying insurance results or trends and make book value comparisons to less acquisitive peer companies less meaningful. A reconciliation of tangible book value per share is provided on page 23. Tangible book value per common share excluding 2014 acquisition is shareholders’ equity less goodwill and other intangible assets divided by the shares outstanding. The numerator adds back the goodwill and other intangible assets related to the 2014 acquisition of The Siam Commercial Samaggi Insurance PCL in order to adjust for the distortive effect of acquisitions.


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 Net income to Operating income:


													YTD			YTD		Full Year
	2Q-14			1Q-14			4Q-13		3Q-13		2Q-13		2014			2013		2013
Net income, as reported	$	779		$	734		$	998	$	916	$	891	$	1,513		$	1,844	$	3,758
Adjusted net realized gains (losses)		(81	)		(102	)		154		41		104		(183	)		310		505
Net realized gains (losses) related to unconsolidated entities ⁽¹⁾		36			51			25		22		12		87			45		92
Income tax expense (benefit) on adjusted net realized gains (losses)		1			(8	)		5		4		15		(7	)		47		56

Operating income	$	825		$	777		$	824	$	857	$	790	$	1,602		$	1,536	$	3,217

(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).

The following table presents the reconciliation of effective tax rate to the operating effective tax rate:


																YTD			YTD			Full Year
	2Q-14			1Q-14			4Q-13			3Q-13			2Q-13			2014			2013			2013
Tax expense, as reported	$	133		$	93		$	88		$	155		$	115		$	226		$	237		$	480
Tax expense (benefit) on adjusted net realized gains (losses)		1			(8	)		5			4			15			(7	)		47			56

Tax expense, adjusted	$	132		$	101		$	83		$	151		$	100		$	233		$	190		$	424

Income before tax, as reported	$	912		$	827		$	1,086		$	1,071		$	1,006		$	1,739		$	2,081		$	4,238
Less: adjusted realized gains (losses)		(81	)		(102	)		154			41			104			(183	)		310			505
Less: realized gains (losses) related to unconsolidated entities		36			51			25			22			12			87			45			92

Operating income before tax	$	957		$	878		$	907		$	1,008		$	890		$	1,835		$	1,726		$	3,641

Effective tax rate		14.6	%		11.3	%		8.1	%		14.4	%		11.5	%		13.0	%		11.4	%		11.3	%
Adjustment for tax impact of adjusted net realized gains (losses)		-0.9	%		0.2	%		1.1	%		0.5	%		-0.3	%		-0.3	%		-0.4	%		0.3	%

Operating effective tax rate		13.7	%		11.5	%		9.2	%		14.9	%		11.2	%		12.7	%		11.0	%		11.6	%

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


							YTD			YTD			Full Year
	2Q-14			2Q-13			2014			2013			2013
Net income	$	779		$	891		$	1,513		$	1,844		$	3,758
Operating income	$	825		$	790		$	1,602		$	1,536		$	3,217
Equity - beginning of period, as reported	$	29,369		$	27,942		$	28,825		$	27,531		$	27,531
Less: unrealized gains (losses) on investments, net of deferred tax		1,594			2,538			1,174			2,633			2,633

Equity - beginning of period, as adjusted	$	27,775		$	25,404		$	27,651		$	24,898		$	24,898

Equity - end of period, as reported	$	30,325		$	27,295		$	30,325		$	27,295		$	28,825
Less: unrealized gains (losses) on investments, net of deferred tax		2,047			1,318			2,047			1,318			1,174

Equity - end of period, as adjusted	$	28,278		$	25,977		$	28,278		$	25,977		$	27,651

Average equity, as reported	$	29,847		$	27,619		$	29,575		$	27,413		$	28,178
Average equity, as adjusted	$	28,027		$	25,691		$	27,965		$	25,438		$	26,275
Operating ROE		11.8	%		12.3	%		11.5	%		12.1	%		12.2	%
ROE		10.4	%		12.9	%		10.2	%		13.5	%		13.3	%


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
	2014			2014			2013			2013
Shareholders’ equity	$	30,325		$	29,369		$	28,825		$	27,295
Less: goodwill and other intangible assets		5,522			5,382			5,404			5,395

Numerator for tangible book value per share	$	24,803		$	23,987		$	23,421		$	21,900

Book value - % change over prior quarter ⁽¹⁾		3.3	%		1.9	%		2.2	%		-2.3	%
Tangible book value - % change over prior quarter ⁽¹⁾		3.4	%		2.4	%		2.9	%		-4.9	%
Denominator		336,225,589			337,974,644			339,793,935			340,086,269

Book value per common share	$	90.19		$	86.90		$	84.83		$	80.26
Tangible book value per common share	$	73.77		$	70.97		$	68.93		$	64.40
Reconciliation of Book Value
Shareholders’ equity, beginning of quarter	$	29,369		$	28,825		$	28,218		$	27,942
Operating income		825			777			824			790
Adjusted net realized gains (losses), net of tax		(46	)		(43	)		174			101
Net unrealized gains (losses), net of tax		453			420			(145	)		(1,220	)
Repurchase of shares		(237	)		(332	)		(57	)		(58	)
Dividend declared on common shares ⁽²⁾		(223	)		(256	)		(174	)		(174	)
Cumulative translation, net of tax		119			(41	)		(66	)		(168	)
Pension liability		(3	)		(5	)		(11	)		(2	)
Other⁽³⁾		68			24			62			84

	$	30,325		$	29,369		$	28,825		$	27,295

(1)	At June 30, 2014, book value increased 5.2% and tangible book value increased 5.9% from December 31, 2013.

(2)	The March 31, 2014 amount includes a $0.12 per share increase related to the Q4 2013 dividend installment approved by our shareholders on January 10, 2014.

(3)	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.

Operating return on equity (ROE) or ROE calculated using income excluding adjusted net realized gains (losses): Operating income or income excluding adjusted 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 ratio: The sum of the loss and loss expense ratio, acquisition cost ratio and the administrative expense ratio excluding life business.

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

Life underwriting income: Net premiums earned and net investment income less losses and loss expenses, 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.

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

Average market yield of fixed maturities: Weighted average yield to maturity of our fixed income portfolio based on the market prices of the holdings as of that date.

Average yield on invested assets: Net investment income divided by average cost of fixed maturities and other investments, and average market value of equity securities.

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

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

NM: Not meaningful.


Glossary		Page 24

Chubb Ltd - FORM 8-K - EX-99.2 - July 22, 2014

Attached files

Chubb Ltd Reports