Chubb Ltd - FORM 8-K - EX-99.2

Attached files

file	filename
EX-99.1 - EX-99.1 - Chubb Ltd	d39231dex991.htm
8-K - 8-K - Chubb Ltd	d39231d8k.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 as indicated by such statements. For example, forward-looking statements related to financial performance including exposures, reserves and recoverables could be affected by the frequency of unpredictable catastrophic events, actual loss experience, uncertainties in the reserving or settlement process, currency exchange fluctuations, 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.

Additional Information and Where to Find It

This financial supplement does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This financial supplement may be deemed to be solicitation material in respect of the proposed transaction between ACE and Chubb. In connection with the proposed transaction, ACE has filed a registration statement on Form S-4, and the final joint proxy statement/prospectus has been delivered to the shareholders of ACE and Chubb. This financial supplement is not a substitute for the registration statement, definitive joint proxy statement/prospectus or any other documents that ACE or Chubb may file with the SEC or send to shareholders in connection with the proposed transaction. SHAREHOLDERS ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Shareholders may obtain copies of the joint proxy statement/prospectus and other documents filed with the SEC (when available) free of charge at the SEC’s website, http://www.sec.gov. Copies of documents filed with the SEC by ACE will be made available free of charge on ACE’s website at www.acegroup.com. Copies of documents filed with the SEC by Chubb will be made available free of charge on Chubb’s website at www.chubb.com.

Participants in Solicitation

ACE, Chubb and their respective directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of ACE is set forth in the proxy statement for ACE’s 2015 Annual General Meeting, which was filed with the SEC on April 8, 2015, and ACE’s Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 27, 2015. Information about the directors and executive officers of Chubb is set forth in the proxy statement for Chubb’s 2015 Annual Meeting of Shareholders, which was filed with the SEC on March 13, 2015, and Chubb’s Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 26, 2015. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC. You may obtain free copies of these documents as described above.

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
	- Book Value and Book Value per Common Share		21

VI.	Other Disclosures
	- Non-GAAP Financial Measures		22 - 24
	- Glossary		25

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 $ % Change 3Q-15 vs.															Constant $
							% Change 3Q-15 vs.														% Change						% Change
	Three months ended September 30						% Change 3Q-15 vs.			Constant $					Nine months ended September 30						YTD-15 vs.			Constant $			YTD-15 vs.
	2015			2014			3Q-14			2014⁽¹⁾		3Q-14 ⁽¹⁾			2015			2014			YTD-14			2014⁽¹⁾			YTD-14 ⁽¹⁾
Gross premiums written	$	6,346		$	6,264			1.3	%	$	5,955		6.6	%	$	18,172		$	17,644			3.0	%	$	16,828			8.0	%
Net premiums written	$	4,709		$	4,729			-0.4	%	$	4,464		5.5	%	$	13,569		$	13,473			0.7	%	$	12,786			6.1	%
P&C net premiums written ⁽²⁾	$	4,217		$	4,232			-0.4	%	$	3,992		5.6	%	$	12,086		$	11,984			0.8	%	$	11,355			6.4	%
Global P&C net premiums written ⁽²⁾	$	3,480		$	3,468			0.3	%	$	3,230		7.8	%	$	10,882		$	10,638			2.3	%	$	10,009			8.7	%
Net premiums earned	$	4,719		$	4,754			-0.7	%	$	4,484		5.2	%	$	13,006		$	13,056			-0.4	%	$	12,381			5.0	%
Net investment income	$	549		$	566			-3.1	%	$	555		-1.1	%	$	1,662		$	1,675			-0.8	%	$	1,646			1.0	%
Operating income	$	897		$	891			0.8	%	$	855		5.0	%	$	2,430		$	2,493			-2.5	%	$	2,408			0.9	%
Net income	$	528		$	785			-32.7	%						$	2,151		$	2,298			-6.4	%
Comprehensive income (loss)	$	(271	)	$	298			N/M							$	768		$	2,754			-72.1	%
Operating cash flow	$	808		$	1,126										$	2,699		$	3,222
P&C combined ratio ⁽²⁾
Loss and loss expense ratio		58.8	%		58.5	%										58.3	%		58.1	%
Underwriting and administrative expense ratio		27.1	%		27.8	%										28.9	%		29.4	%

Combined ratio		85.9	%		86.3	%										87.2	%		87.5	%
Operating return on equity (ROE)		12.9	%		12.6	%										11.7	%		11.9	%
ROE		7.2	%		10.4	%										9.8	%		10.4	%
Operating effective tax rate ⁽³⁾		13.5	%		16.9	%										14.0	%		14.2	%
Effective tax rate		20.0	%		18.3	%										15.5	%		14.9	%
Diluted earnings per share
Operating income	$	2.74		$	2.64			3.8	%						$	7.38		$	7.32			0.8	%
Net income	$	1.62		$	2.32			-30.2	%						$	6.53		$	6.75			-3.3	%

																								December 31 2014			% Change 3Q-15 vs. 4Q-14
Book value per common share															$	89.88								$	90.02			-0.2	%
Book value per common share excluding foreign currency ⁽⁴⁾															$	92.61								$	90.02			2.9	%
Tangible book value per common share															$	72.25								$	72.61			-0.5	%
Tangible book value per common share excluding foreign currency ⁽⁴⁾															$	73.93								$	72.61			1.8	%
Tangible book value per common share excluding acquisitions ⁽⁵⁾															$	73.72								$	72.61			1.5	%
Tangible book value per common share excluding acquisitions and foreign currency ^(4) (5)															$	75.39								$	72.61			3.8	%
Weighted average basic common shares outstanding		324.2			334.5											325.9			337.1
Weighted average diluted common shares outstanding		327.2			337.7											329.2			340.4
Debt plus trust preferred securities/ tangible capital																21.9	%		20.2	%					20.7	%

(1)	Prior periods on a constant dollar basis.

(2)	See non-GAAP financial measures.

(3)

Operating effective tax rate is dependent upon the mix of earnings from different jurisdictions with various tax rates. A change in the geographic mix of earnings would change the effective tax rate. The decrease in the operating effective tax rate for the quarter was primarily due to a higher percentage of operating earnings being generated in lower tax paying jurisdictions.

(4)	For 2015, book value per common share and tangible book value per common share exclude the impact of foreign currency movement during the year.

(5)	For 2015, tangible book value per common share excludes the impact from goodwill and intangibles relating to the acquisition of the Fireman’s Fund high net worth personal lines insurance business in the United States of $474 million.


Financial Highlights		Page 1

ACE Limited

Consolidated Results - Consecutive Quarters

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

(Unaudited)

ACE Limited Consolidated


	3Q-15			2Q-15			1Q-15			4Q-14			3Q-14			YTD 2015			YTD 2014			Full Year 2014
Consolidated Results (Including Corporate) Excluding Life Segment ⁽¹⁾
Gross premiums written	$	5,824		$	5,975		$	4,800		$	5,193		$	5,736		$	16,599		$	16,068		$	21,261
Net premiums written		4,217			4,284			3,585			3,803			4,232			12,086			11,984			15,787
Net premiums earned		4,239			3,873			3,453			3,871			4,265			11,565			11,593			15,464
Adjusted losses and loss expenses ⁽¹⁾		2,494			2,282			1,970			2,269			2,494			6,746			6,740			9,009
Policy acquisition costs		654			609			600			641			702			1,863			1,956			2,597
Administrative expenses		494			504			481			517			483			1,479			1,443			1,960

Underwriting income		597			478			402			444			586			1,477			1,454			1,898
Net investment income		483			496			485			508			497			1,464			1,476			1,984
Interest expense		67			69			67			66			66			203			203			269
Other income (expense) - operating ⁽²⁾		11			(2	)		—			4			(2	)		9			(2	)		2
Amortization of intangible assets		51			54			30			29			27			135			76			105
Income tax expense		133			128			111			110			169			372			377			487

Operating income (including Corporate) excluding Life segment		840			721			679			751			819			2,240			2,272			3,023
Life segment operating income		57			67			66			76			72			190			221			297

Consolidated operating income		897			788			745			827			891			2,430			2,493			3,320
Chubb integration expenses, net of tax		(7	)		—			—			—			—			(7	)		—			—
Adjusted net realized gains (losses) ⁽¹⁾		(393	)		128			(89	)		(210	)		(165	)		(354	)		(348	)		(558	)
Net realized gains (losses) related to unconsolidated entities		25			33			26			49			55			84			142			191
Income tax expense (benefit) on adjusted net realized gains (losses)		(6	)		7			1			111			(4	)		2			(11	)		100

Consolidated net income	$	528		$	942		$	681		$	555		$	785		$	2,151		$	2,298		$	2,853

% Change versus prior year period ⁽¹⁾
Net premiums written as reported		-0.4	%		5.5	%		-2.9	%		2.4	%		2.2	%		0.8	%		5.7	%		4.9	%
Net premiums earned as reported		-0.6	%		0.8	%		-1.0	%		-0.3	%		2.9	%		-0.2	%		7.1	%		5.1	%
Net premiums written constant $		5.6	%		11.6	%		1.7	%		5.0	%		1.7	%		6.4	%		6.1	%		5.9	%
Net premiums earned constant $		5.4	%		7.0	%		3.5	%		2.1	%		2.5	%		5.4	%		7.6	%		6.2	%
Other ratios
Net premiums written/gross premiums written ⁽¹⁾		72	%		72	%		75	%		73	%		74	%		73	%		75	%		74	%
Operating effective tax rate		13.5	%		14.7	%		13.7	%		12.7	%		16.9	%		14.0	%		14.2	%		13.9	%
P&C combined ratio ⁽¹⁾
Loss and loss expense ratio		58.8	%		58.9	%		57.1	%		58.6	%		58.5	%		58.3	%		58.1	%		58.3	%
Policy acquisition cost ratio		15.4	%		15.7	%		17.4	%		16.6	%		16.5	%		16.1	%		16.9	%		16.8	%
Administrative expense ratio		11.7	%		13.1	%		13.9	%		13.3	%		11.3	%		12.8	%		12.5	%		12.6	%

Combined ratio		85.9	%		87.7	%		88.4	%		88.5	%		86.3	%		87.2	%		87.5	%		87.7	%

Combined ratio excluding catastrophe losses and PPD		89.2	%		88.4	%		89.3	%		89.5	%		89.8	%		89.0	%		89.2	%		89.3	%
P&C expense ratio		27.1	%		28.8	%		31.3	%		29.9	%		27.8	%		28.9	%		29.4	%		29.4	%
P&C expense ratio excluding A&H		23.6	%		25.5	%		27.9	%		26.7	%		24.3	%		25.5	%		25.8	%		26.0	%
Catastrophe reinstatement premiums collected - pre-tax	$	—		$	—		$	—		$	2		$	1		$	—		$	1		$	3
Catastrophe losses - pre-tax	$	72		$	124		$	51		$	71		$	87		$	247		$	220		$	291
Favorable prior period development (PPD) - pre-tax	$	(210	)	$	(153	)	$	(83	)	$	(107	)	$	(232	)	$	(446	)	$	(420	)	$	(527	)
Loss and loss expense ratio excluding catastrophe losses and PPD		62.2	%		59.7	%		58.1	%		59.6	%		62.2	%		60.1	%		59.9	%		59.8	%

(1)	See non-GAAP financial measures.

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

Note: Effective Q3 2015, amortization of intangible assets (previously included in prior year other income (expense) – operating) are now reported separately throughout this report. Prior year amounts are reclassified to conform to the current period presentation.


Consolidated Results		Page 2

ACE Limited

Summary Consolidated Balance Sheets

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

(Unaudited)


	September 30 2015			June 30 2015			March 31 2015			December 31 2014
Assets
Fixed maturities available for sale, at fair value	$	48,278		$	48,701		$	50,410		$	49,395
Fixed maturities held to maturity, at amortized cost		8,564			8,676			6,982			7,331
Equity securities, at fair value		464			498			536			510
Short-term investments, at fair value		1,808			2,062			2,536			2,322
Other investments		3,270			3,328			3,430			3,346

Total investments		62,384			63,265			63,894			62,904
Cash		1,038			790			948			655
Securities lending collateral		1,011			1,080			1,033			1,330
Insurance and reinsurance balances receivable		5,290			5,757			5,026			5,426
Reinsurance recoverable on losses and loss expenses		11,231			11,775			11,588			11,992
Deferred policy acquisition costs		2,809			2,806			2,683			2,601
Value of business acquired		410			434			440			466
Prepaid reinsurance premiums		2,059			2,238			1,981			2,026
Goodwill and other intangible assets		5,713			5,969			5,516			5,724
Deferred tax assets		395			285			224			295
Investments in partially-owned insurance companies		654			638			590			504
Other assets		4,766			4,803			4,475			4,325

Total assets	$	97,760		$	99,840		$	98,398		$	98,248

Liabilities
Unpaid losses and loss expenses	$	37,564		$	38,230		$	37,326		$	38,315
Unearned premiums		8,510			8,879			8,182			8,222
Future policy benefits		4,776			4,835			4,744			4,754
Insurance and reinsurance balances payable		4,225			4,602			4,198			4,095
Securities lending payable		1,012			1,081			1,034			1,331
Accounts payable, accrued expenses, and other liabilities		5,977			6,090			6,194			5,726
Short-term debt		2,103			2,102			2,552			2,552
Long-term debt		4,157			4,157			4,157			3,357
Trust preferred securities		309			309			309			309

Total liabilities		68,633			70,285			68,696			68,661
Shareholders’ equity
Total shareholders’ equity, excl. AOCI		29,319			28,948			28,550			28,396
Accumulated other comprehensive income (AOCI)		(192	)		607			1,152			1,191

Total shareholders’ equity		29,127			29,555			29,702			29,587

Total liabilities and shareholders’ equity	$	97,760		$	99,840		$	98,398		$	98,248

Book value per common share	$	89.88		$	91.27		$	90.81		$	90.02
% change over prior quarter		-1.5	%		0.5	%		0.9	%		-0.4	%
Tangible book value per common share	$	72.25		$	72.84		$	73.94		$	72.61
% change over prior quarter		-0.8	%		-1.5	%		1.8	%		-1.9	%


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
							3Q-15 vs.			Constant $		3Q-15 vs.			YTD			YTD			YTD-15 vs.			Constant $		YTD-15 vs.
	3Q-15			3Q-14			3Q-14			3Q-14 ⁽²⁾		3Q-14 ⁽²⁾			2015			2014			YTD-14			YTD-14 ⁽²⁾		YTD-14 ⁽²⁾
Net premiums written
Property and all other	$	1,250		$	1,234			1.4	%						$	4,318		$	4,071			6.1	%
Casualty		1,593			1,546			3.0	%							4,635			4,495			3.1	%

Subtotal		2,843			2,780			2.3	%	$	2,628		8.2	%		8,953			8,566			4.5	%	$	8,160		9.7	%
Agriculture		737			764			-3.5	%		764		-3.5	%		1,204			1,346			-10.5	%		1,346		-10.5	%
Personal accident (A&H) ⁽¹⁾		890			937			-5.2	%		841		5.8	%		2,689			2,815			-4.5	%		2,572		4.5	%
Life		239			248			-3.6	%		231		3.3	%		723			746			-3.2	%		708		2.1	%

Total consolidated	$	4,709		$	4,729			-0.4	%	$	4,464		5.5	%	$	13,569		$	13,473			0.7	%	$	12,786		6.1	%

% of Total Consolidated
Property and all other		27	%		26	%										32	%		30	%
Casualty		33	%		33	%										34	%		33	%

Subtotal		60	%		59	%										66	%		63	%
Agriculture		16	%		16	%										9	%		10	%
Personal accident (A&H) ⁽¹⁾		19	%		20	%										20	%		21	%
Life		5	%		5	%										5	%		6	%

Total consolidated		100	%		100	%										100	%		100	%

Net premiums earned
Property and all other	$	1,321		$	1,313			0.6	%						$	3,914		$	3,847			1.7	%
Casualty		1,548			1,493			3.8	%							4,642			4,515			2.8	%

Subtotal		2,869			2,806			2.3	%	$	2,648		8.4	%		8,556			8,362			2.3	%	$	7,963		7.4	%
Agriculture		739			766			-3.6	%		766		-3.6	%		1,124			1,199			-6.3	%		1,199		-6.3	%
Personal accident (A&H) ⁽¹⁾		884			942			-6.2	%		846		4.5	%		2,645			2,770			-4.5	%		2,531		4.5	%
Life		227			240			-5.7	%		224		1.2	%		681			725			-6.1	%		688		-1.0	%

Total consolidated	$	4,719		$	4,754			-0.7	%	$	4,484		5.2	%	$	13,006		$	13,056			-0.4	%	$	12,381		5.0	%

% of Total Consolidated
Property and all other		28	%		28	%										30	%		29	%
Casualty		33	%		31	%										36	%		35	%

Subtotal		61	%		59	%										66	%		64	%
Agriculture		16	%		16	%										9	%		9	%
Personal accident (A&H) ⁽¹⁾		18	%		20	%										20	%		21	%
Life		5	%		5	%										5	%		6	%

Total consolidated		100	%		100	%										100	%		100	%

Operating income, after-tax
Property, casualty, and all other	$	705		$	671			5.4	%	$	649		8.9	%	$	1,882		$	1,964			-4.1	%	$	1,913		-1.6	%
Agriculture		56			57			-1.7	%		57		-1.7	%		106			51			NM			51		NM
Personal accident (A&H) ⁽¹⁾		102			122			-16.9	%		108		-5.8	%		337			360			-6.6	%		326		3.4	%
Life		34			41			-19.5	%		41		-19.5	%		105			118			-11.3	%		118		-11.3	%

Total consolidated	$	897		$	891			0.8	%	$	855		5.0	%	$	2,430		$	2,493			-2.5	%	$	2,408		0.9	%

% of Total Consolidated
Property, casualty, and all other		79	%		75	%										78	%		79	%
Agriculture		6	%		6	%										4	%		2	%
Personal accident (A&H) ⁽¹⁾		11	%		14	%										14	%		14	%
Life		4	%		5	%										4	%		5	%

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 segment.

Global P&C (Including Corporate)


																YTD			YTD			Full Year
	3Q-15			2Q-15			1Q-15			4Q-14			3Q-14			2015			2014			2014
Gross premiums written	$	4,581		$	5,409		$	4,672		$	4,891		$	4,495		$	14,662		$	13,992		$	18,883
Net premiums written		3,480			3,905			3,497			3,559			3,468			10,882			10,638			14,197
Net premiums earned		3,500			3,552			3,389			3,544			3,499			10,441			10,394			13,938
Losses and loss expenses		1,870			2,009			1,948			2,017			1,853			5,827			5,692			7,709
Policy acquisition costs		612			586			604			629			661			1,802			1,887			2,516
Administrative expenses		494			500			482			513			480			1,476			1,438			1,951

Underwriting income		524			457			355			385			505			1,336			1,377			1,762
Net investment income		478			490			479			501			491			1,447			1,457			1,958
Interest expense		67			69			67			66			66			203			203			269
Other income (expense)—operating ⁽¹⁾		10			(1	)		1			5			(3	)		10			(2	)		4
Amortization of intangible assets		43			47			23			21			19			113			52			74
Income tax expense		118			124			101			98			146			343			356			454

Global P&C operating income		784			706			644			706			762			2,134			2,221			2,927
Chubb integration expenses, net of tax		(7	)		—			—			—			—			(7	)		—			—
Net realized gains (losses)		(67	)		25			(30	)		(67	)		(76	)		(72	)		(111	)		(178	)
Net realized gains (losses) related to unconsolidated entities		13			16			12			43			51			41			142			185
Income tax expense (benefit) on net realized gains (losses)		(7	)		5			—			110			(5	)		(2	)		(9	)		101

Global P&C net income	$	730		$	742		$	626		$	572		$	742		$	2,098		$	2,261		$	2,833

% Change versus prior year period
Net premiums written as reported		0.3	%		6.4	%		0.0	%		3.0	%		4.0	%		2.3	%		6.7	%		5.7	%
Net premiums earned as reported		0.0	%		1.2	%		0.1	%		2.6	%		6.2	%		0.5	%		8.6	%		7.0	%
Net premiums written constant $		7.8	%		13.2	%		5.0	%		5.8	%		3.4	%		8.7	%		7.2	%		6.9	%
Net premiums earned constant $		7.6	%		8.0	%		4.8	%		5.4	%		5.7	%		6.8	%		9.2	%		8.2	%
Other ratios
Net premiums written/gross premiums written		76	%		72	%		75	%		73	%		77	%		74	%		76	%		75	%
Combined ratio
Loss and loss expense ratio		53.4	%		56.5	%		57.5	%		56.9	%		52.9	%		55.8	%		54.8	%		55.3	%
Policy acquisition cost ratio		17.5	%		16.5	%		17.8	%		17.8	%		18.9	%		17.3	%		18.1	%		18.0	%
Administrative expense ratio		14.1	%		14.1	%		14.2	%		14.4	%		13.8	%		14.1	%		13.8	%		14.1	%

Combined ratio		85.0	%		87.1	%		89.5	%		89.1	%		85.6	%		87.2	%		86.7	%		87.4	%

Combined ratio excluding catastrophe losses and PPD		88.8	%		88.2	%		89.5	%		90.2	%		89.8	%		88.8	%		89.2	%		89.4	%
Expense ratio		31.6	%		30.6	%		32.0	%		32.2	%		32.7	%		31.4	%		31.9	%		32.1	%
Expense ratio excluding A&H		28.2	%		27.4	%		28.7	%		29.2	%		29.3	%		28.1	%		28.6	%		28.8	%
Catastrophe reinstatement premiums collected—pre-tax	$	—		$	—		$	—		$	2		$	1		$	—		$	1		$	3
Catastrophe losses—pre-tax	$	72		$	117		$	50		$	70		$	85		$	239		$	208		$	278
Favorable prior period development (PPD)— pre-tax	$	(205	)	$	(153	)	$	(50	)	$	(106	)	$	(229	)	$	(408	)	$	(455	)	$	(561	)
Loss and loss expense ratio excluding catastrophe losses and PPD		57.3	%		57.6	%		57.6	%		57.9	%		57.5	%		57.5	%		57.3	%		57.5	%

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


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
	3Q-15			2Q-15			1Q-15			4Q-14			3Q-14			2015			2014			2014
Gross premiums written	$	3,615		$	3,471		$	2,253		$	2,841		$	3,367		$	9,339		$	8,573		$	11,414
Net premiums written		2,448			2,354			1,518			1,913			2,305			6,320			5,940			7,853
Net premiums earned		2,421			2,009			1,590			1,887			2,284			6,020			5,746			7,633
Losses and loss expenses ⁽¹⁾		1,799			1,393			1,057			1,329			1,694			4,249			4,057			5,386
Policy acquisition costs		197			153			157			166			210			507			549			715
Administrative expenses		192			193			170			181			168			555			506			687

Underwriting income		233			270			206			211			212			709			634			845
Net investment income		271			275			269			280			283			815			831			1,111
Interest expense		3			2			2			2			2			7			7			9
Other income (expense)—operating		3			(2	)		2			6			—			3			4			9
Amortization of intangible assets		39			39			7			8			8			85			24			31
Income tax expense		83			92			88			70			91			263			261			331

Operating income		382			410			380			417			394			1,172			1,177			1,594
Net realized gains (losses) ⁽¹⁾		(33	)		—			(6	)		(39	)		(5	)		(39	)		(25	)		(64	)
Net realized gains (losses) related to unconsolidated entities		14			10			4			19			32			28			71			90
Income tax expense on net realized gains (losses)		2			1			2			1			5			5			7			8

Net income	$	361		$	419		$	376		$	396		$	416		$	1,156		$	1,216		$	1,612

Combined ratio
Loss and loss expense ratio		74.3	%		69.3	%		66.5	%		70.4	%		74.1	%		70.6	%		70.6	%		70.6	%
Policy acquisition cost ratio		8.2	%		7.6	%		9.8	%		8.8	%		9.2	%		8.4	%		9.5	%		9.4	%
Administrative expense ratio		7.9	%		9.7	%		10.7	%		9.6	%		7.4	%		9.2	%		8.9	%		8.9	%

Combined ratio		90.4	%		86.6	%		87.0	%		88.8	%		90.7	%		88.2	%		89.0	%		88.9	%

Combined ratio excluding catastrophe losses and PPD		87.6	%		86.0	%		87.4	%		87.9	%		88.9	%		87.1	%		88.0	%		88.0	%
Catastrophe reinstatement premiums expensed—pre-tax	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe losses—pre-tax	$	22		$	61		$	46		$	30		$	37		$	129		$	115		$	145
Unfavorable (favorable) prior period development (PPD)—pre-tax	$	45		$	(49	)	$	(54	)	$	(12	)	$	8		$	(58	)	$	(61	)	$	(73	)
Loss and loss expense ratio excluding catastrophe losses and PPD		71.6	%		68.8	%		67.1	%		69.6	%		72.5	%		69.5	%		69.6	%		69.6	%
% Change versus prior year period
Net premiums written		6.2	%		16.4	%		-5.9	%		3.0	%		-0.1	%		6.4	%		4.5	%		4.1	%
Net premiums earned		5.9	%		7.4	%		0.0	%		-2.6	%		-0.4	%		4.8	%		5.2	%		3.2	%
Other ratios
Net premiums written/gross premiums written		68	%		68	%		67	%		67	%		68	%		68	%		69	%		69	%

(1)	See non-GAAP financial measures.


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
	3Q-15			2Q-15			1Q-15			4Q-14			3Q-14			2015			2014			2014
Gross premiums written	$	2,372		$	2,905		$	2,125		$	2,539		$	2,126		$	7,402		$	6,497		$	9,036
Net premiums written		1,711			1,975			1,430			1,669			1,541			5,116			4,594			6,263
Net premiums earned		1,682			1,688			1,526			1,560			1,518			4,896			4,547			6,107
Losses and loss expenses		1,175			1,120			1,035			1,077			1,053			3,330			3,009			4,086
Policy acquisition costs		155			130			161			154			169			446			480			634
Administrative expenses		192			189			171			177			165			552			501			678

Underwriting income		160			249			159			152			131			568			557			709
Net investment income		266			269			263			273			277			798			812			1,085
Interest expense		3			2			2			2			2			7			7			9
Other income (expense)—operating		2			(1	)		3			7			(1	)		4			4			11
Amortization of intangible assets		31			32			—			—			—			63			—			—
Income tax expense		68			88			78			58			68			234			240			298

Operating income		326			395			345			372			337			1,066			1,126			1,498
Net realized gains (losses)		(33	)		—			(6	)		(42	)		(5	)		(39	)		(25	)		(67	)
Net realized gains (losses) related to unconsolidated entities		14			10			4			19			32			28			71			90
Income tax expense on net realized gains (losses)		2			1			2			1			5			5			7			8

Net income	$	305		$	404		$	341		$	348		$	359		$	1,050		$	1,165		$	1,513

Combined ratio
Loss and loss expense ratio		69.9	%		66.3	%		67.9	%		69.0	%		69.3	%		68.0	%		66.2	%		66.9	%
Policy acquisition cost ratio		9.2	%		7.7	%		10.5	%		9.9	%		11.1	%		9.1	%		10.5	%		10.4	%
Administrative expense ratio		11.4	%		11.2	%		11.2	%		11.3	%		11.0	%		11.3	%		11.1	%		11.1	%

Combined ratio		90.5	%		85.2	%		89.6	%		90.2	%		91.4	%		88.4	%		87.8	%		88.4	%

Combined ratio excluding catastrophe losses and PPD		86.3	%		85.0	%		87.9	%		89.1	%		88.5	%		86.4	%		87.6	%		88.0	%
Catastrophe reinstatement premiums expensed—pre-tax	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe losses—pre-tax	$	22		$	54		$	45		$	29		$	35		$	121		$	103		$	132
Unfavorable (favorable) prior period development (PPD)—pre-tax	$	50		$	(49	)	$	(21	)	$	(11	)	$	11		$	(20	)	$	(96	)	$	(107	)
Loss and loss expense ratio excluding catastrophe losses and PPD		65.7	%		66.1	%		66.3	%		67.8	%		66.9	%		66.0	%		66.2	%		66.6	%
% Change versus prior year period
Net premiums written		11.0	%		20.8	%		0.8	%		4.2	%		2.7	%		11.3	%		6.5	%		5.9	%
Net premiums earned		10.7	%		9.6	%		2.5	%		3.3	%		5.1	%		7.7	%		8.0	%		6.8	%
Other ratios
Net premiums written/gross premiums written		72	%		68	%		67	%		66	%		72	%		69	%		71	%		69	%


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
	3Q-15			2Q-15			1Q-15			4Q-14			3Q-14			2015			2014			2014
Gross premiums written	$	1,243		$	566		$	128		$	302		$	1,241		$	1,937		$	2,076		$	2,378
Net premiums written		737			379			88			244			764			1,204			1,346			1,590
Net premiums earned		739			321			64			327			766			1,124			1,199			1,526
Losses and loss expenses ⁽¹⁾		624			273			22			252			641			919			1,048			1,300
Policy acquisition costs		42			23			(4	)		12			41			61			69			81
Administrative expenses		—			4			(1	)		4			3			3			5			9

Underwriting income		73			21			47			59			81			141			77			136
Net investment income		5			6			6			7			6			17			19			26
Interest expense		—			—			—			—			—			—			—			—
Other income (expense)—operating		1			(1	)		(1	)		(1	)		1			(1	)		—			(2	)
Amortization of intangible assets		8			7			7			8			8			22			24			31
Income tax expense		15			4			10			12			23			29			21			33

Operating income		56			15			35			45			57			106			51			96
Net realized gains (losses) ⁽¹⁾		—			—			—			3			—			—			—			3
Net realized gains (losses) related to unconsolidated entities		—			—			—			—			—			—			—			—
Income tax expense on net realized gains (losses)		—			—			—			—			—			—			—			—

Net income	$	56		$	15		$	35		$	48		$	57		$	106		$	51		$	99

Combined ratio
Loss and loss expense ratio		84.5	%		85.3	%		33.3	%		77.2	%		83.7	%		81.8	%		87.4	%		85.2	%
Policy acquisition cost ratio		5.7	%		7.2	%		-6.0	%		3.6	%		5.4	%		5.4	%		5.8	%		5.3	%
Administrative expense ratio		0.0	%		1.1	%		-0.9	%		1.0	%		0.4	%		0.3	%		0.4	%		0.6	%

Combined ratio		90.2	%		93.6	%		26.4	%		81.8	%		89.5	%		87.5	%		93.6	%		91.1	%

Combined ratio excluding catastrophe losses and PPD		90.8	%		91.4	%		76.7	%		82.4	%		89.6	%		90.1	%		89.4	%		87.8	%
Catastrophe reinstatement premiums—pre-tax	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Catastrophe losses—pre-tax	$	—		$	7		$	1		$	1		$	2		$	8		$	12		$	13
Unfavorable (favorable) prior period development (PPD)—pre-tax	$	(5	)	$	—		$	(33	)	$	(1	)	$	(3	)	$	(38	)	$	35		$	34
Loss and loss expense ratio excluding catastrophe losses and PPD		85.1	%		83.1	%		83.2	%		77.9	%		83.8	%		84.4	%		82.9	%		81.8	%
% Change versus prior year period
Net premiums written		-3.5	%		-2.4	%		-54.6	%		-5.0	%		-5.2	%		-10.5	%		-1.8	%		-2.3	%
Net premiums earned		-3.6	%		-2.9	%		-37.2	%		-23.4	%		-9.8	%		-6.3	%		-4.2	%		-9.1	%
Other ratios
Net premiums written/gross premiums written		59	%		67	%		69	%		81	%		62	%		62	%		65	%		67	%

(1)	See non-GAAP financial measures for treatment of losses and loss expenses in the P&C combined ratio.


Insurance - North American Agriculture		Page 8

ACE Limited

Segment Results - Consecutive Quarters

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

(Unaudited)

Insurance - Overseas General


																Constant $		YTD			YTD			Full Year
	3Q-15			2Q-15			1Q-15			4Q-14			3Q-14			3Q-14⁽¹⁾		2015			2014			2014
Gross premiums written	$	2,019		$	2,212		$	2,255		$	2,212		$	2,156		$	1,894	$	6,486		$	6,641		$	8,853
Net premiums written		1,584			1,669			1,794			1,749			1,719			1,493		5,047			5,250			6,999
Net premiums earned		1,615			1,644			1,637			1,758			1,726			1,498		4,896			5,047			6,805
Losses and loss expenses		674			816			814			835			707			601		2,304			2,354			3,189
Policy acquisition costs		405			396			389			419			418			361		1,190			1,206			1,625
Administrative expenses		246			254			256			262			258			226		756			764			1,026

Underwriting income		290			178			178			242			343			310		646			723			965
Net investment income		132			139			138			147			130			122		409			398			545
Interest expense		1			1			1			2			2			1		3			4			6
Other income (expense)—operating		6			4			2			6			4			4		12			11			18
Amortization of intangible assets		12			15			23			21			19			18		50			52			74
Income tax expense		85			65			53			78			108			100		203			207			285

Operating income		330			240			241			294			348			317		811			869			1,163
Net realized gains (losses)		(13	)		13			(10	)		(7	)		(75	)				(10	)		(71	)		(78	)
Net realized gains (losses) related to unconsolidated entities		—			3			4			12			9					7			33			45
Income tax expense (benefit) on net realized gains (losses)		(9	)		4			(1	)		111			(11	)				(6	)		(18	)		93

Net income	$	326		$	252		$	236		$	188		$	293				$	814		$	849		$	1,037

Combined ratio
Loss and loss expense ratio		41.7	%		49.7	%		49.7	%		47.5	%		40.9	%				47.1	%		46.6	%		46.9	%
Policy acquisition cost ratio		25.1	%		24.1	%		23.8	%		23.8	%		24.3	%				24.3	%		23.9	%		23.9	%
Administrative expense ratio		15.2	%		15.4	%		15.6	%		15.0	%		14.9	%				15.4	%		15.2	%		15.0	%

Combined ratio		82.0	%		89.2	%		89.1	%		86.3	%		80.1	%				86.8	%		85.7	%		85.8	%

Combined ratio excluding catastrophe losses and PPD		90.5	%		89.8	%		90.3	%		89.4	%		90.5	%				90.2	%		90.1	%		89.9	%
Catastrophe reinstatement premiums—pre-tax	$	—		$	—		$	—		$	—		$	—				$	—		$	—		$	—
Catastrophe losses—pre-tax	$	39		$	58		$	5		$	30		$	39				$	102		$	82		$	112
Favorable prior period development (PPD)—pre-tax	$	(177	)	$	(68	)	$	(24	)	$	(86	)	$	(219	)			$	(269	)	$	(305	)	$	(391	)
Loss and loss expense ratio excluding catastrophe losses and PPD		50.2	%		50.3	%		50.9	%		50.7	%		51.3	%				50.5	%		51.1	%		51.0	%
% Change versus prior year period
Net premiums written as reported		-7.9	%		-5.1	%		1.3	%		3.0	%		9.4	%				-3.9	%		8.9	%		7.4	%
Net premiums earned as reported		-6.4	%		-3.9	%		1.6	%		3.4	%		7.2	%				-3.0	%		9.0	%		7.5	%
Net premiums written constant $		6.1	%		7.6	%		11.0	%		8.4	%		8.1	%				8.3	%		9.7	%		9.4	%
Net premiums earned constant $		7.8	%		9.4	%		11.2	%		8.8	%		6.0	%				9.5	%		9.9	%		9.6	%
Other ratios
Net premiums written/gross premiums written		78	%		75	%		80	%		79	%		80	%				78	%		79	%		79	%

(1)	Prior periods on a constant dollar basis.


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
	3Q-15			2Q-15			1Q-15			4Q-14			3Q-14			2015			2014			2014
Gross premiums written	$	190		$	292		$	292		$	140		$	213		$	774		$	854		$	994
Net premiums written		185			261			273			141			208			719			794			935
Net premiums earned		203			220			226			226			255			649			800			1,026
Losses and loss expenses		20			72			99			104			92			191			327			431
Policy acquisition costs		52			60			54			56			74			166			201			257
Administrative expenses		12			13			12			13			13			37			41			54

Underwriting income		119			75			61			53			76			255			231			284
Net investment income		76			79			75			78			81			230			238			316
Interest expense		1			1			1			—			1			3			4			4
Other income (expense)—operating		4			—			1			3			—			5			1			4
Amortization of intangible assets		—			—			—			—			—			—			—			—
Income tax expense		8			8			8			7			11			24			31			38

Operating income		190			145			128			127			145			463			435			562
Net realized gains (losses)		(14	)		5			(11	)		(12	)		6			(20	)		(17	)		(29	)
Net realized gains (losses) related to unconsolidated entities		(2	)		3			4			12			10			5			38			50
Income tax expense on net realized gains (losses)		—			(1	)		—			—			—			(1	)		—			—

Net income	$	174		$	154		$	121		$	127		$	161		$	449		$	456		$	583

Combined ratio
Loss and loss expense ratio		9.6	%		32.9	%		43.6	%		45.8	%		36.2	%		29.4	%		40.9	%		42.0	%
Policy acquisition cost ratio		25.4	%		27.2	%		24.0	%		25.0	%		28.8	%		25.5	%		25.0	%		25.0	%
Administrative expense ratio		6.2	%		5.6	%		5.6	%		5.7	%		5.2	%		5.7	%		5.2	%		5.3	%

Combined ratio		41.2	%		65.7	%		73.2	%		76.5	%		70.2	%		60.6	%		71.1	%		72.3	%

Combined ratio excluding catastrophe losses and PPD		75.3	%		79.6	%		75.5	%		76.2	%		75.7	%		76.8	%		75.4	%		75.6	%
Catastrophe reinstatement premiums collected—pre-tax	$	—		$	—		$	—		$	2		$	1		$	—		$	1		$	3
Catastrophe losses—pre-tax	$	11		$	5		$	—		$	11		$	11		$	16		$	23		$	34
Favorable prior period development (PPD)—pre-tax	$	(78	)	$	(36	)	$	(5	)	$	(9	)	$	(21	)	$	(119	)	$	(54	)	$	(63	)
Loss and loss expense ratio excluding catastrophe losses and PPD		44.3	%		46.7	%		46.0	%		45.4	%		42.8	%		45.7	%		45.5	%		45.5	%
% Change versus prior year period
Net premiums written as reported		-11.5	%		-5.9	%		-11.4	%		-9.4	%		-21.2	%		-9.5	%		-5.0	%		-5.7	%
Net premiums earned as reported		-20.4	%		-15.5	%		-20.6	%		-7.7	%		6.3	%		-18.8	%		9.3	%		5.1	%
Net premiums written constant $		-9.5	%		-3.9	%		-9.1	%		-8.8	%		-21.8	%		-7.4	%		-5.2	%		-5.8	%
Net premiums earned constant $		-18.1	%		-13.2	%		-19.0	%		-7.1	%		5.7	%		-16.8	%		8.9	%		4.9	%
Other ratios
Net premiums written/gross premiums written		97	%		90	%		93	%		100	%		98	%		93	%		93	%		94	%


Global Reinsurance		Page 10

ACE Limited

Segment Results - Consecutive Quarters

(in millions of U.S. dollars)

(Unaudited)

Life


																YTD			YTD			Full Year
	3Q-15			2Q-15			1Q-15			4Q-14			3Q-14			2015			2014			2014
Gross premiums written	$	522		$	529		$	522		$	553		$	528		$	1,573		$	1,576		$	2,129
Net premiums written		492			500			491			523			497			1,483			1,489			2,012
Net premiums earned		480			487			474			499			489			1,441			1,463			1,962
Losses and loss expenses		153			137			152			147			145			442			442			589
Policy benefits ⁽¹⁾		89			153			142			134			125			384			383			517
(Gains) losses from fair value changes in separate account assets ⁽¹⁾		49			(6	)		(11	)		3			6			32			(5	)		(2	)
Policy acquisition costs		117			118			107			123			123			342			355			478
Administrative expenses		74			74			73			73			71			221			212			285
Net investment income		66			66			66			69			69			198			199			268

Life underwriting income ⁽²⁾		64			77			77			88			88			218			275			363
Interest expense		1			2			1			1			4			4			10			11
Other income (expense) - operating ⁽¹⁾		1			1			(2	)		1			(1	)		—			(6	)		(5	)
Amortization of intangible assets		—			1			—			1			—			1			2			3
Income tax expense		7			8			8			11			11			23			36			47

Operating income		57			67			66			76			72			190			221			297
Net realized gains (losses):
Mark-to-market on guaranteed living benefits derivative (net of related hedges)		(313	)		102			(57	)		(153	)		(95	)		(268	)		(232	)		(385	)
Foreign exchange gains (losses) and all other		(13	)		1			(2	)		7			6			(14	)		(5	)		2
Net realized gains (losses) related to unconsolidated entities		12			17			14			6			4			43			—			6
Income tax expense (benefit) on net realized gains (losses)		1			2			1			1			1			4			(2	)		(1	)

Net income (loss)	$	(258	)	$	185		$	20		$	(65	)	$	(14	)	$	(53	)	$	(14	)	$	(79	)

% Change versus prior year period
Net premiums written as reported		-0.8	%		0.3	%		-0.6	%		4.0	%		3.8	%		-0.4	%		1.4	%		2.0	%
Net premiums earned as reported		-1.9	%		-0.8	%		-1.9	%		3.6	%		4.8	%		-1.5	%		2.8	%		3.0	%
Net premiums written constant $ ⁽³⁾		4.4	%		4.1	%		2.4	%		6.2	%		4.4	%		3.7	%		3.3	%		4.0	%
Net premiums earned constant $		3.4	%		3.0	%		0.9	%		5.9	%		5.4	%		2.4	%		4.5	%		4.9	%

(1)

(Gains) losses from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP have been reclassified from Other income (expense) for purposes of presenting Life underwriting income in the Life segment. 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)	International life insurance net premiums written and deposits breakdown (excludes Combined North American and Life reinsurance businesses):


					Constant $							Constant $
					% Change							% Change
			Constant $		3Q-15 vs.					Constant $		YTD-15 vs.
	3Q-15		3Q-14⁽⁵⁾		3Q-14⁽⁵⁾			YTD-15		YTD-14⁽⁵⁾		YTD-14⁽⁵⁾
International life insurance net premiums written	$	180	$	165		8.7	%	$	545	$	510		6.9	%
International life insurance deposits ⁽⁴⁾		210		233		-9.6	%		726		703		3.4	%

Total international life insurance net premiums written and deposits	$	390	$	398		-2.0	%	$	1,271	$	1,213		4.8	%

(4)	Includes deposits collected on universal life and investment contracts. Consistent with GAAP, premiums collected on universal life and investment contracts are considered deposits and excluded from revenues.

(5)	Prior periods on a constant dollar basis.


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, 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
Losses and loss expenses incurred		3,840			1,156			2,684
Losses and loss expenses paid		(3,165	)		(810	)		(2,355	)		88	%
Other (incl. foreign exch. revaluation)		(405	)		(120	)		(285	)

Balance at September 30, 2014	$	37,447		$	10,336		$	27,111
Losses and loss expenses incurred		3,442			1,026			2,416
Losses and loss expenses paid		(3,307	)		(873	)		(2,434	)		101	%
Other (incl. foreign exch. revaluation)		733			818			(85	)

Balance at December 31, 2014	$	38,315		$	11,307		$	27,008
Losses and loss expenses incurred		2,743			621			2,122
Losses and loss expenses paid		(3,062	)		(744	)		(2,318	)		109	%
Other (incl. foreign exch. revaluation)		(670	)		(197	)		(473	)

Balance at March 31, 2015	$	37,326		$	10,987		$	26,339
Losses and loss expenses incurred		3,065			648			2,417
Losses and loss expenses paid		(2,830	)		(547	)		(2,283	)		94	%
Other (incl. foreign exch. revaluation)		669			60			609

Balance at June 30, 2015	$	38,230		$	11,148		$	27,082
Losses and loss expenses incurred		3,252			609			2,643
Losses and loss expenses paid		(3,391	)		(908	)		(2,483	)		94	%
Other (incl. foreign exch. revaluation)		(527	)		(193	)		(334	)

Balance at September 30, 2015	$	37,564		$	10,656		$	26,908

Add net recoverable on paid losses		—			575			(575	)

Balance including net recoverable on paid losses	$	37,564		$	11,231		$	26,333


Loss Reserve Rollforward		Page 12

ACE Limited

Reinsurance Recoverable Analysis

(in millions of U.S. dollars)

(Unaudited)

Net Reinsurance Recoverable by Division


	September 30			June 30			March 31			December 31
	2015			2015			2015			2014
Reinsurance recoverable on paid losses and loss expenses
Active operations	$	392		$	448		$	413		$	478
Brandywine and Other Run-off		284			283			292			313

Total	$	676		$	731		$	705		$	791

Reinsurance recoverable on unpaid losses and loss expenses
Active operations	$	9,769		$	10,262		$	10,052		$	10,348
Brandywine and Other Run-off		1,127			1,136			1,184			1,210

Total	$	10,896		$	11,398		$	11,236		$	11,558

Gross reinsurance recoverable
Active operations	$	10,161		$	10,710		$	10,465		$	10,826
Brandywine and Other Run-off		1,411			1,419			1,476			1,523

Total	$	11,572		$	12,129		$	11,941		$	12,349

Provision for uncollectible reinsurance ⁽¹⁾
Active operations	$	(207	)	$	(214	)	$	(213	)	$	(217	)
Brandywine and Other Run-off		(134	)		(140	)		(140	)		(140	)

Total	$	(341	)	$	(354	)	$	(353	)	$	(357	)

Net reinsurance recoverable
Active operations	$	9,954		$	10,496		$	10,252		$	10,609
Brandywine and Other Run-off		1,277			1,279			1,336			1,383

Total	$	11,231		$	11,775		$	11,588		$	11,992

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


Reinsurance Recoverable		Page 13

ACE Limited

Investment Portfolio

(in millions of U.S. dollars)

(Unaudited)


	September 30 2015					June 30 2015					March 31 2015					December 31 2014
Market Value
Fixed maturities available for sale	$	48,278				$	48,701				$	50,410				$	49,395
Fixed maturities held to maturity		8,750					8,805					7,307					7,589
Short-term investments		1,808					2,062					2,536					2,322

Total fixed maturities	$	58,836				$	59,568				$	60,253				$	59,306

Asset Allocation by Market Value
Treasury	$	2,619		4	%	$	2,424		4	%	$	2,448		4	%	$	2,448		4	%
Agency		1,040		2	%		1,139		2	%		1,221		2	%		1,222		2	%
Corporate and asset-backed		20,018		34	%		20,007		34	%		20,370		34	%		19,854		34	%
Mortgage-backed		12,936		22	%		12,661		21	%		12,791		21	%		12,325		21	%
Municipal		5,306		9	%		5,276		9	%		5,067		9	%		4,930		8	%
Non-U.S.		15,109		26	%		15,999		27	%		15,820		26	%		16,205		27	%
Short-term investments		1,808		3	%		2,062		3	%		2,536		4	%		2,322		4	%

Total fixed maturities	$	58,836		100	%	$	59,568		100	%	$	60,253		100	%	$	59,306		100	%

Credit Quality by Market Value
AAA	$	8,712		15	%	$	9,320		16	%	$	9,386		16	%	$	8,943		15	%
AA		21,560		37	%		21,294		36	%		21,760		36	%		21,589		36	%
A		11,877		20	%		11,568		19	%		11,712		19	%		11,625		20	%
BBB		8,688		15	%		8,806		15	%		8,789		15	%		8,690		15	%
BB		4,281		7	%		4,531		8	%		4,377		7	%		4,372		7	%
B		3,527		6	%		3,860		6	%		4,054		7	%		3,916		7	%
Other		191		0	%		189		0	%		175		0	%		171		0	%

Total fixed maturities	$	58,836		100	%	$	59,568		100	%	$	60,253		100	%	$	59,306		100	%

Cost/Amortized Cost
Fixed maturities available for sale	$	47,411				$	47,599				$	48,384				$	47,826
Fixed maturities held to maturity		8,564					8,676					6,982					7,331
Short-term investments		1,808					2,062					2,536					2,322

Subtotal fixed maturities		57,783					58,337					57,902					57,479
Equity securities		434					433					447					440
Other investments		2,943					2,989					3,096					2,999

Total investment portfolio	$	61,160				$	61,759				$	61,445				$	60,918

Avg. duration of fixed maturities		4.0 years					4.1 years					3.9 years					4.0 years
Avg. market yield of fixed maturities		2.9	%				2.9	%				2.6	%				2.8	%
Avg. credit quality		A/Aa					A/Aa					A/Aa					A/Aa
Avg. yield on invested assets		3.6	%				3.6	%				3.6	%				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 September 30, 2015
Agency residential mortgage-backed (RMBS)	$	—	$	10,327	$	—	$	—	$	—	$	10,327
Non-agency RMBS		26		5		14		8		13		66
Commercial mortgage-backed		2,516		13		14		—		—		2,543

Total mortgage-backed securities at market value	$	2,542	$	10,345	$	28	$	8	$	13	$	12,936

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

Market Value at September 30, 2015


	S&P Credit Rating
	Investment Grade
	AAA		AA		A		BBB		Total
Asset-backed	$	754	$	50	$	—	$	—	$	804
Banks		—		18		2,207		314		2,539
Basic Materials		—		3		92		286		381
Communications		—		58		212		997		1,267
Consumer, Cyclical		—		108		444		512		1,064
Consumer, Non-Cyclical		53		474		1,245		835		2,607
Diversified Financial Services		—		44		303		137		484
Energy		25		35		147		757		964
Industrial		—		362		456		407		1,225
Utilities		—		10		660		388		1,058
All Others		80		244		562		608		1,494

Total	$	912	$	1,406	$	6,328	$	5,241	$	13,887

Market Value at September 30, 2015


	S&P Credit Rating
	Below Investment Grade
	BB		B		CCC		Total
Asset-backed	$	—	$	3	$	10	$	13
Banks		3		4		—		7
Basic Materials		139		90		2		231
Communications		582		477		11		1,070
Consumer, Cyclical		595		514		27		1,136
Consumer, Non-Cyclical		530		792		29		1,351
Diversified Financial Services		141		45		—		186
Energy		373		141		10		524
Industrial		342		329		16		687
Utilities		207		66		—		273
All Others		270		366		17		653

Total	$	3,182	$	2,827	$	122	$	6,131


Investments 2		Page 15

ACE Limited

Investment Portfolio - 3

(in millions of U.S. dollars)

(Unaudited)

Non-U.S. Fixed Income Portfolio

September 30, 2015

Non-U.S. Government Securities


	Market Value by S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
United Kingdom	$	991	$	—	$	—	$	—	$	—	$	991
Republic of Korea		—		897		—		—		—		897
Federative Republic of Brazil		—		—		—		545		28		573
United Mexican States		—		—		393		118		—		511
Canada		435		—		—		—		—		435
Kingdom of Thailand		—		—		356		—		—		356
Province of Ontario		—		—		340		—		—		340
Province of Quebec		—		—		237		—		—		237
Japan		—		—		203		—		—		203
Australia		187		—		—		—		—		187
Other Non-U.S. Government Securities		515		848		254		319		501		2,437

Total	$	2,128	$	1,745	$	1,783	$	982	$	529	$	7,167


Non-U.S. Corporate Securities
	Market Value by S&P Credit Rating
	AAA		AA		A		BBB		BB and below		Total
United Kingdom	$	114	$	44	$	608	$	571	$	190	$	1,527
Canada		89		134		222		316		182		943
United States ⁽¹⁾		1		84		106		224		187		602
France		34		64		224		174		30		526
Australia		76		77		249		96		22		520
Netherlands		24		125		164		130		56		499
Germany		80		18		131		130		19		378
Switzerland		39		16		98		114		33		300
China		—		146		79		29		11		265
Hong Kong		9		5		146		7		4		171
Other Non-U.S. Corporate Securities		251		278		639		558		485		2,211

Total	$	717	$	991	$	2,666	$	2,349	$	1,219	$	7,942

(1) 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


	September 30, 2015	Market Value		Rating
1	JP Morgan Chase & Co	$	475	A
2	General Electric Co		455	AA+
3	Goldman Sachs Group Inc		329	A-
4	AT&T INC		294	BBB+
5	Wells Fargo & Co		268	A+
6	Bank of America Corp		238	A-
7	Verizon Communications Inc		236	BBB+
8	Morgan Stanley		229	A-
9	HSBC Holdings Plc		228	A
10	Ford Motor Co		210	BBB-


Investments 4		Page 17

ACE Limited

Net Realized and Unrealized Gains (Losses)

(in millions of U.S. dollars)

(Unaudited)


	Three months ended September 30, 2015									Nine months ended September 30, 2015
	Net Realized			Net Unrealized						Net Realized			Net Unrealized
	Gains			Gains			Net			Gains			Gains			Net
	(Losses)⁽¹⁾			(Losses)			Impact			(Losses) ⁽¹⁾			(Losses)			Impact
Fixed maturities	$	(51	)	$	(237	)	$	(288	)	$	(50	)	$	(630	)	$	(680	)
Fixed income derivatives		(22	)		—			(22	)		6			—			6
Public equity		2			(34	)		(32	)		32			(40	)		(8	)
Private equity		9			(12	)		(3	)		49			(19	)		30

Total investment portfolio		(62	)		(283	)		(345	)		37			(689	)		(652	)

Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges ⁽²⁾		(313	)		—			(313	)		(268	)		—			(268	)
Foreign exchange ⁽³⁾		(2	)		(575	)		(577	)		(73	)		(860	)		(933	)
Partially-owned entities ⁽⁴⁾		14			10			24			45			10			55
Other		(5	)		4			(1	)		(11	)		11			—

Net gains (losses) before tax		(368	)		(844	)		(1,212	)		(270	)		(1,528	)		(1,798	)

Income tax expense (benefit)		(6	)		(45	)		(51	)		2			(145	)		(143	)

Net gains (losses)	$	(362	)	$	(799	)	$	(1,161	)	$	(272	)	$	(1,383	)	$	(1,655	)

(1)

Other-than-temporary impairments for the quarter includes $26 million for fixed maturities, $3 million for public equity and $1 million for private equity. Year to date other-than-temporary impairments includes $46 million for fixed maturities, $4 million for public equities and $1 million for private equity.

(2)	The quarter and year to date include $83 million and $69 million, respectively, of gains on applicable hedges.

(3)	Unrealized foreign exchange loss, after-tax, for the quarter was $547 million. Unrealized foreign exchange loss, after-tax, year to date was $825 million.

(4)	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 September 30, 2014									Nine months ended September 30, 2014
	Net Realized			Net Unrealized						Net Realized			Net Unrealized
	Gains			Gains			Net			Gains			Gains			Net
	(Losses)⁽⁵⁾			(Losses)			Impact			(Losses) ⁽⁵⁾			(Losses)			Impact
Fixed maturities	$	18		$	(361	)	$	(343	)	$	49		$	638		$	687
Fixed income derivatives		(13	)		—			(13	)		(53	)		—			(53	)
Public equity		(56	)		36			(20	)		(60	)		70			10
Private equity		51			(5	)		46			143			43			186

Total investment portfolio		—			(330	)		(330	)		79			751			830

Mark-to-market from variable annuity reinsurance derivative transactions, net of applicable hedges ⁽⁶⁾		(95	)		—			(95	)		(232	)		—			(232	)
Foreign exchange ⁽⁷⁾		(19	)		(251	)		(270	)		(42	)		(131	)		(173	)
Partially-owned entities ⁽⁸⁾		4			(7	)		(3	)		(4	)		(7	)		(11	)
Other		—			7			7			(7	)		(6	)		(13	)

Net gains (losses) before tax		(110	)		(581	)		(691	)		(206	)		607			401
Income tax expense (benefit)		(4	)		(94	)		(98	)		(11	)		151			140

Net gains (losses)	$	(106	)	$	(487	)	$	(593	)	$	(195	)	$	456		$	261

(5)	Other-than-temporary impairments for the quarter includes $4 million for fixed maturities. Year to date other-than-temporary impairments includes $17 million for fixed maturities, $3 million for private equity, and $7 million for public equity.

(6)	The quarter and year to date include $15 million and $106 million, respectively, of losses on applicable hedges.

(7)	Unrealized foreign exchange loss, after-tax, for the quarter and year to date were $202 million and $124 million, respectively.

(8)	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).


Net Gains (Losses)		Page 18

ACE Limited

Capital Structure

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

(Unaudited)


	September 30			June 30			March 31			December 31			December 31
	2015			2015			2015			2014			2013
Total short-term debt ^{(1) (2)}	$	2,103		$	2,102		$	2,552		$	2,552		$	1,901
Total long-term debt		4,157			4,157			4,157			3,357			3,807

Total debt	$	6,260		$	6,259		$	6,709		$	5,909		$	5,708

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

Total shareholders’ equity	$	29,127		$	29,555		$	29,702		$	29,587		$	28,825

Total capitalization	$	35,696		$	36,123		$	36,720		$	35,805		$	34,842
Tangible capital ⁽³⁾	$	29,983		$	30,154		$	31,204		$	30,081		$	29,438
Leverage ratios
Debt/ total capitalization		17.5	%		17.3	%		18.3	%		16.5	%		16.4	%
Debt plus trust preferred securities/ total capitalization		18.4	%		18.2	%		19.1	%		17.4	%		17.3	%
Debt/ tangible capital		20.9	%		20.8	%		21.5	%		19.6	%		19.4	%
Debt plus trust preferred securities/ tangible capital		21.9	%		21.8	%		22.5	%		20.7	%		20.4	%

Note: As of September 30, 2015, there was $0.5 billion usage of credit facilities on a total commitment of $1.0 billion.

(1)	In May 2015, $450 million of 5.6 percent senior notes matured and were fully paid. In November 2015, $700 million of 2.6 percent senior notes will mature and are expected to be fully paid using proceeds from the issuance of $700 million of 3.35 percent senior notes in May 2014.

(2)	Repurchase agreements in the amount of $150 million matured during the quarter, and there were new repurchase agreements in the amount of $151 million.

(3)	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 September 30						Nine months ended September 30
	2015			2014			2015			2014
Numerator
Operating income to common shares	$	897		$	891		$	2,430		$	2,493
Chubb integration expenses, net of tax		(7	)		—			(7	)		—
Adjusted net realized gains (losses), net of tax		(362	)		(106	)		(272	)		(195	)

Net income	$	528		$	785		$	2,151		$	2,298

Rollforward of Common Shares Outstanding
Shares - beginning of period		323,814,281			336,225,589			328,659,686			339,793,935
Repurchase of shares		—			(4,349,302	)		(6,677,663	)		(10,143,184	)
Shares issued, excluding option exercises		(78,863	)		(41,637	)		1,039,238			1,270,038
Issued for option exercises		326,950			276,907			1,041,107			1,190,768

Shares - end of period		324,062,368			332,111,557			324,062,368			332,111,557

Denominator
Weighted average shares outstanding		324,210,936			334,472,324			325,904,502			337,083,498
Effect of other dilutive securities		2,962,484			3,201,656			3,269,724			3,298,569

Adj. wtd. avg. shares outstanding and assumed conversions		327,173,420			337,673,980			329,174,226			340,382,067

Basic earnings per share
Operating income	$	2.77		$	2.66		$	7.46		$	7.40
Chubb integration expenses, net of tax		(0.02	)		—			(0.02	)		—
Adjusted net realized gains (losses), net of tax		(1.12	)		(0.31	)		(0.84	)		(0.58	)

Net income	$	1.63		$	2.35		$	6.60		$	6.82

Diluted earnings per share
Operating income	$	2.74		$	2.64		$	7.38		$	7.32
Chubb integration expenses, net of tax		(0.02	)		—			(0.02	)		—
Adjusted net realized gains (losses), net of tax		(1.10	)		(0.32	)		(0.83	)		(0.57	)

Net income	$	1.62		$	2.32		$	6.53		$	6.75


Earnings per share		Page 20

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


	September 30			June 30			March 31			December 31			September 30
	2015			2015			2015			2014			2014
Shareholders’ equity	$	29,127		$	29,555		$	29,702		$	29,587		$	30,017
Less: goodwill and other intangible assets		5,713			5,969			5,516			5,724			5,425

Numerator for tangible book value per share	$	23,414		$	23,586		$	24,186		$	23,863		$	24,592

Book value - % change over prior quarter		-1.4	%		-0.5	%		0.4	%		-1.4	%		-1.0	%
Tangible book value - % change over prior quarter		-0.7	%		-2.5	%		1.4	%		-3.0	%		-0.8	%
Denominator		324,062,368			323,814,281			327,084,762			328,659,686			332,111,557

Book value per common share	$	89.88		$	91.27		$	90.81		$	90.02		$	90.38
Tangible book value per common share	$	72.25		$	72.84		$	73.94		$	72.61		$	74.05
Reconciliation of Book Value
Shareholders’ equity, beginning of quarter	$	29,555		$	29,702		$	29,587		$	30,017		$	30,325
Operating income		897			788			745			827			891
Chubb integration expenses, net of tax		(7	)		—			—			—			—
Adjusted net realized gains (losses), net of tax		(362	)		154			(64	)		(272	)		(106	)
Net unrealized gains (losses), net of tax		(255	)		(672	)		361			94			(290	)
Repurchase of shares		—			(394	)		(340	)		(430	)		(450	)
Dividend declared on common shares		(218	)		(217	)		(222	)		(223	)		(223	)
Cumulative translation, net of tax		(547	)		132			(410	)		(520	)		(202	)
Pension liability		3			(5	)		10			9			5
Other⁽¹⁾		61			67			35			85			67

	$	29,127		$	29,555		$	29,702		$	29,587		$	30,017

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


Reconciliation Book Value		Page 21

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 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 gains and losses on 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 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. A reconciliation of GAAP combined ratio to P&C combined ratio is provided on page 24.

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) 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 a 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. We also exclude Chubb integration expenses related to the planned acquisition due to the size and complexity of this acquisition. These integration expenses are distortive to our results and are not indicative of our underlying profitability. We believe that excluding these integration expenses facilitates the comparison of our financial results to our historical operating results. These expenses include legal and professional fees and all costs directly related to the integration activities of the planned Chubb acquisition. 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. A reconciliation of Consolidated Other income (expense) on a GAAP basis to Consolidated Other income (expense) - operating is provided on page 24.

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.

International life insurance net premiums written and deposits collected, 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 insurance business because new life deposits are an important component of production and key to our efforts to grow our business.

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 21. Tangible book value per common share excluding 2014 acquisitions 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 acquisition of the Fireman’s Fund high net worth personal lines insurance business in the United States in order to adjust for the distortive effect of acquisitions. In addition, we disclose per share measures that exclude the impact of foreign currency fluctuations during 2015 in order to adjust for the distortive effects of fluctuations in exchange rates.


Reconciliation Non-GAAP		Page 22

ACE Limited

Non-GAAP Financial Measures - 2

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

(Unaudited)

Regulation G - Non-GAAP Financial Measures (continued)

Operating income

Operating income is a common performance measure for insurance companies and is presented throughout this report.

The following table presents the reconciliation of Net income to Operating income:


															YTD			YTD			Full Year
	3Q-15			2Q-15		1Q-15			4Q-14			3Q-14			2015			2014			2014
Net income, as reported	$	528		$	942	$	681		$	555		$	785		$	2,151		$	2,298		$	2,853
Chubb integration expenses, net of tax		(7	)		—		—			—			—			(7	)		—			—
Adjusted net realized gains (losses)		(393	)		128		(89	)		(210	)		(165	)		(354	)		(348	)		(558	)
Net realized gains (losses) related to unconsolidated entities ⁽¹⁾		25			33		26			49			55			84			142			191
Income tax expense (benefit) on adjusted net realized gains (losses)		(6	)		7		1			111			(4	)		2			(11	)		100

Operating income	$	897		$	788	$	745		$	827		$	891		$	2,430		$	2,493		$	3,320

(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 Operating income (loss) of each segment and Corporate:


																YTD			YTD			Full Year
	3Q-15			2Q-15			1Q-15			4Q-14			3Q-14			2015			2014			2014
Insurance – North American P&C	$	326		$	395		$	345		$	372		$	337		$	1,066		$	1,126		$	1,498
Insurance – Overseas General		330			240			241			294			348			811			869			1,163
Global Reinsurance		190			145			128			127			145			463			435			562
Corporate		(62	)		(74	)		(70	)		(87	)		(68	)		(206	)		(209	)		(296	)

Global P&C (including Corporate)		784			706			644			706			762			2,134			2,221			2,927
Insurance – North American Agriculture		56			15			35			45			57			106			51			96

Consolidated Results (including Corporate) Excluding Life Segment		840			721			679			751			819			2,240			2,272			3,023
Life		57			67			66			76			72			190			221			297

Consolidated operating income	$	897		$	788		$	745		$	827		$	891		$	2,430		$	2,493		$	3,320

Operating ROE

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


							YTD			YTD			Full Year
	3Q-15			3Q-14			2015			2014			2014
Net income	$	528		$	785		$	2,151		$	2,298		$	2,853
Operating income	$	897		$	891		$	2,430		$	2,493		$	3,320
Equity - beginning of period, as reported	$	29,555		$	30,325		$	29,587		$	28,825		$	28,825
Less: unrealized gains (losses) on investments, net of deferred tax		1,540			2,047			1,851			1,174			1,174

Equity - beginning of period, as adjusted	$	28,015		$	28,278		$	27,736		$	27,651		$	27,651

Equity - end of period, as reported	$	29,127		$	30,017		$	29,127		$	30,017		$	29,587
Less: unrealized gains (losses) on investments, net of deferred tax		1,285			1,757			1,285			1,757			1,851

Equity - end of period, as adjusted	$	27,842		$	28,260		$	27,842		$	28,260		$	27,736

Average equity, as reported	$	29,341		$	30,171		$	29,357		$	29,421		$	29,206
Average equity, as adjusted	$	27,929		$	28,269		$	27,789		$	27,956		$	27,694
Operating ROE		12.9	%		12.6	%		11.7	%		11.9	%		12.0	%
ROE		7.2	%		10.4	%		9.8	%		10.4	%		9.8	%


Reconciliation Non-GAAP 2		Page 23

ACE Limited

Non-GAAP Financial Measures - 3

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

(Unaudited)

Regulation G - Non-GAAP Financial Measures (continued)

Operating effective tax rate

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


																YTD			YTD			Full Year
	3Q-15			2Q-15			1Q-15			4Q-14			3Q-14			2015			2014			2014
Tax expense, as reported	$	134		$	143		$	120		$	232		$	176		$	397		$	402		$	634
Tax expense (benefit) on Chubb integration expenses		(2	)		—			—			—			—			(2	)		—			—
Tax expense (benefit) on adjusted net realized gains (losses)		(6	)		7			1			111			(4	)		2			(11	)		100

Tax expense, adjusted	$	142		$	136		$	119		$	121		$	180		$	397		$	413		$	534

Income before tax, as reported	$	662		$	1,085		$	801		$	787		$	961		$	2,548		$	2,700		$	3,487
Less: Chubb integration expenses		(9	)		—			—			—			—			(9	)		—			—
Less: adjusted realized gains (losses)		(393	)		128			(89	)		(210	)		(165	)		(354	)		(348	)		(558	)
Less: realized gains (losses) related to unconsolidated entities		25			33			26			49			55			84			142			191

Operating income before tax	$	1,039		$	924		$	864		$	948		$	1,071		$	2,827		$	2,906		$	3,854

Effective tax rate		20.0	%		13.2	%		15.0	%		29.5	%		18.3	%		15.5	%		14.9	%		18.2	%
Adjustment for tax impact of Chubb integration expenses		-0.1	%		—			—			—			—			0.0	%		—			—
Adjustment for tax impact of adjusted net realized gains (losses)		-6.4	%		1.5	%		-1.3	%		-16.8	%		-1.4	%		-1.5	%		-0.7	%		-4.3	%

Operating effective tax rate		13.5	%		14.7	%		13.7	%		12.7	%		16.9	%		14.0	%		14.2	%		13.9	%

Other income (expense) - operating

The following table presents the reconciliation of Consolidated Other income (expense) on a GAAP basis to Consolidated Other income (expense) - operating. Other income (expense) – operating is a non-GAAP financial measure which excludes gains (losses) from fair value changes in separate account assets that do not qualify for separate account reporting under GAAP and the portion of net realized gains and losses related to unconsolidated entities. Gains (losses) from fair value changes in separate account assets are reclassified from Other income (expense) for purposes of presenting Life underwriting income, as the offsetting movement in the separate account liabilities is included in Policy benefits. Net realized gains (losses) related to unconsolidated entities is excluded from operating income in order to enhance the understanding of our core results of operations as they are heavily influenced by, and fluctuate in part according to market conditions.

Note: Effective Q3 2015, amortization of intangible assets (previously reported in Other income (expense) - operating) are now reported separately. Prior year amounts are reclassified to conform to the current year presentation.


																YTD			YTD			Full Year
	3Q-15			2Q-15			1Q-15			4Q-14			3Q-14			2015			2014			2014
Consolidated GAAP Other income (expense):
Consolidated excluding Life segment	$	24		$	14		$	12		$	47		$	49		$	50		$	140		$	187
Life segment		(36	)		24			23			4			(3	)		11			(1	)		3

Consolidated		(12	)		38			35			51			46			61			139			190
Less: Gains (losses) from fair value changes in separate account assets
Consolidated excluding Life segment		—			—			—			—			—			—			—			—
Life segment		(49	)		6			11			(3	)		(6	)		(32	)		5			2

Consolidated		(49	)		6			11			(3	)		(6	)		(32	)		5			2
Less: Net realized gains (losses) related to unconsolidated entities
Consolidated excluding Life segment		13			16			12			43			51			41			142			185
Life segment		12			17			14			6			4			43			—			6

Consolidated		25			33			26			49			55			84			142			191
Consolidated Other income (expense) - operating:
Consolidated excluding Life segment		11			(2	)		—			4			(2	)		9			(2	)		2
Life segment		1			1			(2	)		1			(1	)		—			(6	)		(5	)

Consolidated	$	12		$	(1	)	$	(2	)	$	5		$	(3	)	$	9		$	(8	)	$	(3	)

P&C combined ratio

The following table presents the reconciliation of GAAP combined ratio to P&C combined ratio. The P&C combined ratio includes the impact of realized gains and losses 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 gains and losses on these derivatives as part of the results of our underwriting operations.


																YTD			YTD			Full Year
	3Q-15			2Q-15			1Q-15			4Q-14			3Q-14			2015			2014			2014
GAAP combined ratio		85.8	%		87.6	%		88.4	%		88.5	%		87.3	%		87.2	%		87.9	%		88.1	%
Impact of gains and losses on crop derivatives		0.1	%		0.1	%		0.0	%		0.0	%		-1.0	%		0.0	%		-0.4	%		-0.4	%

P&C combined ratio		85.9	%		87.7	%		88.4	%		88.5	%		86.3	%		87.2	%		87.5	%		87.7	%


Reconciliation Non-GAAP 3		Page 24

ACE Limited

Glossary

ACE Limited Consolidated comprises all segments including Corporate.

Operating return on equity (ROE) or ROE calculated using income excluding Chubb integration expenses, net of tax and adjusted net realized gains (losses), net of tax: Operating income or income excluding Chubb integration expenses and 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.

Chubb integration expenses, net of tax: Chubb integration expenses comprise legal and professional fees and all other costs directly related to the integration activities of the planned Chubb acquisition.


Glossary		Page 25

Chubb Ltd - FORM 8-K - EX-99.2 - October 20, 2015

Attached files

Chubb Ltd Reports