ACE Limited Reports Record Second Quarter Net Income of $467 Million; Income Excluding Net Realized Gains Increases 13% to $443 Million; Net Investment Income Increases 26% to $305 Million

Business Wire, July 25, 2005

HAMILTON, Bermuda -- ACE Limited (NYSE:ACE) today reported net income for the second quarter ended June 30, 2005 of $467 million or $1.58 per ordinary share after payment of preferred dividends, compared with net income of $423 million or $1.44 per share for the same quarter last year. Income excluding net realized gains (losses) after tax for the second quarter was $443 million, or $1.50 per share, compared with $391 million or $1.33 per share for the same quarter a year ago.(1)

Second Quarter Summary
               (in millions, except per share amounts)
                                               (Per Share - Diluted)
                      2005    2004    Change   2005    2004    Change
                      ----------------------   ----------------------
                            Restated                 Restated

Net income            $467    $423      10%    $1.58   $1.44    10%

Net realized gains,
 net of tax             24      32       -      0.08    0.11     -

Income excluding net
 realized gains,
 net of tax (1)       $443    $391      13%    $1.50   $1.33    13%

Net income for the first six months of 2005 was $904 million or $3.06 per share, compared with $877 million or $3.00 per share for the first six months of 2004. For the first six months of 2005, income excluding net realized gains (losses) after tax was $898 million or $3.04 per share, compared with $809 million or $2.76 per share for the same period of 2004.(1)

Six Months
               (in millions, except per share amounts)
                                               (Per Share - Diluted)
                      2005    2004    Change   2005    2004    Change
                      ----------------------   ----------------------
                            Restated                 Restated

Net income            $904    $877      3%     $3.06   $3.00     2%

Net realized gains,
 net of tax              6      68      -       0.02    0.24     -

Income excluding net
 realized gains,
 net of tax (1)       $898    $809     11%     $3.04   $2.76    10%

Evan Greenberg, President and Chief Executive Officer of ACE Limited, commented: "This was an excellent quarter for ACE, highlighted by record net income and strong operating income. Shareholders' equity exceeded $10 billion - a milestone - and reflects our continued and growing balance sheet strength. The quality of our earnings was excellent, with P&C underwriting income and investment income each contributing approximately 50 percent to our operating income for the quarter. Revenue growth slowed in line with market conditions. We are maintaining discipline, and our growth reflects that."

Second quarter operating highlights were as follows:

--P&C net premiums earned increased 7% over the prior year's quarter

--The P&C combined ratio was 90.4% for the quarter compared with 89.1% a year ago

--Operating cash flow amounted to $1.1 billion for the quarter

--Invested assets increased by $1.1 billion from March 31, 2005

--Net investment income increased 26% to $305 million compared to prior year's quarter

--Shareholders' equity increased 5% to $10.5 billion from March 31, 2005

--Tangible equity rose to $7.8 billion, a gain of 7% from March 31, 2005

--Debt to total capital ratio improved to 15.5% from 16.1% at March 31, 2005

--Return on equity for the quarter was 17.9%; excluding FAS 115 it was 18.7% (2)

--Diluted book value per share as of June 30, 2005 was $34.28 (3)

Financial results for the quarter by business segment compared with prior year's results follow. Further details are available in the financial supplement. Key items include:

--Insurance-North American: Net premiums written increased 6% for the quarter and the combined ratio was 90.1%.

--Insurance-Overseas General: Net premiums written declined 3% for the quarter and the combined ratio was 89.7%.

--Global Reinsurance: Net premiums written were flat for the quarter. This segment had a combined ratio of 80.2%.

--Financial Services: Income excluding net realized gains (losses) was $49 million for the quarter.

All amounts included herein for prior periods have been adjusted to reflect the previously reported restatements.

Please refer to the ACE Financial Supplement June 30, 2005, which is posted on the Company's website, for more detailed information on individual segment performance, together with additional disclosure on reinsurance recoverable, loss reserves, investment portfolio and capital structure. ACE's website reference (url) is http://media.corporate-ir.net/media_files/nys/ace/reports/fin_supp_jun e_30_2005.xls. (Due to the length of this URL, it may be necessary to copy and paste this hyperlink into your Internet browser's URL address field.)

ACE will host its second quarter 2005 earnings conference call and webcast on Tuesday, July 26, 2005 beginning at 8:30 a.m. EDT. The earnings conference call will be available via live and archived webcast at http://www.acelimited.com or by dialing 888-889-5602 (within the United States) or 973-582-2734 (international). Please refer to the ACE Limited website in the Investor Information section under Calendar of Events for details. A replay of the call will be available from Tuesday, July 26, 2005 until Friday, August 26, 2005. To listen to the replay dial 877-519-4471 (in the United States) or 973-341-3080 (international); passcode 6211276.