ACE Limited Reports Second Quarter Results

July 29, 2003

Hamilton, Bermuda-based ACE Limited reported the results of operations for the quarter ended June 30, 2003.

Highlights for the quarter are as follows:

Net income for the quarter was $371 million compared with net income of $104 million for the comparable quarter a year ago.

Net income per share was $1.32 for the quarter compared with $0.36 for the same quarter last year, an increase of 267 percent.

Income excluding net realized gains (losses) was $286 million compared with $229 million for the second quarter of 2002.

Earnings per share excluding net realized gains (losses) was $1.01 for the current quarter compared with $0.82 for the same quarter last year, an increase of 23 percent.

Net realized gains, net of income tax, were $85 million ($0.31 per share) compared with net realized losses of $125 million ($0.46 per share) for the same quarter in 2002. Net unrealized gains totaled $273 million compared with $107 million for the same quarter in 2002.

Diluted book value per Ordinary Share at June 30, 2003 was $27.24 compared with $24.16 at Dec. 31, 2002 and $24.21 at June 30, 2002.

Net premiums written increased 28 percent over the same quarter a year ago, while net premiums earned increased 46 percent quarter on quarter.

The combined ratio was 91.7 percent for the quarter compared to 91.5 percent for the second quarter 2002.

Operating cash flow was $978 million for the quarter compared with $427 million in the comparable quarter of 2002.

Net investment income rose 5 percent to $211 million for the quarter compared with $201 million in the prior year’s quarter.

Brian Duperreault, chairman and CEO of ACE Limited, commented: “If I had to single out a defining characteristic of the second quarter, I would point to the significant increase in our capital strength. Everything that happened this quarter contributed to our capital resources. We posted record income, generated positive gains in both our fixed income and equity portfolios, completed the conversion of $311 million of mezzanine securities to common equity and completed the issue of $575 million of perpetual preferred shares. The result was a 22% increase in shareholders’ equity for the quarter from $6.7 billion to $8.2 billion.”

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