ACE Reports Strong Q3 Gains; Net Operating Income$304 Million

October 29, 2003

Bermuda’s ACE Limited reported a very good third quarter, with net operating income, which excludes gains/losses on investments, rising 105 percent to a record $304 million, or $1.04 per share, compared with $148 million or $0.53 per share for the same period in 2002.

ACE reported net income per share of $1.22, which included after-tax net realized gains of $51 million for the quarter, compared to a net loss of $0.24 per share for the quarter a year ago after considering $205 million in net realized losses. Net premiums written increased 4% to $2.3 billion for the quarter. “Out of total net premiums written, consolidated property and casualty increased by 27%, while Financial Services declined 78% reflecting the erratic nature of production in this segment,” said the bulletin

Chairman and CEO Brian Duperreault commented: “This was another excellent quarter for our Company that once again demonstrated the growing strength of our organization, our global presence and diversified product capability. ACE recorded increased income before net realized gains (losses) in every operating segment for the quarter. We remain optimistic about business conditions for the balance of the year and beyond.”

The announcement listed other “operating highlights” as follows:
— The P&C combined ratio was 91.6% for the quarter compared with 98.0% a year ago
— Current quarter catastrophe losses totaled $42 million or 1.9% of P&C earned premiums for the quarter, compared with $100 million, or 6.7% of P&C earned premiums in the comparable quarter of 2002
— Operating cash flow amounted to $1.1 billion for the quarter
— Net investment income increased 9% to $216 million
— Diluted book value per ordinary share increased to $27.76 from $24.16 at December 30, 2002, up 15%

It also noted that Shareholders’ equity is now $8.3 billion, “an increase of 31% from December 31, 2002,” while “tangible equity amounted to $5.6 billion, a gain of 53% in the first nine months. Total capital resources were $10.7 billion as of September 30, 2003. ACE’s debt to total capital ratio improved to 17.7%. Income before net realized gains as a percent of average equity, including the application of FAS 115, on an annualized basis totaled 15.2% for the quarter, and 16.8% excluding FAS 115.”

North American net premiums written rose 23% in the quarter and the combined ratio was 91.9% “reflecting the positive contributions made by the major business units.”

ACE said it will host its third quarter earnings conference call and webcast today Wednesday, October 29, 2003 beginning at 8:00 a.m. EST. The call is available via live and archived webcast at http://www.acelimited.com or by dialing 1-973-582-2745. Please refer to our website in the “Investor Information, Calendar of Events” for details. A replay of the call will be available from Wednesday, October 29, 2003 until Wednesday, November 12, 2003 at 5:00 p.m. EST. To listen to the replay, dial: 1-877-519-4471 (in the United States) or 1-973-341-3080 (international); passcode 4224312.

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