ACE 2d Quarter Shows 6% Premium Growth; Better Combined Ratio

July 26, 2006

ACE Limited has reported net income for the second quarter ended June 30, 2006 of $573 million or $1.72 per common share after payment of preferred dividends, compared with net income of $467 million or $1.58 per share for the same quarter last year.

Income excluding net realized gains (losses) for the second quarter was $579 million, or $1.74 per share, compared with $443 million or $1.50 per share for the same quarter a year ago.(1)

Evan Greenberg, president and chief executive officer of ACE Limited, cited the quarter’s highlights.

“This was another excellent quarter for ACE, marked by both record net and operating income. The property and casualty combined ratio was 88%. Our premium growth in the quarter reflects current market conditions globally, which in all remain favorable but mixed. We have a broad geographic and product reach and take a balanced approach to our business — capitalizing on opportunities when they make economic sense and walking away from business when it does not. For six months, our annualized ROE was 18%, which reflects an efficient use of capital,” Greenberg said.

According to Greenberg, second quarter operating highlights were as follows:

P&C net premiums written increased 6% over the prior year quarter

P&C net premiums earned increased 1% over the prior year quarter

The P&C combined ratio was 87.8% for the quarter compared to 90.3% a year ago

P&C underwriting income increased 28% over the prior year quarter

Operating cash flow amounted to $882 million for the quarter

Invested assets increased by $1.1 billion from March 31, 2006

Net unpaid losses and loss expenses increased $439 million to
$21.4 billion from March 31, 2006

Net investment income increased 28% to $390 million over the
prior year quarter

Shareholders’ equity increased 3% to $12.5 billion from March
31, 2006

Tangible equity rose to $9.8 billion, an increase of 3% from March 31, 2006

Debt to total capital ratio increased to 15.9% from 14.5% at
March 31, 2006

Return on average equity for the quarter was 19.3%(3)

Book value per share as of June 30, 2006 was $36.60(4)

Property and casualty net premiums earned are expected to grow between 2% and 3% for the full year.

The property and casualty combined ratio is expected to range between 88% and 90%. The company expects it to be at the high end of the range including the regulatory settlement of $80 million announced in the first quarter. This accounts for approximately seven-tenths of a percentage point on the combined ratio.

Source: ACE

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