ACE Reports $3 Million Q3 Net Loss

October 28, 2004

Bermuda’s ACE Limited reported a net loss for the third quarter ended Sept. 30, 2004 of $3 million or $(0.05) per common share after payment of preferred dividends, compared with net income of $355 million or $1.22 per share for the same quarter last year.

Ace noted: “Income excluding net realized gains (losses) for the third quarter was $31 million, or $0.07 per share, compared with $304 million or $1.04 per share for the same quarter of last year. The catastrophe losses from hurricanes and typhoons resulted in an after- tax charge of $406 million for the quarter or $1.42 per share compared with after-tax net catastrophe losses of $35 million or $0.12 per share in the third quarter of 2003. The combined ratio was 105.2 percent. If catastrophe losses were excluded the combined ratio would be 88.1 percent, a 1.5 point improvement over the comparable quarter in 2003.”

President and CEO Evan Greenberg commented: “Our income for the quarter was significantly impacted by an unprecedented series of large natural catastrophe events which overshadowed an otherwise strong quarter in terms of revenue, earnings and book value growth. Our claims organization and internal risk management systems were put to the test this quarter, and I am pleased to say that ACE came through with flying colors.”

ACE listed “other third quarter operating highlights” as follows:
— Net premiums written increased 20% to $2.8 billion, reflecting P&C net premium growth of 23% over 2003
— The P&C combined ratio increased to 105.0%. Excluding catastrophe losses the P&C combined ratio was 87.6% for the quarter compared with 89.7% a year ago
— Operating cash flow amounted to approximately $1.8 billion for the quarter
— Cash and invested assets increased by $1.3 billion from June 30, 2004
— Net investment income increased 17% to $252 million. P&C net investment income increased 37% over 2003
— Shareholders’ equity increased 3% from June 30, 2004 principally because net unrealized gains on investments exceeded our net loss for the quarter
— Tangible equity increased by $261 million, an increase from June 30, 2004 of 4%
— Debt to total capital ratio decreased to 16.8% from 19.8% at June 30, 2004. In June 2004, the Company sold $500 million of 10-year senior debt with a 5.875% coupon. The proceeds of this debt were used to redeem $75 million of callable debt in July and to refinance a maturing $400 million bond in August
— Annualized return on equity for the quarter ended Sept. 30, 2004 was 0.9%(2)
— Diluted book value per ordinary share as of Sept. 30, 2004 increased 3% to $31.29 from June 30, 2004(3).”

The complete report may be obained on the company’s Web site at:

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