ACE Details Brandywine Loss Reserves

December 18, 2006

ACE Limited has published additional details from the annual internal and biennial external reviews of the Company’s Brandywine run-off loss reserves, including asbestos and environmental liabilities.

The details are as follows:
— As a result of the internal review, the Company concluded that its net loss reserves for the Brandywine operations were adequate and, therefore, no change to the carried net reserve was required, while the gross loss reserves increased by approximately $200 million.
— The conclusions of the external review provided estimates of ultimate gross and net Brandywine liabilities that are lower than the same study two years ago. As a result, the difference in net loss reserves between the internal and external studies
has narrowed to approximately $100 million after-tax from $180 million after-tax two years ago.

— The Company’s best estimate falls comfortably within the range of outcomes produced by the external actuarial firm.

CFO Philip Bancroft commented: “The evaluation process for our direct gross and ceded exposures is ground-up, detailed and methodical. The process to model our ceded exposures includes refined estimates of third party reinsurance after allocation of detailed account and policy level information. This approach allows a detailed assessment of the collectibility of our reinsurance recoverable asset. The external actuaries both reviewed our model and subsequently used it when developing their estimate.”

ACE also noted that it “conducts an annual internal review of Brandywine loss reserves that includes an extensive ground-up evaluation of direct asbestos and environmental exposures. In addition, a biennial review is conducted by an independent actuarial consulting firm, as required by the Pennsylvania Insurance Department, as a condition of the 1996 Brandywine restructuring order.”

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