ACE Posts $489 Million Q1 Net; to Host Conference Call

ACE Limited reported record net income for the first quarter ended March 31, 2006 of $489 million or $1.46 per common share after payment of preferred dividends, compared with net income of $437 million or $1.48 per share for the same quarter last year.

The bulletin noted that these “results include an $80 million pre-tax charge pertaining to the imminent settlement with certain governmental agencies of their investigations of various insurance industry business practices. Income excluding net realized gains (losses), investigation-related settlement charge and the cumulative effect of a change in accounting principle (cumulative effect), net of tax, for the first quarter was a record $543 million, or $1.63 per share, compared with $455 million or $1.54 per share for the same quarter of last year.”

ACE also reported additional “earnings highlights” as follows:
— P&C net premiums written increased 2 percent over the prior year quarter; excluding the impact of foreign exchange the increase was 4 percent
— The P&C combined ratio was 90.2 percent for the quarter. Excluding the investigation-related settlement charge the P&C combined ratio was 87.2 percent for the quarter compared with 88.5 percent a year ago
— Operating cash flow amounted to $1 billion for the quarter
— Cash and invested assets increased by $1.3 billion to $33.6 billion from year-end 2005
— Net unpaid losses and loss expenses increased $496 million to $20.9 billion from year-end 2005
— Net investment income increased 29 percent to $369 million over the prior year quarter
— Shareholders’ equity increased 3 percent to $12.2 billion from year-end 2005
— Tangible equity rose to $9.5 billion, a gain of 4 percent from year-end 2005
— Debt to total capital ratio improved to 14.5 percent from 14.8 percent at year-end 2005
— Return on average equity for the quarter was 16.3 percent; excluding FAS 115, it was 16.7 percent
— Book value per share as of March 31, 2006 was $35.68
— Upon adopting FAS 123R on January 1, 2006, the Company was required to expense employee stock options and its employee stock purchase plan resulting in an expense of $4 million in the current quarter.

Concerning its operating performance during the period, ACE noted the following:
— Insurance-North American: Net premiums written increased 2 percent for the quarter. The combined ratio was 87.3 percent.
— Insurance-Overseas General: Net premiums written decreased 4 percent for the quarter. The segment’s combined ratio was 87.1 percent.
— Global Reinsurance: Net premiums written were up 14 percent for the quarter. This segment had a combined ratio of 77.3 percent.
— Financial Services: Income excluding net realized gains (losses) decreased 10 percent to $37 million for the quarter.
— Life Insurance and Reinsurance: Net premiums written increased 2 percent for the quarter. Income excluding net realized gains (losses) increased 24 percent to $31 million for the quarter.

President and CEO Evan Greenberg commented: “We had an excellent quarter. All divisions of ACE performed well. Both operating and net income achieved record highs even after charges related to an investigation settlement. We anticipate revenue growth picking up in the second quarter. We are well-diversified, and while certain of our businesses are under growth pressure, we have growth opportunity in other areas of our business. The settlement that will be announced shortly will be a major step in achieving closure and finality to what has been a difficult two years for our company and the industry.”

ACE will host its first quarter 2006, quarter-end earnings conference call and webcast today, Wednesday, April 26, 2006 beginning at 8:30 a.m. EDT. The earnings conference call will be available via live and archived webcast at: www.acelimited.com or by dialing 800-811-7286 (within the United States) or 913-981-4902 (international); conference ID 8635348. Please refer to the ACE Limited website in the Investor Information section under Calendar of Events for details. A replay of the call will be available from approximately 11:30 a.m. EDT on Wednesday, April 26, 2006 until Friday, May 26, 2006. To listen to the replay, dial: 1-888-203-1112 (in the United States) or 1-719-457-0820 (international); passcode 8635348 (#).