ACE Limited

ACE LimitedJP Morgan 2003 InsuranceFixed Income Conference

March 13, 2003

2 ACE Limited

Application of the Safe Harbor of the Private Securities Litigation Reform Act of 1995:

Forward-looking statements are being made in this presentation; actual results could differ materially from projected results.

Some of the forward-looking statements may include references to financial forecasts, rating changes, the impact of financing plans, claims payments, rates, demand, credit spreads, profitability, income, growth potential, business mix, reserves, reinsurance recoverables, investments, expenses and tax rates.

Factors that could cause actual results to differ materially include, but are not limited to:(i) the competitive environment in which the Company operates;(ii) global political conditions, the occurrence of terrorist attacks or the outbreak of

war;(iii) rating agency actions;(iv) fluctuations in interest rates and other market conditions affecting investments

and financing opportunities;(v) the actual amount of new and renewal business and market acceptance of the

Company’s products;(vi) the occurrence of catastrophic events or other insured or reinsured events with a

frequency or severity exceeding the Company’s estimates, actual loss experience and the amount and timing of mitigating recoveries, including reinsurance collections;

(vii) credit developments among reinsurers;(viii) the uncertainities in the loss reserving and claims settlement process; and(ix) economic, legal, regulatory, litigation, judicial and legislative developments or

uncertainties.

See our SEC filings and our latest earnings press release and financial supplement , which are available on our website, particularly our safe harbor language, for more information on factors that could affect our forward looking statements.

Safe Harbor Disclosure

3 ACE Limited

Agenda

Company overview

2003 outlook

Asbestos

Rating agency update

4 ACE Limited

Business Overview

Leading property casualty insurance and reinsurance company with $43 billion in assets

Global platform with operations in almost 50

countries

Diversified product offerings in commercial lines, financial guaranty, personal lines, accident and health insurance and reinsurance

Publicly-traded since 1993; founded in 1985

5 ACE Limited

Key Objectives

Underwriting profitability, even if it means exiting a line of business

Diversification of products and geography achieved via internal growth and acquisitions, as appropriate

ROE of 15% or better

6 ACE Limited

Business Segments

$8.1 billion in net premiums written in 2002

Insurance-North American is largest premium source with $2.9 billion or 36% of total premiums

Insurance-Overseas General is second largest segment with premium of $2.7 billion or 34% of total premiums

Financial Services premium is variable, as loss portfolio transfer (LPT) business skews results.

2002 Net Premiums Written

$936

$2,716

$2,919

$1,497

Ins-North American Ins-Overseas General Global Reinsurance Financial Services

$ in Millions

(36%)

(34%)

(18%)

(12%)

7 ACE Limited

Business Segments

Operating earnings before the $354 million asbestos and environmental charge totaled $865 million

Insurance-North American is the largest segment at 42% of operating earnings before corporate expenses

Global Reinsurance is the second largest earnings contributor at 28%

* Excluding $354 million after-tax charge for A&E prior period reserve development

2002 Operating Earnings before Corporate Expenses

$451

$116

$296

$202

Ins-North America Ins-Overseas General

Global Reinsurance Financial Services

(43%)

(11%)

(27%)

(19%)

$ in Millions

8 ACE Limited

Insurance – North American

Premium growth in 2002 driven by:

Rate increases New products ($200

million GPW)

Indicative rate increases U.S. casualty up 75% U.S. D&O up 90%

1,891 1,986

2,846

73

468797

22

2000 2001 2002 4Q-01 4Q-02

Net Premiums Written

P&C Life & Health

43%

70%

$ in Millions

5%

9 ACE Limited

Insurance – North American

2002 adjusted loss rate of 68.0% flat with 2001’s despite rate increases

Change in business mix Prior year reserve

development higher in 2002 than 2001

2002 satellite losses 2002 underwriting and

administrative expense ratio down to 22.5% from 28.7% in 2001

Greater proportion of lower commission D&O and E&O business

Administrative expenses up less than earned premium growth

65.1%

27.3%

68.2%

7.4%

28.7%

68.0%

20.9%

22.5%

2000 2001 2002

Combined Ratio

Adj. loss ratio 9/11 loss ratio A&E loss ratio Expense ratio

92.4%104.3%

111.4%

10 ACE Limited

42%

Insurance – Overseas General

Business expansion and rate increases driving premium growth in all regions

Japanese market is an exception; flat except for introduction of new fire lines

P&C rates up, with exception of aviation, in ACE Global Markets

Increased reinsurance costs suppressed net premium growth in 2002 at ACE GM

2,004

1,442

712

1,929

787

362

259514

282

2000 2001 2002 4Q-01 4Q-02

2002 Net Premiums Written

ACE Global Markets ACE International

$ in Millions

11%

34%

9%

42%

11 ACE Limited

Insurance – Overseas General

2002 adjusted combined ratio down modestly compared to 2001

ACE Global Markets turnaround continues; 2002 combined ratio of 109.3% versus 107.3% 9/11 adjusted 2001 (124.3% unadjusted)

ACE International level; 2002 combined ratio of 95.5% versus 109.9% 9/11 adjusted 2001 (111.6% unadjusted)

* Adjusted for 9/11 claims and casualty reserve charge in 2001

60.5%

38.8%

60.6%

14.9%

39.7%

60.8%

38.6%

2000 2001 2002

Combined Ratio

Adjusted loss ratio Large losses Expense ratio

99.3%

115.2%

99.4%

12 ACE Limited

Global Reinsurance

P&C growth driven by diversification initiative and rate increases

4Q-01 large life deal skews life and total premium comparisons for 2002

Life segment will be included in Global Reinsurance going forward

252354

408

777

159

18

345

9447

2000 2001 2002 4Q-01 4Q-02

Net Premium Written

P&C Life and A&H

$ in Millions

120%

422%

29%

13 ACE Limited

Global Reinsurance

Increase in 2002 loss ratio reflects growth of casualty business

Catastrophe losses were relatively light in 2002

Expense ratio reflects lower administrative expense ratio as premium growth far in excess of administrative expense growth

21.0%

24.9%

30.1%

67.6%

30.0%

44.9%

24.0%

2000 2001 2002

Combined Ratio

Adjusted loss ratio 9/11 loss ratio Expense ratio

14 ACE Limited

Financial Services

4 business units in NY and Bermuda

Financial guaranty includes municipal and structured finance bond (re)insurance; title, mortgage and trade credit reinsurance; CDO insurance and credit default swaps.

Financial solutions includes finite risk reinsurance, loss portfolio transfers, CDO insurance and other structured underwritings.

$110

$92

Financial Guaranty Financial Solutions

Operating Earnings

(45%)

(55%)

$ in Millions

15 ACE Limited

Financial Services

$81.8 billion portfolio

Muni portfolio rated A on average

Par up 4% over 2001

Non-muni portfolio rated AA- on average

Par up 20% over 2001

Single name corporate swap portfolio down 17% since 2001

Par Outstanding Dec. 31, 2002

10.3% 15.6%

61.3%0.7%

2.5%

4.2%

5.4%

Consumer rec. Sr. layer DCOSMunicipal Funded equity CDO'sOther Commercial rec.Single name swaps

Financial Guaranty Portfolio

16 ACE Limited

Consolidated

Operating segment adjusted earnings up 20% in 2002

Debt repayment in corporate segment reduced corporate loss 6%

Consolidated adjusted operating income up 28%

Adjusted 2002 ROE 13.1% versus target of 15%

$ in Millions

Financial Summary

2000 2001 2002

%

Change

02/01

Segment operating income $804 $144 $711 NMFAdj. segment operating income 804 888 1065 20%

Corporate expenses (222) (213) (200) (6%)Consolidated operating income 582 (69) 511 NMFAdj. operating income 582 675 865 28%

17 ACE Limited

Balance Sheet

Most asset changes driven by business growth and strong cash flow

Reinsurance recoverables include $1.9 billion gross increase after A&E charge

Total Assets

2001 2002

%

Change

02/01

Investments and cash $15.9 $18.3 15%Insurance rein. receivables 2.5 2.7 5%Reinsurance recoverables 11.4 14.0 23%DAC 0.7 0.8 23%Prepaid insurance 1.2 1.7 41%Goodwill 2.8 2.8 2%Deferred tax asset 1.3 1.3 3%Other assets 1.4 1.8 37%

Total Assets $37.2 $43.4 17%

$ in Billions

18 ACE Limited

Investment Portfolio

$17.2 billion fixed income portfolio

$2.4 billion in consolidated cash flow supported portfolio growth

High credit quality; average rating of AA

Duration of 3.1 years

Yield of 4.4% down from 5.25% at year end 2001

Fixed Income Rating Distribution

AA

AAAA

BBB BB B Other(.5%)(5%)(4%)

(8%)

(17%)

(17%)

(49%)

$ in Millions

19 ACE Limited

Investment Portfolio

Fixed Income Asset Allocation

MBS

Agency

Corporate

Cash & CETreasury

ABS

MunicipalNon-US

Cash & CE Treasury AgencyCorporate MBS ABSMunicipal Non-US

(2%)

(7%)(9%) (15%)

(5%)

(3%)

(40%)

(19%)

$ in Millions

20 ACE Limited

Balance Sheet

Policy liability growth due to business growth and A&E change

Total debt and preferred stock declined during year

Gain due to lower interest rates greater than unrealized losses on credit impairments, credit default swaps, equity and bond swaps

Total Liabilities and Shareholders’ Equity$ in Billions

2001 2002

%

Change

02/01

Unpaid losses/ future policy benefits $21.1 $24.8 17%Unearned premiums 3.9 5.6 45%Debt 1.8 1.9 3%Trust preferred securities 0.9 0.5 (46%)Other liabilites 3.1 3.9 29%

Total Liabilities 30.8 36.7 19%

Mezzanine Equity 0.3 0.3 0%

Shareholder's equity 6.0 6.0 (1%)Other Comprehensive Income 0.1 0.4 331%

Shareholders' Equity 6.1 6.4 5%

21 ACE Limited

Planned Financing:Impact on Balance Sheet at 12/31/02

12/31/2002 12/31/2002Actual Pro forma

Short term debt 150$ 150$ Long term debt 1,749$ 1,749$ Total Debt 1,899$ 1,899$

Trust preferreds (TRUPS) 475$ 475$

Mezzanine (Mezz) 311$ 311$

Preferred Stock 500$

Stockholders equity 6,299$ 6,299$ Less Goodwill 2,717$ 2,717$ Tangible Equity* 3,582$ 3,582$

Total Capital 8,984$ 9,484$ Less Goodwill 2,717$ 2,717$ Tangible Capital* 6,267$ 6,767$

*To be conservative, tangible equity or tangible capital does not include credit for the preferred stock issue.

22 ACE Limited

Planned Financing: Impact on Leverage Ratios

1) Key Assumptions:- $500mm of perpetual preferred stock issued at 8%. - Mezzanine equity becomes common equity in Q2/03.- Preferred stock included as equity

Ratios1 12/31/2001 12/31/2002 12/31/2003Actual Actual proforma

D/Total Capital 20.2% 20.9% 18.1%D+Trups+Mezz/Total Capital 33.2% 29.6% 22.7%D+Trups+Mezz/Tangible Capital 47.6% 42.6% 30.8%D+Trups+Mezz/Tangible Equity 90.9% 74.3% 44.6%

23 ACE Limited

2003 Outlook

Pricing cycle remains firm, with lower or less rate increases in some segments

Property catastrophe rates relatively stable for 2003 renewals

European pricing moved up after US; expect this to continue

Demand for terrorism coverage modest

Credit spreads remain wide

24 ACE Limited

2003 Guidance

P&C net premium earned growth of 30-33%

Combined ratio excluding Financial Services of 90 – 92%, including $100 million of catastrophe losses in Global Reinsurance segment

Investment income of $845 – 865 million

Financial Services operating income growth of 15 – 20%

Interest expense of $215 – 225 million

Consolidated tax rate of 18 – 20%, although 16 – 18% in 1Q-03

25 ACE Limited

Brandywine Asbestos & Environmental Exposure

1995 – Restructuring order CIGNA agreed to $800 million reinsurance protection and a

dividend retention reserve

1999 – ACE’s acquisition of CIGNA P&C operations

Purchased $2.5 billion reinsurance protection from NICO

26 ACE Limited

Analysis of Reserve Adjustment

$ in MillionsTotal

Gross Reserve Addition $2,178 Ceded to Third Parties (1,327)Net Before NICO 851 Cession to NICO (533)Net Reserve Addition 318

Bad Debt Provision 14510% ACE Bermuda Participation 53Total Change in Reserve Need and Bad Debt $516

After Tax Charge $354

27 ACE Limited

Gross Brandywine Asbestos Liabilities

% of Total EstimatedNumber of Gross Paid Gross Ultimate Unpaid Three Year

Policyholders 2000 - 2002 2000 - 2002 12/31/2002 Survival Ratio($ 000's) ($ 000's)

Resolved with Payment 18 112,277 16.5% 21 0.0 Reserved at Policy Limits or Settlement Amounts 15 70,802 10.4% 191,770 8.1 Reserved at Policy Limits + Provision for Non-Products 3 27,972 4.1% 68,959 7.4 Other Known 14 84,102 12.3% 229,807 8.2 No Known Policies 10 - - - -Total 60 295,153 43.3% 490,557 5.0

Other Direct Exposures with Estimated Liability > $2 Million 75 150,345 22.1% 670,537 13.4

Other Direct Exposure with Estimated Liability < $2 Million 1,491 49,209 7.2% 65,000 4.0

Assumed Reinsurance - 186,413 27.4% 762,000 12.3

Additional IBNR Not Allocated - - - 730,400 -

Total 1,626 681,120 100.0% 2,718,494 12.0

Three Year Survival Ratio eliminating the 60 Major Asbestos Manufacturers/Producers: 17.3

60 Major Asbestos Manufacturers/Producers

28 ACE Limited

Estimated Brandywine Claims Payments

0

50

100

150

200

250

300

Cal

end

ar Y

ear

Cla

ims

Pay

men

ts N

et o

f T

hir

d P

arty

Rei

n. P

aym

ents

($

Mill

ion

s)

2007 2012 2017 2022 2027 2032 2037 2042 2047

Year of Loss Payment

ACE

NICO

NICO 90% / ACE 10%

ACE

29 ACE Limited

Rating Agency Update:Recent Actions

S&P On Credit Watch Negative - affirmed commercial paper

rating (A2) and indicated that debt and financial strength ratings may stay the same or fall by 1 or 2 notches. Watch does not include ACE Guaranty or ACE Capital Re and subsidiaries.

Moody’s Under Review for Possible Downgrade - indicated that

debt ratings may fall by one notch. Other financial strength ratings expected to stay the same except for Brandywine which is also under review.

30 ACE Limited

Rating Agency Update: Recent Actions

Fitch Ratings watch negative - all debt ratings and financial

strength ratings for INA Holdings subsidiaries. Brandywine and Century Indemnity downgraded from BBB to BBB-.

AM Best Have not commented publicly. Furnished additional

information on recoverables, reserves and 2003 projections.

31 ACE Limited

Key Financial Strength Ratings

Segment Legal Entity

S&P AM Best

Global Reinsurance ACE Tempest Life Reinsurance, Ltd. A+

ACE Tempest Reinsurance Ltd. A+ A+

Insurance North America ACE Bermuda Insurance Ltd. A+ A+

(Intercompany Pool) ACE American Insurance Co.& 9 other US companies A+ A

(Quota Share Co) 8 State Cos and ACE American Lloyd's Insurance Co. A+ A

(Westchester Group) Westchester Fire Insurance Co. A+ A

(Brandywine Group) 3 companies - ACE American Re, Century Indemnity/Re BBB B+

Overseas General Japan - ACE Insurance A-

Puerto- Rico - ACE Insurance Co. A

Australia - ACE Insurance Co. A A

New Zealand - ACE Insurance Co. A

Europe -ACE Insurance S.A. N.V.* A+ A

Canada - ACE INA Insurance Co. BBBpi A

Financial Services ACE Capital Re AA NR-1

ACE Guaranty Re Inc. AAA NR-1

FINANCIAL STRENGTH

*ACE Global Markets (Syndicate 2488) has a Aa3 rating from Moody’s ACE INA UK also rated A+ by S&P.

32 ACE Limited

Key Debt Ratings

Category Holding Company Debt Instrument Moody's S&P

Commercial paper ACE Limited $750M commercial paper program P-1 A-2ACE INA Holdings Inc. $2.05B commercial paper program P-1 A-2

Senior unsecured debt ACE Limited $500M 6.0% senior debt due 03/19/07 A2 A-ACE INA Holdings Inc. $100M 8.875% debentures due Aug 15, 2029 A2 A-

$400M 8.2% senior unsecured notes due Aug 15, 2004 A2 A-$300M 8.3% senior unsecured notes due Aug 15, 2005 A2 A-

Preferred Stock ACE Limited $311M 8.25% convertible preferred due 6/16/03 Baa1 BBBACE INA Holdings Inc. $100M 8.875% trust preferred due 12/31/2029 A3 BBB

$300M 9.7% capital securities due 04/01/30 A3 BBBACE Financial Services Inc. $75M 7.65% trust preferreds due 1/31/2044 A3 BBB

Private Debt Transactions ACE US Holdings, Inc. $250M 9.2% senior notes NR* NRACE INA Holdings, Inc. $200M 11.2% subordinated notes NR NR

*NR = Not rated