UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _____________ to _____________
Commission File No. 1-11778 I.R.S. Employer Identification No. N/A
ACE LIMITED
(Incorporated in the Cayman Islands)
The ACE Building
30 Woodbourne Avenue
Hamilton HM 08
Bermuda
Telephone 441-295-5200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
YES ____X____ NO _________
The number of registrant's Ordinary Shares ($0.125 par value) outstanding
as of February 6, 1997 was 57,176,085.
1
ACE LIMITED
INDEX TO FORM 10-Q
Part I. FINANCIAL INFORMATION
-------------------------------
Page
No.
--------
Item 1. Financial Statements:
Consolidated Balance Sheets
December 31, 1996 (Unaudited) and September 30, 1996 3
Consolidated Statements of Operations (Unaudited)
Three Months Ended December 31, 1996 and December 31, 1995 4
Consolidated Statements of Shareholders' Equity (Unaudited)
Three Months Ended December 31, 1996 and December 31, 1995 5
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended December 31, 1996 and December 31, 1995 6
Notes to Interim Consolidated Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Results of Operations 10
and Financial Condition
Part II. OTHER INFORMATION
---------------------------
Item 4. Submission of matters to a vote of security holders 24
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 24
Signatures 25
2
ACE LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31 September 30
1996 1996
----------- ------------
(unaudited)
(in thousands of U.S.
Dollars, except share
and per share data)
ASSETS
Investments and cash
Fixed maturities available for sale,
at fair value (amortized cost - $3,345,862
and $3,394,437) $3,370,700 $3,389,762
Equity securities, at fair value (cost -
$353,846 and $257,049) 416,090 323,005
Short-term investments, at fair value
(amortized cost - $363,334 and $376,680) 363,252 376,680
Other investments, at cost 12,453 12,453
Cash 93,504 53,374
--------- ---------
Total investments and cash 4,255,999 4,155,274
Goodwill on Tempest acquisition 200,473 201,742
Accrued investment income 39,088 42,728
Deferred acquisition costs 30,732 34,546
Premiums and insurance balances receivable 84,601 85,033
Prepaid reinsurance premiums 24,269 15,421
Other assets 112,283 39,614
--------- ---------
Total assets $4,747,445 $4,574,358
========== ==========
LIABILITIES
Unpaid losses and loss expenses $1,870,619 $1,836,113
Unearned premiums 354,793 398,731
Premiums received in advance 49,101 26,381
Reinsurance balances payable 15,154 3,471
Accounts payable and accrued liabilities 78,707 54,913
Dividend payable 10,702 10,471
---------- ----------
Total liabilities 2,379,076 2,330,080
========== ==========
Commitments and contingencies
SHAREHOLDERS' EQUITY
Ordinary Shares ($0.125 par value, 100,000,000
shares authorized; 57,937,585 and 58,170,755
shares issued and outstanding) 7,241 7,271
Additional paid-in capital 1,151,572 1,156,194
Unearned stock grant compensation (3,524) (1,299)
Net unrealized appreciation on investments 87,000 61,281
Cumulative translation adjustments (318) 131
Retained earnings 1,126,398 1,020,700
---------- ----------
Total shareholders' equity 2,368,369 2,244,278
---------- ----------
Total liabilities and shareholders' equity $4,747,445 $4,574,358
========== ==========
See accompanying notes to interim consolidated financial statements
3
ACE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 1996 and 1995
(Unaudited)
1996 1995
-------- --------
(in thousands of U.S. Dollars,
except share and per share data)
REVENUES
Gross premiums written $ 132,512 $ 131,481
Reinsurance premiums ceded (21,898) (2,686)
--------- ---------
Net premiums written 110,614 128,795
Change in unearned premiums 53,786 (12,811)
--------- ---------
Net premiums earned 164,400 115,984
Net investment income 59,738 47,126
Net realized gains on investments 41,723 44,602
--------- ---------
Total revenues 265,861 207,712
--------- --------
EXPENSES
Losses and loss expenses 110,150 92,924
Acquisition costs 14,129 12,114
Administrative expenses 15,841 9,138
---------- --------
Total expenses 140,120 114,176
---------- --------
NET INCOME $ 125,741 $ 93,536
========== =========
Earnings per share $ 2.14 $ 2.02
========== ==========
Weighted average shares outstanding 58,886,255 46,327,982
========== ==========
See accompanying notes to interim consolidated financial statements
4
ACE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Three Months Ended December 31, 1996 and 1995
(Unaudited)
1996 1995
---------- ----------
(in thousands of U.S. Dollars)
Ordinary Shares
Balance - beginning of period $ 7,271 $ 5,764
Exercise of stock options 2 --
Repurchase of shares (32) (1)
---------- ---------
Balance - end of period 7,241 5,763
---------- ---------
Additional paid-in capital
Balance - beginning of period 1,156,194 548,513
Exercise of options for Ordinary Shares 393 --
Repurchase of Ordinary Shares (5,015) (72)
---------- ---------
Balance - end of period 1,151,572 548,441
---------- ---------
Unearned stock grant compensation
Balance - beginning of period (1,299) (1,796)
Stock grants awarded (2,626) (17)
Stock grants forfeited -- 60
Amortization 401 254
---------- ---------
Balance - end of period (3,524) (1,499)
---------- ---------
Net unrealized appreciation (depreciation) on investments
Balance - beginning of period 61,281 94,694
Net appreciation during period 25,719 37,756
---------- ---------
Balance - end of period 87,000 132,450
---------- ---------
Cumulative translation adjustments
Balance - beginning of period 131 --
Net adjustment for period (449) --
---------- ---------
Balance - end of period (318) --
---------- ---------
Retained earnings
Balance - beginning of period 1,020,700 795,488
Net income 125,741 93,536
Dividends declared (10,430) (6,455)
Repurchase of Ordinary shares (9,613) (96)
---------- ---------
Balance - end of period 1,126,398 882,473
---------- ---------
TOTAL SHAREHOLDERS' EQUITY $2,368,369 $1,567,628
========== ==========
See accompanying notes to interim consolidated financial statements
5
ACE LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended December 31, 1996 and 1995
(Unaudited)
1996 1995
--------- --------
(in thousands of U.S. Dollars)
Cash flows from operating activities
Net income $ 125,741 $ 93,536
Adjustments to reconcile net income to net cash
provided by operating activities
Unearned premiums (43,938) 12,811
Unpaid losses and loss expenses 34,506 70,918
Prepaid reinsurance premiums (8,848) --
Net realized gains on investments (41,723) (44,602)
Amortization of premium/discount (1,595) (2,450)
Deferred acquisition costs 3,814 (2,313)
Insurance balances receivable 432 (4,834)
Premiums received in advance 22,720 22,806
Reinsurance balances payable 11,683 --
Accounts payable and accrued liabilities (16,384) 2,550
Other 353 (3,247)
---------- --------
Net cash flows from operating activities 86,761 145,175
---------- --------
Cash flows from investing activities
Purchases of fixed maturities (1,890,148) (2,080,726)
Purchases of equity securities (239,903) (52,783)
Sales of fixed maturities 1,979,112 1,960,987
Sales of equity securities 141,500 54,323
Maturities of fixed maturities -- 12,000
Net realized gains on financial futures contracts 17,688 14,844
Acquisition of subsidiaries, net of cash acquired (30,416) --
---------- ---------
Net cash used in investing activities (22,167) (91,355)
---------- --------
Cash flows from financing activities
Repurchase of Ordinary Shares (14,658) (169)
Proceeds from exercise of options for Ordinary Shares 395 --
Dividends paid (10,201) (6,456)
---------- ---------
Net cash used for financing activities (24,464) (6,625)
---------- ---------
Net increase in cash 40,130 47,195
Cash - beginning of period 53,374 16,929
---------- ---------
Cash - end of period $ 93,504 $ 64,124
========== =========
See accompanying notes to interim consolidated financial statements
6
ACE LIMITED AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General
The interim consolidated financial statements, which include the accounts
of the Company and its subsidiaries, have been prepared on the basis of
accounting principles generally accepted in the United States of America
and, in the opinion of management, reflect all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of results for
such periods. The results of operations and cash flows for any interim
period are not necessarily indicative of results for the full year. These
financial statements should be read in conjunction with the consolidated
financial statements, and related notes thereto, included in the Company's
1996 Annual Report on Form 10-K.
On November 26, 1996, the Company, through its wholly-owned subsidiary
ACE UK Limited, acquired Ace London Holdings Ltd. ("Ace London")
(formerly Ockham Worldwide Holdings PLC) a wholly owned
subsidiary of Ockham Holdings PLC. Ace London owns two Lloyd's
of London ("Lloyd's") managing agencies, ACE London Aviation
Limited ("ALA") (formerly Ockham Sturge Aviation Agency Ltd.) and ACE
London Underwriting Limited ("ALU") (formerly Ockham Worldwide Agency
Ltd.). Together these two agencies manage six syndicates with total
underwriting capacity for the 1997 year of account of 361 million pounds
(approximately $614 million). Ace London also owns a Lloyd's
corporate member which provides funds at Lloyd's to support underwriting
on these syndicates. The Company is providing funds at Lloyd's of
approximately 7.5 million pounds (approximately $13 million), which is
primarily in the form of a letter of credit, supporting approximately 15
million pounds (approximately $25 million) of premium writing capacity to
the syndicates managed by ALA and ALU for the 1997 year of account. The
acquisition has been recorded using the purchase method of accounting.
On November 26, 1996, the Company through its wholly-owned subsidiary ACE
UK Limited, also acquired the remaining 49 percent interest in Methuen
Group Limited ("Methuen"), the holding company for Methuen Underwriting
Limited, which it did not already own. The Company had originally acquired
a 51 percent interest in Methuen on March 27, 1996. The acquisition of the
remaining 49 percent interest has been recorded using the purchase method
of accounting.
At December 31, 1996 approximately 61 percent of the Company's written
premiums came from North America with approximately 33 percent coming from
the United Kingdom and continental Europe and approximately 6 percent
from other countries.
2. Commitments and Contingencies
A number of the Company's insureds have given notice of claims relating to
breast implants or components or raw material thereof that had been
produced and/or sold by such insureds. Lawsuits including class actions,
involving thousands of implant recipients have been filed in both state and
federal courts throughout the United States. Most of the federal cases
have been consolidated pursuant to the rules for Multidistrict Litigation
("MDL") to a Federal District Court in Alabama.
7
On April 1, 1994, the judge presiding over the MDL proceeding gave
preliminary approval to a global settlement agreement in the approximate
amount of $4.2 billion and conditional certification to a settlement class
("Global I").
On May 15, 1995, the Dow Corning Corporation, a significant participant in
the Global I settlement, filed for protection under Chapter 11 of the U.S.
Bankruptcy Code.
As of June 1, 1995, over 440,000 registrations were received by the Global
I Claims Administrator. Approximately 248,500 of these were filed by
domestic class members by the September 16, 1994 deadline for making claims
under the Current Disease Compensation Program. Based on an analysis of
about 3,000 of these registrations, the judge concluded that a severe
racheting (or reduction) of the settlement amounts shown in the notice of
settlement would occur if current claims were evaluated under the existing
criteria and if funding of the Current Disease Compensation Program
remained at the $1.2 billion level.
Because of the anticipated racheting of benefit amounts and the defendants'
right to withdraw under the Global I settlement, the judge entered an order
on October 9, 1995 declaring that class members had new opt-out rights and
that, in general, class members and their attorneys should not expect to
receive any benefits under Global I.
On October 1, 1995, negotiators for three of the major defendants agreed on
the essential elements of a revised individual settlement plan for domestic
class members with at least one implant from any of those manufacturers
("Settlement II"). In general, under Settlement II, the amounts payable to
individual participants, and the manufacturers' obligations to make those
payments, would not be affected by the number of class members electing to
opt out from the new plan. Also, in general, the compensation would be
fixed rather than subject to potential further racheting, and the
manufacturers would not have a right to walk away because of the amount of
claims payable. Finally, each defendant agreed to be responsible only for
cases in which its implant was identified, and not for a percentage of all
claims.
By November 13, 1995, Settlement II was approved by the three major
defendants. In addition, two other defendants became part of Settlement
II, although certain of their settlement terms are different and more
restricted than the plan offered by the original three defendants.
On December 22, 1995, the judge approved Settlement II and the materials
for giving notice to claimants although several appeals concerning
Settlement II have been lodged with the Eleventh Circuit Court of Appeals.
In mid-January 1996, the three major defendants each made a payment of $125
million to a court-established fund as an initial reserve for payments to
be made under Settlement II. The Claims Administrator is sending out
notifications of status and advance payments to claimants who submitted
implant manufacturer proof. The estimated total cost of Settlement II and
the number of opt-outs is not presently known.
Although the Company has underwritten the coverage for a number of the
defendant companies including four of the companies involved in the revised
Settlement II described above, the Company anticipates that insurance
8
coverage issued prior to the time the Company issued policies will be
available for a portion of the defendants' liability. In addition, the
Company's policies only apply when the underlying liability insurance
policies or per occurrence retentions are exhausted.
At June 30, 1994, the Company increased its then existing reserves relating
to breast implant claims. Although the reserve increase was partially
satisfied by an allocation from existing IBNR, it also required an increase
in the Company's total reserve for unpaid losses and loss expenses at June
30, 1994 of $200 million. The increase in reserves was based on
information made available in conjunction with Global I (including
information relating to opt-outs) and information made available from the
Company's insureds and was predicated upon an allocation between coverage
provided before and after the end of 1985 (when the Company commenced
underwriting operations). No additional reserves relating to breast
implant claims have been added since June 30, 1994.
The Company continually evaluates its reserves in light of developing
information and in light of discussions and negotiations with its insureds.
In August 1996, the Company settled with one of its policyholders, a breast
implant manufacturer, for a sum of money to be paid out over a number of
years in the future. The settlement is consistent with the Company's
belief that its reserves are adequate. Significant uncertainties continue
to exist with regard to the ultimate outcome and cost of Settlement II and
the number and value of the opt-out claims. While the Company is unable at
this time to determine whether additional reserves, which could have a
material adverse effect upon the financial condition, results of operations
and cash flows of the Company, may be necessary in the future, the Company
believes that its reserves for unpaid losses and loss expenses including
those arising from breast implant claims are adequate as at December 31,
1996.
3. Shares Issued and Outstanding
On August 9, 1996, the Board of Directors terminated the then existing
share repurchase program and authorized a new program for up to $100.0
million of the Company's Ordinary Shares. During the quarter ended
December 31, 1996, the Company repurchased 255,000 Ordinary Shares under
the share repurchase program for an aggregate cost of $14.7 million. As at
December 31, 1996, approximately $51.0 million of the Board authorization
had not been utilized.
4. Restricted Stock Awards
During the current quarter, 44,725 restricted Ordinary Shares were awarded
to officers of the Company and its subsidiaries. These shares vest at
various dates through November 1999.
5. Line of Credit
The Company has a committed line of credit provided by a syndicate of six
major international banks, led by Morgan Guaranty Trust Company of New York
("Morgan") which provides for unsecured borrowings up to an aggregate
amount of $50 million. The line of credit agreement requires the Company
to maintain consolidated tangible net worth of not less than $1.25 billion.
9
At December 31, 1996, there were no outstanding loans under this
arrangement.
With effect from November 22, 1996, the same syndicate of banks have also
provided up to approximately 71 million pounds (approximately $120 million)
for a five year, collateralized letter of credit ("LOC"), which will
primarily be used to provide funds at Lloyd's to support underwriting
capacity on Lloyd's syndicates in which the Company participates. Certain
assets, amounting to 115 percent of the value of the LOC, have been
pledged as collateral for the LOC. At December 31, 1996 there were no
drawdowns on the LOC.
6. Reclassification
Certain items in the prior period financial statements have been
reclassified to conform with the current period presentation.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
---------------------------------------------
General
The following is a discussion of the Company's results of operations,
financial condition, liquidity and capital resources as of and for the
three months ended December 31, 1996. The results of operations and cash
flows for any interim period are not necessarily indicative of results for
the full year. This discussion should be read in conjunction with the
consolidated financial statements, related notes thereto and the
Management's Discussion and Analysis of Results of Operations and Financial
Condition included in the Company's 1996 Annual Report on Form 10-K.
ACE Limited ("ACE") is a holding company which, through its Bermuda-based
operating subsidiaries, A.C.E. Insurance Company, Ltd. ("ACE Insurance"),
Corporate Officers & Directors Assurance Ltd. ("CODA") and Tempest
Reinsurance Company Limited ("Tempest"), provides insurance and reinsurance
for a diverse group of international clients. In addition, the Company
provides funds at Lloyd's of London ("Lloyd's") to support underwriting by
syndicates managed by Methuen Underwriting Limited ("MUL") ACE London
Aviation Limited ("ALA") and ACE London Underwriting Limited ("ALU"), each
indirect wholly owned subsidiaries of ACE.. The term "the Company" refers
to ACE and its subsidiaries, excluding Methuen (as defined below) and
Ace London (as defined below).
On July 1, 1996, the Company completed the acquisition of Tempest, a
leading Bermuda-based property catastrophe reinsurer. Tempest underwrites
property catastrophe reinsurance on a worldwide basis, emphasizing excess
layer coverages, and has large aggregate exposures to man-made and natural
disasters. Property catastrophe loss experience is generally characterized
by low frequency but high severity short-tail claims which may result in
significant volatility in financial results.
On March 27, 1996, the Company acquired a controlling interest in Methuen
Group Limited ("Methuen"), the holding company for MUL, a leading Lloyd's
managing agency. On November 26, 1996, the Company acquired the remaining
49 percent interest in Methuen. MUL manages six syndicates with a total
underwriting capacity of 366 million pounds (approximately $555 million) for
the 1996 year of account and 384 million pounds (approximately $640 million)
for the 1997 year of account. Total underwriting capacity is the amount of
gross premiums that a syndicate at Lloyd's can underwrite in a given year of
account. However, a syndicate is not required to fully utilize all of the
capacity and it is not unusual for capacity utilization to be significantly
lower than 100 percent. For the 1996 year of account, the Company,
through a corporate subsidiary, has participated in the underwriting of
these syndicates by providing funds at Lloyd's of 12.25 million pounds
(approximately $18 million), which was primarily in the form of a letter of
credit, supporting 24.5 million pounds (approximately $37 million) of
underwriting capacity. For the 1997 year of account, the Company has
provided funds at Lloyd's of approximately 64 million pounds (approximately
$109 million) to support up to approximately 128 million pounds
(approximately $217 million) of premium writing capacity by syndicates
managed by MUL. The syndicates managed by MUL in which the Company
participates underwrite aviation, marine and non-marine risks.
11
On November 26, 1996, the Company acquired Ace London Holdings Ltd.
("Ace London") (formerly Ockham Worldwide Holdings PLC)
a wholly owned subsidiary of Ockham Holdings PLC. Ace London
owns two Lloyd's managing agencies, ALA and ALU. Together
these two agencies manage six syndicates with total underwriting capacity
for the 1997 year of account of 361 million pounds (approximately $614
million). Ace London also owns a Lloyd's corporate member which
provides funds at Lloyd's to support underwriting on these syndicates.
The Company is providing funds at Lloyd's of approximately 7.5 million
pounds (approximately $13 million), which is primarily in the form of a
letter of credit, supporting approximately 15 million pounds (approximately
$25 million) of premium writing capacity to the syndicates managed by ALA
and ALU for the 1997 year of account. The syndicates managed by ALA and
ALU in which the Company participates underwrite aviation and non-marine
risks.
The Company's excess liability insurance policy generally provides limits
of up to a maximum of $200 million per occurrence and annual aggregate,
with a minimum attachment point generally of $100 million. For all new and
renewal business, effective December 15, 1994, the Company reduced the
maximum limits offered for integrated occurrences from $200 million to $100
million. The Company maintains excess of loss clash reinsurance to protect
it from losses arising from a single set of circumstances (occurrence)
covered by more than one excess liability insurance policy. The
reinsurance provides protection to a maximum of $150 million, and in the
aggregate excess of $225 million, for each and every loss occurrence
involving three or more insureds. Integrated occurrences are specifically
excluded.
The Company offers up to $75 million of limits in directors and officers
liability coverage. The Company does not purchase reinsurance for its
directors and officers liability risks.
The Company began satellite insurance operations in February 1994. Until
February 15, 1996, the Company offered separate limits of up to $25 million
per risk for launch insurance, including ascent to orbit and initial
operations, and up to $25 million per risk for in-orbit insurance. This
risk was fully retained by the Company. Effective for all business written
on or after February 15, 1996, the Company entered into a surplus treaty
arrangement which provides for up to $25 million of reinsurance for each
risk. This reinsurance arrangement enabled the Company to raise the gross
limits offered for satellite insurance to $50 million per risk.
During fiscal 1995, the Company entered the following new lines of
business: aviation insurance, excess property insurance and financial
lines. Also during fiscal 1995, the Company commenced its participation in
the reinsurance of "First Line".
Aviation insurance provides coverage for various aviation products,
including aircraft manufacturers hull and liability, as well as airport
liability, aircraft refueling operations and associated aircraft liability
risks. The Company offers limits of up to $100 million per insured, with
no minimum attachment point. The Company reduces its net exposure to
approximately $50 million per insured with a dedicated reinsurance program.
The Company offers global excess property "all risk" insurance , providing
limits of up to a maximum of $50 million per occurrence with a minimum
attachment point of $25 million. Coverage includes such perils as
windstorm, earthquake and fire, as well as explosion. Consequential
business interruption coverage is also offered. In certain circumstances,
12
the Company uses reinsurance to establish the retained net limit per risk.
In addition, the Company has purchased catastrophe reinsurance to control
the possible effects of cumulative natural peril exposure.
The Company's financial lines product group offers specifically designed
financial, insurance and reinsurance solutions to address complex risk
management problems. The programs offered typically have the following
common characteristics: multi-year contract terms, broad coverage that
includes stable capacity and pricing for the insured, aggregate policy
limits and insured participation in the results of their own loss
experience. Each contract is unique because it is tailored to the
insurance or reinsurance needs, specific loss history and financial
strength of the insured. Premium volume, as well as the number of
contracts written, can vary significantly from period to period due to
the nature of the contracts being written. Profit margins may vary from
contract to co on the amount of underwriting risk and investment risk
assumed on each contract.
With effect from November 20, 1996, the Company participates in the
reinsurance of Shipowners Insurance and Guaranty Company Ltd. (SIGCo), a
Bermuda-based company approved by the United States Coast Guard to provide
financial guarantees required by the U.S. Coast Guard to issue Certificates
of Financial Responsibility under the Oil Pollution Act of 1990 to owners of
vessels operating in U.S. waters. SIGCo underwrites the risks previously
written by the "First Line" program which the Company has participated in
since December 1994. The Company has purchased excess of loss reinsurance
to limit its exposure in this line.
The Company will continue to evaluate potential new product lines and other
opportunities in the insurance and reinsurance markets.
Results of Operations - Three Months ended December 31, 1996
----------------------------------------------------------------------------
Net Income Three Months ended % Change
December 31 from
1996 1995 prior year
------- -------- ----------
(in millions)
Income excluding net realized
gains on investments $ 84.0 $48.9 74.7%
Net realized gains on
investments 41.7 44.6 N.M.
------ ----- -----
Net income $125.7 $93.5 N.M.
------ ----- -----
(N.M. - Not meaningful)
-----------------------------------------------------------------------------
Higher net investment income and income from insurance operations were the
main contributors to the 71.7 percent increase in income excluding net
realized gains on investments for the first quarter of fiscal 1997,
compared with the corresponding fiscal 1996 quarter. The increase in
13
investment income and income from insurance operations were primarily
attributable to the inclusion of the results of Tempest in the current
quarter. Tempest contributed $9.3 million to net investment income and
$31.4 million to income excluding net realized gains on investments.
These increases were partially offset by an increase in general and
administrative expenses.
Both net income for the current quarter and the first quarter of fiscal
1996 benefitted from positive movements in the investment markets which
produced significant net realized gains on investments in each of these
quarters.
14
Results of Operations - Three Months ended December 31, 1996 (continued)
Premiums Three Months ended % Change
December 31 from
1996 1995 prior year
------- ------- ----------
(in millions)
Gross premiums written:
Excess liability $ 38.3 $ 56.3 (32.0)%
Financial Lines 19.9 -- N.M.
Directors and officers
liability 34.8 34.7 0.4
Satellite 19.3 24.0 (19.7)
Aviation 5.2 3.1 65.2
Excess property 6.0 6.1 (1.3)
SIGCo / First Line 1.0 7.3 N.M.
Property catastrophe
(Tempest) 1.7 -- N.M.
Lloyd's syndicates 6.1 -- N.M.
Other 0.2 -- N.M.
------ ----- -------
$132.5 $131.5 1.0%
====== ====== =======
Net premiums written:
Excess liability $ 38.8 $ 56.3 (31.1)%
Financial Lines 6.6 -- N.M.
Directors and officers
liability 34.8 34.7 0.4
Satellite 13.7 23.5 (41.5)%
Aviation 4.0 2.3 73.5
Excess property 6.0 5.2 15.5
SIGCo / First Line 1.1 6.8 N.M.
Property catastrophe
(Tempest) 1.7 -- N.M.
Lloyd's syndicates 3.7 -- N.M.
Other 0.2 -- N.M.
------ ----- -------
$110.6 $128.8 (14.1)%
====== ====== =======
Net premiums earned:
Excess liability $ 53.7 $ 61.8 (13.0)%
Financial Lines 21.6 1.9 N.M.
Directors and officers
liability 23.6 27.0 (12.5)
Satellite 13.4 18.2 (26.6)
Aviation 6.3 2.1 198.1
Excess property 4.2 1.3 229.3
SIGCo / First Line 2.9 3.7 (20.9)
Property catastrophe
(Tempest) 36.1 -- N.M.
Lloyd's syndicates 2.3 -- N.M.
Other 0.3 -- N.M.
------ ----- -------
$164.4 $116.0 (41.7)%
====== ====== =======
15
Results of Operations - Three Months ended December 31, 1996 (continued)
For the three months ended December 31, 1996, gross written premiums
increased by 1 percent from $131.5 million to $132.5 million despite
continuing competitive pressures in most insurance markets. The growth in
gross written premiums was mainly a result of the increase in financial
lines premiums in the first quarter of fiscal 1997 from nil for the
comparable fiscal 1996 quarter, together with the participation in the
Lloyd's syndicates managed by MUL. These factors together accounted for a
$26.0 million increase in gross written premiums. This increase was offset
by declines in excess liability and satellite premiums. The decline in
excess liability premiums of $18.0 million was mainly the result of
continuing competitive pressures in that market. The decline in satellite
premiums of $4.7 million was the result of reduced launch activity in the
first quarter of fiscal 1997 compared to the first quarter of fiscal 1996,
where launch activity was considered high.
Net premiums written declined by 14.1 percent to $110.6 million for the
three months ended December 31, 1996, compared with $128.8 million for the
first quarter of fiscal 1996. As with gross written premiums, the decrease
in net written premiums is primarily the result of declines in excess
liability premiums and satellite premiums. A portion of the decline in net
premiums written is also a result of the Company's decision to purchase
reinsurance for the financial lines and satellite product lines.
Net premiums earned increased by $48.4 million or 41.7 percent to $164.4
million for the quarter ended December 31, 1996 compared with $116.0
million for the quarter ended December 31, 1995. The growth in net premiums
earned was the result of contributions from the new lines of business,
particularly financial lines, and the inclusion of Tempest earned premiums
for the quarter which amounted to $36.1 million. These increases were
offset somewhat by declines in excess liability and directors and officers
liability earned premiums.
-----------------------------------------------------------------------------
Net Investment Income Three Months ended % Change
December 31 from
1996 1995 prior year
------- -------- ----------
(in millions)
Net Investment Income $59.7 $47.1 26.8%
===== ===== ====
-----------------------------------------------------------------------------
The increase in net investment income in the current quarter, as compared
with the first quarter of fiscal 1996, is primarily attributable to a
larger investable asset base. The larger investable asset base is due to
positive cash flows from operations and the reinvestment of funds generated
by the portfolio. The increase in the current quarter is also the result
of the consolidation of the Tempest portfolio. The average yield on the
investment portfolio remained relatively unchanged in the first quarter of
fiscal 1997 compared to the first quarter of fiscal 1996.
16
-----------------------------------------------------------------------------
Net Realized Gains on Investments Three Months ended
December 31
1996 1995
------- --------
(in millions)
Fixed maturities and short-term investments $21.4 $25.9
Equity securities 4.2 2.8
Financial futures contracts 17.7 14.8
Currency gains (losses) (1.6) 1.1
----- -----
$41.7 $44.6
===== =====
-----------------------------------------------------------------------------
The Company's investment strategy takes a long-term view and the portfolio
is actively managed to maximize total return within certain specific
guidelines which minimize risk. The portfolio is reported at fair value.
The effect of market movements on the investment portfolio will directly
impact net realized gains (losses) on investments when securities are sold.
Changes in unrealized gains and losses, which result from the revaluation
of securities held, are reported as a separate component of shareholders'
equity.
In May 1996, the Company decided to increase the equity exposure of the
portfolio from 15 percent to 20 percent. This change to the equity
exposure has been fully implemented during this current quarter. The
remainder of the portfolio is comprised of fixed maturity securities.
The Company uses foreign currency forward and option contracts to minimize
the effect of fluctuating foreign currencies on the value of non-U.S.
dollar holdings. The contracts used are not designated as specific hedges
and therefore, realized and unrealized gains and losses recognized on these
contracts are recorded as a component of net realized gains (losses) in the
period in which the fluctuations occur, together with net foreign currency
gains (losses) recognized when non-U.S. dollar securities are sold.
During the first quarter of fiscal 1997 the fair value of the Company's
investment portfolio was positively impacted by a general increase in
prices in the U.S. bond markets resulting from the decline in interest
rates during the period. The sales proceeds for fixed maturity securities
were generally higher than their amortized cost during most of the quarter
which resulted in net realized gains of $21.4 million being recognized on
fixed maturities and short-term investments. In the first quarter of
fiscal 1996, net realized gains of $25.9 million were recognized on fixed
maturities and short-term investments.
With strong equity markets, net realized gains on sales of equity
securities were $4.2 million in the first quarter of fiscal 1997 compared
with gains of $2.8 million in the first quarter of fiscal 1996.
Net realized gains on financial futures contracts of $17.7 million recorded
in the first quarter of fiscal 1997 were primarily generated by the equity
index futures contracts held, as a result of an over 8 percent rise in the
S&P 500 Stock Index during the quarter. The majority of the $14.8 million
of net realized gains on financial futures contracts recorded in the first
quarter of fiscal 1996 were also generated by the equity index futures
contracts held, as a result of a 6 percent rise in the S&P 500 Stock Index
17
during that period. The remainder of the net realized gains on financial
futures contracts in the first quarter of fiscal 1996 arose from gains
recognized on futures contracts used by certain of the Company's external
managers of fixed income securities.
-----------------------------------------------------------------------------
Combined Ratio Three Months ended
December 31
1996 1995
------- --------
(in millions)
Losses and Loss Expense Ratio 67.0% 80.1%
Acquisition cost Ratio 8.6 10.4
Administrative expense ratio 9.6 7.9
----- ----
Combined ratio 85.2% 98.4%
===== ====
-----------------------------------------------------------------------------
The underwriting results of a property and casualty insurer are discussed
frequently by reference to its losses and loss expense ratio, acquisition
cost ratio, administrative expense ratio and combined ratio. Each ratio is
derived by dividing the relevant expense amounts by net premiums earned.
The combined ratio is the sum of the losses and loss expense ratio, the
acquisition cost ratio and the administrative expense ratio. A combined
ratio under 100 percent indicates underwriting profits and a combined ratio
exceeding 100 percent indicates underwriting losses. Property catastrophe
reinsurance companies generally expect to have overall lower combined
ratios as compared with other reinsurance companies with long-tail
exposures.
For the three months ended December 31, 1996, the losses and loss expense
ratio was 67.0 percent compared to 80.1 percent for the first quarter of
fiscal 1996. The ratio for the current quarter is impacted by the
inclusion of Tempest. Property catastrophe loss experience is generally
characterized by low frequency but high severity short-tail claims which
may result in significant volatility in results. For the current quarter,
Tempest's loss and loss expense ratio was 15.0 percent. Excluding Tempest,
the loss and loss expense ratio would have been 81.0 percent. Several
aspects of the Company's operations, including the low frequency and high
severity of losses in the high excess layers in certain lines of business
in which the Company provides insurance and reinsurance, complicate the
actuarial reserving techniques utilized by the Company. Management
believes, however, that the Company's reserves for unpaid losses and loss
expenses, including those arising from breast implant litigation, are
adequate to cover the ultimate cost of losses and loss expenses incurred
through December 31, 1996. Since such provisions are necessarily based on
estimates, future developments may result in ultimate losses and loss
expenses significantly greater or less than such amounts (see "Breast
Implant Litigation").
Although acquisition costs increased by $2.0 million in the quarter, the
acquisition cost ratio actually decreased due primarily to the change in
the mix of business written in the quarter. Administrative expenses
increased by $6.7 million in the current quarter compared to the first
quarter of fiscal 1996. These additional expenses are primarily due to the
18
increased cost base resulting from the strategic diversification by the
Company over the past two years, including the introduction of the new
insurance products during 1994 and 1995 and the recent acquisitions of
Tempest, Methuen and Ockham Worldwide. In addition, the increase in the
market value of the Company's shares during the quarter resulted in total
expenses related to employee stock appreciation rights of $2.5 million
compared with $1.4 million for the first quarter of fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
As a holding company, ACE's assets consist primarily of the stock of its
subsidiaries as well as other investments. In addition to investment
income, its cash flows depend primarily on dividends or other statutorily
permissible payments from its Bermuda-based insurance and reinsurance
subsidiaries (the "Bermuda subsidiaries"). There are currently no legal
restrictions on the payment of dividends from retained earnings by the
Bermuda subsidiaries as the minimum statutory capital and surplus
requirements are satisfied by the share capital and additional paid-in
capital of each of the Bermuda subsidiaries. However, the payment of
dividends or other statutorily permissible distributions by the Bermuda
subsidiaries is subject to the need to maintain shareholder's equity at a
level adequate to support the level of insurance and reinsurance
operations.
The Company's consolidated sources of funds consist primarily of net
premiums written, investment income, and proceeds from sales and maturities
of investments. Funds are used primarily to pay claims, operating expenses
and dividends and for the purchase of investments.
For the three months ended December 31, 1996, the Company's consolidated
net cash flow from operating activities was $86.8 million, compared with
$145.2 million for the three months ended December 31, 1995. Cash flows
are affected by claims payments, which due to the nature of the insurance
and reinsurance coverage provided by the Company, may comprise large loss
payments on a limited number of claims and can therefore fluctuate
significantly. The irregular timing of these large loss payments, for
which the source of cash can be from operations, available credit
facilities or routine sales of investments, can create significant
variations in cash flow from operations between periods. For the three
month periods ended December 31, 1996 and 1995, loss and loss expense
payments amounted to $75.1 million and $22.0 million respectively. Total
loss and loss expense payments amounted to $101.4 million, $73.1 million
and $126.6 million in fiscal years 1996, 1995 and 1994, respectively.
At December 31, 1996, total investments and cash amounted to approximately
$4.3 billion, compared to $4.2 billion at September 30, 1996. The increase
in investable assets can be attributed in part to the combined contribution
of unrealized appreciation in the portfolio due to the general strength of
both fixed income and equity markets, cash flows from operating activities
during the quarter as well as the reinvestment of funds generated by the
portfolio.
The Company's investment portfolio is structured to provide a high level of
liquidity to meet insurance related or other obligations. The consolidated
investment portfolio is externally managed by independent professional
investment managers and is invested in high quality investment grade
marketable fixed income and equity securities, the majority of which trade
in active, liquid markets. The Company believes that its cash balances,
cash flow from operations, routine sales of investments and the liquidity
provided under its committed line of credit (discussed below) are adequate
to allow the Company to pay claims within the time periods required under
its policies.
19
The Company has a $50 million committed unsecured line of credit provided
by a syndicate of six major international banks, led by Morgan Guaranty
Trust Company of New York ("Morgan"). In accordance with the Company's
cash management strategy, this facility is utilized when it is determined
that borrowing on a short-term basis is advantageous to the Company. The
line of credit agreement requires the Company to maintain consolidated
tangible net worth of not less than $1.25 billion. There were no
draw-downs from the line of credit during the three months ended December 31,
1996 and there were no outstanding borrowings at December 31, 1996.
The syndicate of banks have also provided up to approximately 71
million pounds (approximately $120 million) for a five year, collateralized
letter of credit ("LOC"), which will primarily be used to provide funds at
Lloyd's to support underwriting capacity on Lloyd's syndicates in which
the Company participates. Certain assets, amounting to 115 percent of
the value of the LOC, have been pledged as collateral for the LOC.
Morgan has served as the issuing bank for the letter of credit.
The Board of Directors has authorized the repurchase from time to time of
the Company's Ordinary Shares in open market and private purchase
transactions. On August 9, 1996, the Board of Directors terminated the
then existing share repurchase program and authorized a new program for up
to $100.0 million of the Company's Ordinary Shares. During the quarter
ended December 31, 1996, the Company repurchased 255,000 Ordinary Shares
under the share repurchase program for an aggregate cost of $14.7 million.
As at December 31, 1996, approximately $51.0 million of the Board
authorization had not been utilized. During the period January 1, 1997
through February 6, 1997, the Company repurchased an additional 761,500
Ordinary Shares under the share repurchase program for an aggregate cost
of $43.7 million, leaving approximately $7.4 million of the Board
authorization not utilized. On February 7, 1997, the Board of Directors
terminated the existing share repurchase program and authorized a new
program for up to $100.9 million of the Company's Ordinary Shares.
On October 18, 1996 and January 17, 1997, the Company paid quarterly
dividends of 18 cents per share to shareholders of record on September 30,
1996 and December 29, 1996. On February 7, 1997 the Board of Directors
declared a quarterly dividend of 18 cents per share payable on April 18,
1997 to shareholders of record on March 31, 1997. The declaration
and payment of future dividends is at the discretion of the
Board of Directors and will be dependent upon the profits and financial
requirements of the Company and other factors, including legal
restrictions on the payment of dividends and such other factors as the
Board of Directors deems relevant.
Fully diluted net asset value per share was $40.73 at December 31, 1996,
compared with $38.31 at September 30, 1996.
The Company maintains loss reserves for the estimated unpaid ultimate
liability for losses and loss expenses under the terms of its policies and
agreements. The ultimate liability is estimated using actuarial and
statistical projections. The reserve for unpaid losses and loss expenses of
$1.9 billion at December 31, 1996, includes $1.0 billion of case and loss
expense reserves. While the Company believes that its reserve for unpaid
losses and loss expenses at December 31, 1996 is adequate, future
developments may result in ultimate losses and loss expenses significantly
greater or less than the reserve provided. A number of the Company's
insureds have given notice of claims relating to breast implants or
components or raw material thereof that had been produced and/or sold by
such y does not have adequate data upon which to anticipate any funding
schedule for the payment of these liabilities, and it expects that the
amount of time required to determine the financial impact of the options
selected by claimants may extend well into 1997 and beyond. Payments may be
accelerated for some policyholders in 1997 as a result of settlement of
opt-out cases and as additional payments are required to fund Settlement II
(see "Breast Implant Litigation").
20
The Company's financial condition, results of operations and cash flow are
influenced by both internal and external forces. Claims settlements,
premium levels and investment returns may be impacted by changing rates of
inflation and other economic conditions. In many cases, significant
periods of time, ranging up to several years or more, may elapse between
the occurrence of an insured loss, the reporting of the loss to the Company
and the settlement of the Company's liability for that loss. The liquidity
of its investment portfolio, cash flows and the line of credit are, in
management's opinion, adequate to meet the Company's expected cash
requirements.
Breast Implant Litigation
A number of the Company's insureds have given notice of claims relating to
breast implants or components or raw material thereof that had been
produced and/or sold by such insureds. Lawsuits, including class actions,
involving thousands of implant recipients have been filed in both state and
federal courts throughout the United States. Most of the federal cases
have been consolidated pursuant to the rules for Multidistrict Litigation
("MDL") to a Federal District Court in Alabama.
On April 1, 1994 the judge presiding over the MDL proceeding gave
preliminary approval to a global settlement agreement in the approximate
amount of $4.2 billion and conditional certification to a settlement class
("Global I").
On May 15, 1995, the Dow Corning Corporation, a significant participant in
the Global I settlement, filed for protection under Chapter 11 of the U.S.
Bankruptcy Code.
As of June 1, 1995, over 440,000 registrations were received by the Global
I Claims Administrator. Approximately 248,500 of these were filed by
domestic class members by the September 16, 1994 deadline for making claims
under the Current Disease Compensation Program. Based on an analysis of
about 3,000 of these registrations, the judge concluded that a severe
racheting (or reduction) of the settlement amounts shown in the notice of
settlement would occur if current claims were evaluated under the existing
criteria and if funding of the Current Disease Compensation Program
remained at the $1.2 billion level.
Because of the anticipated racheting of benefit amounts and the defendants'
right to withdraw under the Global I settlement, the judge entered an order
on October 9, 1995 declaring that class members had new opt-out rights and
that in general class members and their attorneys should not expect to
receive any benefits under Global I.
On October 1, 1995, negotiators for three of the major defendants agreed on
the essential elements of a revised individual settlement plan for domestic
class members with at least one implant from any of those manufacturers
("Settlement II"). In general, under Settlement II, the amounts payable to
individual participants, and the manufacturers' obligations to make those
payments, would not be affected by the number of class members electing to
opt out from the new plan. Also, in general, the compensation would be
fixed rather than subject to potential further racheting, and the
manufacturers would not have a right to walk away because of the amount of
claims payable. Finally, each settling defendant agreed to be responsible
only for cases in which its implant was identified, and not for a
percentage of all cases.
Participants with implants from one or more of those three defendants who
had submitted timely claims under Global I would have two options.
21
Option One: An amount based on disease criteria and severity levels in the
Global I settlement ranging from $10,000 to $100,000. Although
substantially less than the amounts shown in the initial notices for Global
I settlement, they are greater for many claimants than the amounts that,
after racheting, would have been offered under Global I and are not subject
to a "walkaway" by defendants because of such opt-outs.
Option Two: A potentially higher benefit based on having or developing
during a 15-year period certain diseases that meet more restrictive
criteria. The compensation range for persons qualifying under this option
is from $75,000 to $250,000. Qualifying claimants would also be eligible
for an advance payment of $1,000 under certain circumstances. In general,
the maximum total obligation under this 15-year program allocated among the
three defendants plus the additional defendants referred to below is $755
million.
Each Current Claimant, regardless of the option selected, would be paid an
advance payment of $5,000 and would also be eligible for an additional
payment of $3,000 to defray the costs of explantation during that 15-year
period should the person choose to do so without regard to the status of
any appeals. Current Claimants would be given an extended period of time
to identify manufacturers of their implants, to correct any deficiencies in
the documentation supporting their prior claims or to provide additional
support for claims under the more restrictive criteria.
By November 13, 1995, Settlement II was approved by the three major
defendants. In addition, two other defendants became part of Settlement
II, although certain of their settlement terms are different and more
restricted than the plan offered by the original three defendants.
On December 22, 1995, the judge approved Settlement II and the materials
for giving notice to claimants although several appeals concerning
Settlement II have been lodged with the Eleventh Circuit Court of Appeals.
In mid-January 1996, the three major defendants each made a payment of $125
million to a court-established fund as an initial reserve for payments to
be made under Settlement II. The Claims Administrator is sending out
notifications of status and advance payments to claimants who submitted
implant manufacturer proof. Although Option One closed on December 16,
1996, information on the estimated total cost of Settlement II and the
number of opt -outs is not presently available.
Although the Company has underwritten the coverage for a number of the
defendant companies including four of the companies involved in the revised
Settlement II described above, the Company anticipates that insurance
coverage issued prior to the time the Company issued policies will be
available for a portion of the defendants' liability. In addition, the
Company's policies only apply when the underlying liability insurance
policies or per occurrence retentions are exhausted.
Declaratory judgment lawsuits, involving four of the Company's insureds,
have been filed seeking guidance on the appropriate trigger for their
insurance coverage. None of the insureds have named the Company in such
lawsuits, although other insurers and third parties have sought to involve
the Company in those lawsuits. To date, one court has stayed a lawsuit
against the Company by other insurers; a second court has dismissed the
claims by other insurers against the Company. Another court in Texas has
ruled against the Company's arguments that the court should dismiss the
claims by other insurers and certain doctors attempting to bring the
Company into coverage litigation there. On appeal in the Texas lawsuit,
the appellate court affirmed the lower court's order refusing to dismiss
22
the claims against the Company; further appellate review in the Texas
Supreme Court has been sought. In addition, further efforts are
contemplated to stay or dismiss the doctor's claims against the Company in
the Texas lawsuit. The remaining case is presently stayed; if it is
activated, the Company will resist involvement on jurisdictional and other
grounds.
At June 30, 1994, the Company increased its then existing reserves relating
to breast implant claims. Although the reserve increase was partially
satisfied by an allocation from existing IBNR, it also required an increase
in the Company's total reserve for unpaid losses and loss expenses at June
30, 1994 of $200 million. The increase in reserves was based on
information made available in conjunction with Global I (including
information relating to opt-outs) and information made available from the
Company's insureds and was predicated upon an allocation between coverage
provided before and after the end of 1985 (when the Company commenced
underwriting operations). No additional reserves relating to breast
implant claims have been added since June 30, 1994.
The Company continually evaluates its reserves in light of developing
information and in light of discussions and negotiations with its insureds.
In August 1996, the Company settled with one of its insureds, a breast
implant manufacturer, for a sum of money to be paid out over a number of
years in the future. The settlement is consistent with the Company's
belief that its reserves are adequate. Significant uncertainties continue
to exist with regard to the ultimate outcome and cost of Settlement II and
the number and value of the opt-out claims. While the Company is unable at
this time to determine whether additional reserves, which could have a
material adverse effect upon the financial condition, results of operations
and cash flows of the Company, may be necessary in the future, the Company
believes that its reserves for unpaid losses and loss expenses including
those arising from breast implant claims are adequate as of December 31,
1996.
23
ACE LIMITED
PART II - OTHER INFORMATION
Item 4. Submission of matters to a vote of security holders
------------------------------------------------------------
1) The Annual General Meeting was held on February 7, 1997.
2) The following matters were voted on at the Annual General Meeting:
a) The following directors were elected.
Term Votes Votes
Expiring in favour Withheld
-------- ----------- --------
Meryl D. Hartzband 1999 47,892,779 55,874
Donald Kramer 1999 47,892,523 56,130
Michael G. Atieh 2000 47,891,453 57,200
Bruce Crockett 2000 47,891,219 57,434
Robert W. Staley 2000 47,892,544 56,100
Gary M. Stuart 2000 47,891,459 57,194
b) The appointment or Coopers & Lybrand L.L.P. as independent public
accountant for the Company for the year ended September 30, 1997
was ratified and approved.
The holders of 47,910,015 shares voted in favour, 5,954 shares
voted against and 32,684 shares abstained.
Item 5. Other Information
--------------------------
1) On February 7, 1997 the Company declared a dividend of $0.18 per
Ordinary Share payable on April 18, 1997 to shareholders of record
on March 31, 1997.
2) The Board of Directors has authorized the repurchase from time to
time of the Company's Ordinary Shares in open market and private
purchase transactions. On February 7, 1997, the Board of
Directors terminated the then existing share repurchase program
and authorized a new program for up to $100.0 million of the
Company's Ordinary Shares.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------
a) Exhibit 11.1 - Statement regarding computation of earnings per Share.
b) There were no reports on Form 8-K filed during the quarter.
24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACE LIMITED
February 10, 1997 ____________________________________
Brian Duperreault
Chairman, President and Chief
Executive Officer
February 10, 1997 ____________________________________
Christopher Z. Marshall
Executive Vice President and Chief
Financial Officer
25
EXHIBIT INDEX
-------------
Exhibit
Number Description Numbered Page
------- ------------ -------------
11.1 Computation of earnings per share 27
27 Financial Data Schedule 28
26