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 Quarter Ended June 30, 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 August 8, 1996 was 58,902,190.
<TABLE> <CAPTION> ACE LIMITED INDEX TO FORM 10-Q Part I. FINANCIAL INFORMATION - ------------------------------- Page No. <S> <C> Item 1. Financial Statements: Consolidated Balance Sheets June 30, 1996 (Unaudited) and September 30, 1995 1 Consolidated Statements of Operations (Unaudited) Three Months Ended June 30, 1996 and June 30, 1995 Nine Months Ended June 30, 1996 and June 30, 1995 2 Consolidated Statements of Shareholders' Equity (Unaudited) Nine Months Ended June 30, 1996 and June 30, 1995 3 Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended June 30, 1996 and June 30, 1995 4 Notes to Interim Consolidated Financial Statements (Unaudited) 5 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 8 Part II. OTHER INFORMATION - --------------------------- Item 4. Submission of Matters to a vote of Security Holders 22 Item 5. Other information 22 Item 6. Exhibits and Reports on Form 8-K 22 Signatures 23 <CAPTION> ACE LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, 1996 and September 30, 1995 June 30 September 30 1996 1995 ------- ------------ (unaudited) (in thousands of U.S. Dollars, except share and per share data) <S> <C> <C> Assets Investments and cash Fixed maturities, at fair value (amortized cost - $2,856,318 and $2,325,959) $2,839,966 $2,377,510 Equity securities, at fair value (cost - $249,496 and $224,020) 316,971 267,163 Short-term investments 344,222 458,145 Other investments, at cost 12,453 12,453 Cash 40,301 16,929 ---------- ---------- Total investments and cash 3,553,913 3,132,200 ========== ========== Accrued investment income 35,740 29,574 Deferred acquisition costs 33,425 34,428 Insurance balances receivable 83,362 20,993 Other assets 38,149 15,557 ---------- ---------- Total assets $3,744,589 $3,232,752 ========== ==========
Liabilities Unpaid losses and loss expenses $1,704,732 $1,437,930 Unearned premiums 368,827 305,568 Premiums received in advance 52,264 23,876 Accounts payable and other liabilities 29,210 16,259 Dividend payable 8,299 6,456 ---------- ---------- Total liabilities 2,163,332 1,790,089 ---------- ---------- Commitments and contingencies Shareholders' equity Ordinary Shares ($0.125 par value, 100,000,000 shares authorized; 46,105,108 and 46,111,185 shares issued and outstanding) 5,763 5,764 Additional paid-in capital 548,441 548,513 Unearned stock grant compensation (1,235) (1,796) Net unrealized appreciation on investments 51,123 94,694 Cumulative translation adjustments 186 -- Retained earnings 976,979 795,488 ---------- ---------- Total shareholders' equity 1,581,257 1,442,663 ---------- ---------- Total liabilities and shareholders' equity $3,744,589 $3,232,752 ========== ========== See accompanying notes to interim consolidated financial statements
<CAPTION> ACE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months and Nine Months Ended June 30, 1996 and 1995 (Unaudited) Three Months Ended Nine Months Ended June 30 June 30 1996 1995 1996 1995 ---- ---- ---- ---- (in thousands of U.S. Dollars, except share and per share data) <S> <C> <C> <C> <C> Revenues Net premiums written $ 165,131 $ 105,597 $ 471,461 $ 318,964 Change in unearned premiums (19,234) 1,878 (63,187) (856) ---------- ---------- ----------- ---------- Net premiums earned 145,897 107,475 408,274 318,108 Net investment income 50,641 46,520 146,079 134,784 Net realized gains (losses) on investments (1,633) 49,885 48,230 10,217 ---------- ---------- ----------- ---------- Total revenues 194,905 203,880 602,583 463,109 ---------- ---------- ----------- ---------- Expenses Losses and loss expenses 120,438 87,895 334,438 260,268 Acquisition costs 12,287 11,378 36,950 35,008 Administrative expenses 9,704 7,182 28,380 17,112 ---------- ---------- ----------- ---------- Total expenses 142,429 106,455 399,768 312,388 ---------- ---------- ----------- ---------- Net income $ 52,476 $ 97,425 $ 202,815 $ 150,721 ========== ========== =========== ========== Earnings per share $1.13 $2.08 $4.36 $3.19 ========== ========== =========== ========== Weighted average shares outstanding 46,479,694 46,872,672 46,468,832 47,230,973 ========== ========== =========== ========== See accompanying notes to interim consolidated financial statements
<CAPTION> ACE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the Nine Months Ended June 30, 1996 and 1995 (Unaudited) 1996 1995 ---- ---- (in thousands of U.S. Dollars) <S> <C> <C> Ordinary shares Balance - beginning of period $ 5,764 $ 5,928 Exercise of stock options (aggregate par value less than $1) -- -- Repurchase of Ordinary shares (1) (154) -------- --------- Balance - end of period 5,763 5,774 -------- --------- Additional paid-in capital Balance - beginning of period 548,513 564,198 Exercise of stock options -- 8 Repurchase of Ordinary shares (72) (14,636) -------- --------- Balance - end of period 548,441 549,570 -------- --------- Unearned stock grant compensation Balance - beginning of period (1,796) (412) Stock grants awarded (272) (2,412) Stock grants forfeited 60 -- Amortization 773 777 --------- --------- Balance - end of period (1,235) (2,047)
Net unrealized appreciation (depreciation) on investments Balance - beginning of period 94,694 (79,685) Net appreciation (depreciation) during period (43,571) 162,303 ---------- ---------- Balance - end of period 51,123 82,618 ---------- ---------- Cumulative translation adjustments Balance - beginning of period -- -- Net adjustment for period 186 -- ---------- ---------- Balance - end of period 186 -- ---------- ---------- Retained earnings Balance - beginning of period 795,488 598,716 Net income 202,815 150,721 Dividends declared (21,228) (16,841) Repurchase of Ordinary shares (96) (15,742) ---------- ---------- Balance - end of period 976,979 716,854 ========== ========== Total shareholders' equity $1,581,257 $1,352,769 ========== ========== See accompanying notes to interim consolidated financial statements
<CAPTION> ACE LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended June 30, 1996 and 1995 (Unaudited) 1996 1995 ---- ---- (in thousands of U.S. Dollars) <S> <C> <C> Cash flows from operating activities Net income $202,815 $150,721 Adjustments to reconcile net income to net cash provided by operating activities Unearned premiums 63,259 856 Unpaid losses and loss expenses 266,802 212,466 Net realized (gains) losses on investments (48,230) (10,217) Amortization of premium/ discount (4,412) (10,064) Deferred acquisition costs 1,003 (116) Insurance balances receivable (62,369) (3,394) Premiums received in advance 28,388 18,300 Accounts payable and other liabilities 5,847 844 Accrued investment income (6,166) 3,063 Other (3,429) (3,557) -------- -------- Net cash flows from operating activities 443,508 358,902 -------- --------
Cash flows from investing activities Purchases of fixed maturities (7,027,445) (5,425,771) Purchases of equity securities (170,081) (282,866) Sales of fixed maturities 6,576,371 5,308,625 Sales of equity securities 162,777 71,024 Maturities of fixed maturities 50,830 34,392 Net realized gains on financial futures and option contracts 18,519 26,075 Acquisitions of subsidiaries, net of cash acquired (11,572) (25,794) Other -- (1,470) --------- ---------- Net cash used in investing activities (400,601) (295,785) --------- ----------
Cash flows from financing activities Repurchase of Ordinary Shares (169) (30,532) Proceeds from exercise of options for shares -- 8 Dividends paid (19,366) (15,597) ------- -------- Net cash used for financing activities (19,535) (46,121) ------- -------- Net increase in cash 23,372 16,996 Cash - beginning of period 16,929 14,421 ------- -------- Cash-end of period $40,301 $31,417 ======= ======== See accompanying notes to interim consolidated financial statements </TABLE>
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 1995 Annual Report on Form 10-K. On March 27, 1996, the Company, through a corporate subsidiary, ACE UK Limited ("ACE UK"), completed the acquisition of a 51 percent interest in Methuen Group Limited ("Methuen") the holding company for Methuen Underwriting Limited (formerly Methuen (Lloyd's Underwriting Agents) Limited), a leading Lloyd's of London managing agency. The Company may acquire the remaining 49 percent interest in Methuen during the years 1999 and 2000 through various put and call arrangements. The acquisition has been recorded using the purchase method of accounting. At June 30, 1996 approximately 75 percent of the Company's written premiums came from North America with approximately 20 percent coming from the United Kingdom and continental Europe and approximately 5 percent from other countries. 2. Accounting Policies Translation of Foreign Currencies Financial statements of subsidiaries expressed in foreign currencies are translated into U.S. dollars in accordance with Statement of Financial Accounting Standards No. 52 "Foreign Currency Translation" (FASB 52). Under FASB 52, functional currency assets and liabilities are translated into U.S. dollars generally using period end rates of exchange and the related translation adjustments are recorded as a separate component of shareholders' equity. Functional currencies are generally the currencies of the local operating environment. Income statement amounts expressed in functional currencies are translated using average exchange rates. Exchange gains and losses resulting from foreign currency transactions are also recorded in income currently. Financial Lines Financial lines policies are generally multi-year in structure. In the majority of the cases, due to the ability of the insured/reinsured to commute or cancel coverage within the multi-year term, only the annual premium is included as written at contract inception. The remaining annual premiums will be included as written at each successive anniversary date within the multi-year term. All premiums are earned in accordance with the expiration of the risk within the year written. Losses and loss expenses on financial lines contracts includes provision for experience refunds on those contracts that contain such features and where the estimated incidence of losses on the contract is expected to generate such a balance due to the insured/reinsured. 3. 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. 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 settlement, filed for protection under Chapter 11 of the U.S. Bankruptcy Code. 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 reduction, 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. By November 13, 1995 Settlement II was approved by the boards of directors of the three defendants subject to finalizing certain details. 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 in the MDL proceeding approved Settlement II and the materials for giving notice to claimants. On December 29, 1995, the judge also approved for distribution, as part of the notice, a "Question and Answer Booklet" about Settlement II. 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 judge has started to remand or transfer opt-out cases to the originating or other courts for further pretrial proceedings and trial. Notifications of Status to certain claimants (who have submitted implant manufacturer proof) were sent out by the Claims Administrator starting in late May 1996. At the present time, it cannot be determined how many claimants will accept and qualify under the terms of Settlement II; similarly, the number of opt-outs cannot be estimated. (For further discussion, see "Management's Discussion and Analysis - Breast Implant Litigation"). At June 30, 1994, following the announcement of Global I, 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 relating to breast implant claims was originally based on information made available in conjunction with Global I (including information relating to opt-outs) and is continually reviewed on the basis of additional information made available from the Company's insureds. The increase 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 believes that its reserves for unpaid losses and loss expenses including those arising from breast implant claims is adequate as of June 30, 1996. The Company continually evaluates its reserves in light of developing information. However, significant uncertainties continue to exist, especially with regard to the ultimate outcome and cost of Settlement II and the number and value of the opt out claims. 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. 4. Shares Issued and Outstanding On February 3, 1995, the Board of Directors authorized a share repurchase program in an aggregate amount not to exceed $75 million. This program superseded and replaced the balance of the previous authorization. As at June 30, 1996, approximately $45 million of the Board authorization had not been utilized. Between July 1, 1996 and August 8, 1996, 536,200 ordinary shares were repurchased by the Company under the February 3, 1995 authorization for a total cost of $23.6 million. On August 9, 1996, the Board of Directors authorized a new share repurchase program in an aggregate amount not to exceed $100 million. This program supercedes and replaces the balance of the February 3, 1995 authorization. 5. Restricted Stock Awards During fiscal 1996, 6,734 restricted Ordinary Shares were awarded to outside directors of the Company under the terms of the 1995 Outside Directors Plan which was approved by the shareholders of the Company on February 9, 1996. These shares vest in February 1997. All unvested restricted Ordinary Shares issued to directors prior to approval of the Plan were cancelled upon approval of the Plan. 6. Reclassification Certain items in the prior period financial statements have been reclassified to conform with the current period presentation. 7. Subsequent Event On July 1, 1996, the Company completed the acquisition of Tempest Reinsurance Company Limited ("Tempest"), a Bermuda-based property catastrophe reinsurer. Under the terms of the Agreement and Plan of Amalgamation, Tempest shares outstanding at the time of acquisition were cancelled and converted into approximately 13.3 million Ordinary Shares of the Company. The acquisition will be recorded using the purchase method of accounting. Under purchase accounting, the total purchase price is allocated to the acquired assets and liabilities based on their values. The excess of the cost of the transaction over the fair value of the net assets acquired will be recorded as goodwill and amortized on a straight line basis over a 40-year period. (For further discussions, see "Management's Discussion and Analysis - Liquidity and Capital Resources").
MANAGEMENT'S DISCUSSION AND ANALYSIS OF --------------------------------------- RESULTS OF OPERATIONS AND FINANCIAL CONDITION ---------------------------------------------- General The following is a discussion of the Company's financial condition, results of operations, liquidity and capital resources as of and for the three and nine months ended June 30, 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 Management's Discussion and Analysis of Results of Operations and Financial Condition included in the Company's 1995 Annual Report on Form 10-K. ACE Limited is a holding company which through its principal operating subsidiaries, A.C.E. Insurance Company, Ltd. ("ACE Insurance") and Corporate Officers & Directors Assurance Ltd. ("CODA") provides high level excess liability insurance, directors and officers liability insurance, satellite insurance, aviation insurance, excess property insurance, financial lines products and certain financial guarantee reinsurance. In addition, on March 27, 1996, the Company acquired a controlling interest in Methuen Group Limited ("Methuen"), the holding company for Methuen Underwriting Limited ("Methuen Underwriting") (formerly Methuen (Lloyd's Underwriting Agents) Limited), a leading Lloyd's of London managing agency. The Company may acquire the remaining 49 percent interest in Methuen during the years 1999 and 2000 through various put and call arrangements. On July 1, 1996 the Company completed the acquisition of Tempest Reinsurance Company Limited ("Tempest"), a leading Bermuda-based property catastrophe reinsurer. (For further discussion, see "Liquidity and Capital Resources"). 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 on or after December 15, 1994, the Company has reduced the maximum limits offered for integrated occurrences under the excess liability policy form from $200 million to $100 million. This chanreduction, 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. Until February 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 has entered into a surplus treaty arrangement with X.L. Reinsurance Company Ltd., a Bermuda-based reinsurer, which provides for up to $25 million of reinsurance for each risk. This reinsurance arrangement has 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 four new lines of business: aviation insurance, excess property insurance, financial lines and First Line reinsurance. Aviation insurance provides coverage for various aviation products, including aircraft manufacturer's hull and liability, as well as airport liability, aircraft refueling operations and associated aircraft liability risks. The Company retains net limits of up to approximately $50 million per insured for aviation insurance. The Company also 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. The Company's financial lines product group offers specifically designed financial and insurance solutions to address complex risk management problems. The Company participates in the reinsurance of Stockton Reinsurance Ltd. with respect to a program referred to as "First Line" which provides 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. Methuen Underwriting manages six syndicates with total underwriting capacity of 367 million pounds (approximately $555 million) in 1996. For the 1996 year of account, the Company has, through a newly formed corporate subsidiary, provided funds at Lloyd's of 12.25 million pounds (approximately $18 million) which was substantially in the form of a letter of credit supporting 24.5 million pounds (approximately $37 million) of underwriting capacity on Methuen syndicates. The Company has agreed, subject to certain conditions, to provide funds at Lloyd's of 50 million pounds (approximately $76 million) to support underwriting by Methuen syndicates in 1997 and subsequent years. The Company has purchased or may purchase reinsurance for certain of its product lines. The Company will continue to evaluate potential new product lines.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (continued) Results of Operations - Three Months ended June 30, 1996 - -------------------------------------------------------------------- Net Income Three Months ended % Change June 30 from 1996 1995 prior year ---- ---- -------------- (in millions) Income excluding net realized gains (losses) on investments $54.1 $47.5 13.9% Net realized gains (losses) on investments (1.6) 49.9 N.M. ----- ----- ----- Net income $52.5 $97.4 N.M. ===== ===== ===== (N.M. - Not meaningful) - -------------------------------------------------------------------- Higher net investment income and income from insurance operations contributed to the increase in income excluding net realized gains (losses) on investments for the third quarter of fiscal 1996, compared with the corresponding 1995 quarter. These increases were partially offset by an increase in general and administrative expenses.
- -------------------------------------------------------------------- Premiums Three Months ended June 30 % Change 1996 1995 from prior year ---- ---- --------------- (in millions) Net premiums written: Excess liability $58.1 $63.6 (8.8)% Directors and officers liability 27.7 26.8 3.4 Satellite 21.4 11.8 81.4 First Line 1.4 0.3 N.M. Aviation 8.5 1.6 N.M. Excess property 3.2 1.5 N.M. Financial lines 38.6 -- N.M. Lloyd's syndicates 6.1 -- N.M. Other 0.1 -- N.M. ------ ------ ----- $165.1 $105.6 56.3% ====== ====== ===== Net premiums earned: Excess liability $57.9 $65.1 (11.1)% Directors and officers liability 25.7 27.1 (5.2) Satellite 19.6 11.9 64.7 First Line 2.9 2.9 -- Aviation 5.5 0.3 N.M. Excess property 3.5 0.1 N.M. Financial lines 29.8 -- N.M. Lloyd's syndicates 0.8 -- N.M. Other 0.2 0.1 N.M. ------ ------ ----- $145.9 $107.5 35.7% ====== ====== ===== N.M. Not meaningful - -------------------------------------------------------------------- Net premiums written increased by 56.3% in the three months ended June 30, 1996 to $165.1 million compared to $105.6 million for the third quarter 1995. This growth is a result of a very strong quarter for the Company's financial lines, satellite and aviation insurance businesses together with the inclusion of premiums from our participation in the Lloyd's syndicates managed by Methuen. The decline in excess liability premiums was primarily a result of continuing competitive pressures in this market which resulted in a net loss of accounts as well as a lower level of premiums generated from accounts which renewed coverage at lower limits and/or higher attachment points. The directors and officers liability market remains competitive with corresponding pressure on prices. However, premiums increased in the quarter as a result of several new multi-year policies. For the quarter ended June 30, 1996, net premiums earned increased by $38.4 million to $145.9 million compared to $107.5 million in 1995. This incease was the result of contributions from the new lines of business, particularly financial lines together with the increase in satellite premiums earned, primarily from launch insurance, offset by a decline in excess liability and directors and officers liability premiums earned in the quarter. - --------------------------------------------------------------------- Net Investment Income Three Months ended % Change June 30 from 1996 1995 prior year ---- ---- ----------- (in millions) Net Investment income $50.6 $46.5 8.8% ===== ===== ==== - --------------------------------------------------------------------- The increase in net investment income in the current quarter, as compared to 1995, is attributable to a larger investable asset base despite a lower yield generated by the portfolio as a result of general market conditions during the period. The larger investable asset base is due primarily to positive cash flows from insurance operations and the reinvestment of funds generated by the portfolio. - --------------------------------------------------------------------- Net Realized Gains (Losses) Three Months ended on Investments June 30 1996 1995 ---- ---- (in millions) Fixed maturities and short-term investments $(17.4) $30.0 Financial futures contracts 4.1 19.1 Equity securities 13.8 (1.2) Currency (2.1) 2.0 ------ ------ $ (1.6) $49.9 ====== ====== - --------------------------------------------------------------------- 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. Prior to May 10, 1996 the Company's investment guidelines targeted an equity exposure of 15 percent of the externally managed investment portfolio. On May 10, 1996, the Board resolved to increase the targeted equity exposure to 20 percent. The remainder of the portfolio is composed of fixed maturity securities. The portfolio is reported at fair value. Changes in unrealized gains and losses, which result from the revaluation of securities held, are reported as a separate component of shareholders' equity. When securities are sold, the effect of market movements on the investment portfolio will directly impact net realized gains (losses) on investments. U.S. bond market prices continued to decline during the third quarter and thus sales proceeds for fixed maturity securities were generally lower than their amortized cost which resulted in net realized losses of $17.4 million being recognized on fixed maturities and short-term investments compared to net realized gains of $30.0 million for the same period in 1995. With strong equity markets, net realized gains for the three month period ended June 30, 1996 were $13.8 million compared to net realized losses of $1.2 million in 1995. Common stocks were introduced into the portfolio in December 1994 and the realized losses generated in the third quarter of 1995 were primarily due to routine sales by the equity managers during the period. Gains and losses on financial futures contracts are the result of fixed maturity and equity security market movements. The increase in interest rates during the three month period resulted in a market decline for fixed maturity securities, and realized losses from U.S. Treasury futures contracts. There was a 3.9 percent rise in the S&P 500 stock index during the period and hence realized gains on the S&P 500 index futures contracts in the synthetic equity fund. Realized gains from S&P 500 index futures exceeded losses from the U.S. Treasury futures, resulting in a net realized gain on financial futures contracts of $4.1 million. In the same period in 1995, increases in the Treasury and equity markets resulted in realized gains of $19.1 million. During 1995, as part of the change in the asset allocation, non-U.S. dollar fixed maturity and equity securities were purchased in the portfolio. 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. - -------------------------------------------------------------------- Combined Ratio Three Months Ended June 30 1996 1995 ---- ---- Losses and loss expense ratio 82.6% 81.8% Underwriting expense ratio 8.4 10.6 Administrative expense ratio 6.6 6.7 ---- ---- Combined ratio 97.6% 99.1% ===== ===== - -------------------------------------------------------------------- The underwriting results of a property and casualty insurer are discussed frequently by reference to its losses and loss expense ratio, underwriting expense 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 underwriting expense ratio and administrative expense ratio. A combined ratio under 100 percent indicates underwriting profits and a combined ratio exceeding 100 percent indicates underwriting losses. For the three months ended June 30, 1996, the losses and loss expense ratio was 82.6 percent compared to 81.8 percent for the third quarter of 1995 primarily as a result of a change in the mix of business during the current quarter compared with 1995. Several aspects of the Company's operations, including the low frequency and high severity of losses in the high excess layers in which the Company provides insurance, 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 June 30, 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 underwriting expenses increased by $0.9 million in the quarter, the underwriting expense ratio actually decreased significantly due primarily to the change in the mix of business written in the quarter compared to 1995. General and administrative expenses increased $2.5 million in the current quarter compared to the third quarter of 1995. These additional expenses are mainly due to the increased cost base associated with the new insurance products introduced during the latter half of 1995. The administrative expense ratio decreased as a result of growth in earned premium. Results of operations - Nine Months ended June 30, 1996 - ------------------------------------------------------------------ Net Income Nine Months ended % Change June 30 from 1996 1995 prior year ------ ------ ---------- (in millions) Income excluding net realized gains (losses) on investments $154.6 $140.5 10.0% Net realized gains (losses) on investments 48.2 10.2 N.M. ------- ------ ----- Net income $202.8 $150.7 N.M. ------- ------ ----- (N.M. - Not meaningful) - --------------------------------------------------------------------
The increase in income excluding net realized gains (losses) on investments for the nine months ended June 30, 1996 compared with 1995 resulted primarily from increased investment income of $11.3 million. Earned premiums increased by $90.2 million in 1996 as compared with 1995, however as the Company operated at a 97.9% combined ratio (98.2% for the same period in 1995), the net impact of increases in earned premiums on net income was minimal. - -------------------------------------------------------------------------- Premiums Nine Months ended % Change June 30 from 1996 1995 prior year ---- ---- ---------- (in millions) Net Premiums written: Excess liability $167.5 $188.5 (11.1)% Directors and officers liability 79.1 83.2 (4.9) Satellite 64.9 30.7 111.7 First Line 10.0 13.2 (24.2) Aviation 17.3 1.6 N.M. Excess Property 13.6 1.5 N.M. Financial lines 112.3 -- N.M. Lloyd's syndicates 6.1 -- N.M. Other 0.7 0.3 N.M. ------ ------ ------ $471.5 $319.0 47.8% ====== ====== ======
Net premiums earned: Excess liability $179.4 $198.7 (9.7)% Directors and officers liability 79.5 83.1 (4.3) Satellite 56.9 29.7 91.6 First Line 9.1 5.8 56.9 Aviation 11.8 0.3 N.M. Excess Property 7.6 0.1 N.M. Financial lines 62.8 -- N.M. Lloyd's syndicates 0.8 -- N.M. Other 0.4 0.4 N.M. ------- ------ ------ $408.3 $318.1 28.4% ======= ====== ===== (N.M. - not meaningful) - ----------------------------------------------------------------------------
The addition of financial lines premiums of $112.3 million, the increase in satellite premiums of $34.3 million and the contributions from aviation and property were the main contributors to the increase in net premiums written for the nine months ended June 30, 1996, compared to 1995. These were offset by decreases in excess liability and directors and officers liability premiums written. Limit reductions, some of which resulted from reduced integrated occurrence coverage, increases to higher attachment points on some business written and timing differences arising from changes in anniversary dates of several policies contributed to a $21.0 million decrease in excess liability premiums. The decline in directors and officers liability can be attributed mainly to a lower level of premiums generated from multi-year policies. Continuing competitive pressures in both the excess liability and directors and officers liability markets with corresponding pressure on prices also contributed to the declines. Net premiums earned increased by $90.2 million to $408.3 million for the nine months ended June 30, 1996 compared to 1995. This increase was a result of contributions from the new lines of business, particularly financial lines, together with the increase in satellite premiums earned, primarily from launch insurance, offset by declines in excess liability and directors and officers liability premiums earned in the period. - ------------------------------------------------------------------- Net Investment Income Nine months ended % Change June 30 from 1996 1995 prior year ---- ---- ---------- (in millions) Net investment income $146.1 $134.8 8.4% ====== ====== === - ---------------------------------------------------------------------- The increase of $11.3 million in net investment income for the nine months ended June 30, 1996, as compared to 1995 was attributable to a larger investable asset base despite a lower yield generated by the portfolio as a result of general market conditions during the period. The larger investable asset base is due primarily to positive cash flows from insurance operations and the reinvestment of funds generated by the portfolio. - --------------------------------------------------------------------- Net Realized Gains (Losses) on Investments Nine Months ended June 30 1996 1995 ---- ---- (in millions) Fixed maturities and short-term investments $14.9 $ (7.7) Financial futures contracts 18.5 26.1 Equity securities 16.8 (1.8) Currency (2.0) (6.4) ----- ------ $48.2 $ 10.2 ====== ======= 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 Company's investment guidelines during the quarter ended March 31, 1996 target an equity exposure of 15 percent of the externally managed investment portfolio. On May 10, 1996, the Board resolved to increase the targeted equity exposure to 20 percent. The remainder of the portfolio is composed of fixed maturity securities. The portfolio is reported at fair value. Changes in unrealized gains and losses, which result from the revaluation of securities held, are reported as a separate component of shareholders' equity. The effect of market movements on the investment portfolio will directly impact net realized gains (losses) when securities are sold. Sales proceeds for fixed maturity securities were generally higher then their amortized costs during the period which resulted in net realized gains on investments for the nine month period of $14.9 million compared to $7.7 million of net realized losses during the same period in 1995. The 1995 losses were the result of the repositioning of the portfolio as part of the implementation of the revised investment strategy during a period when sales proceeds were lower than amortized costs. The realized gains on financial futures contracts were generated from U.S. Treasury futures contracts and from the equity index futures contracts held in the synthetic equity fund. Gains and losses on these instruments are closely linked to fluctuations in the U.S. Treasury and equity markets and therefore, realized gains would be expected during periods of broad market improvements while losses are realized during periods of market declines. There were realized currency losses for the nine months ended June 30, 1996 of $2.0 million compared to a loss of $6.4 million for the same period of 1995. Unrealized currency losses of $6.5 million on securities held in the portfolio as at June 30, 1996 are reflected in net unrealized appreciation on investments in shareholders' equity. At June 30, 1995 there was an unrealized currency gain of $10.7 million in net unrealized appreciation on investments in shareholders' equity.
- ---------------------------------------------------------------------- Combined Ratio Nine Months ended June 30 1996 1995 ---- ---- Losses and loss expense ratio 81.9% 81.8% Underwriting expense ratio 9.1 11.0 Administration expense ratio 6.9 5.4 ---- ---- Combined ratio 97.9% 98.2% ==== ==== - ---------------------------------------------------------------------- Losses and loss expense as a percentage of net premiums earned was 81.9% for the nine months ended June 30, 1996 as compared with 81.8% for 1995. Underwriting expenses increased by $1.9 million to $36.9 million for the nine months ended June 30, 1996 compared with 1995, however, the underwriting expense ratio decreased significantly to 9.1% from 11.0% primarily due to the change in the mix of business written in the period. General and administrative expenses increased by $11.3 million this year compared to 1995. These additional expenses are partially due to the increased cost base associated with the new insurance products introduced during the latter half of 1995. In addition, the increase in the market value of the Company's shares during 1996 resulted in total expenses related to employee stock appreciation rights of $4.0 million compared with $0.7 million in 1995. Liquidity and Capital Resources As a holding company, the Company's assets consist primarily of the stock of its subsidiaries as well as other investments and, in addition to investment income, its cash flows depend primarily on dividends or other statutorily permissible payments from its Bermuda insurance subsidiaries. There are currently no legal restrictions on the payment of dividends from retained earnings by the Company or its Bermuda insurance subsidiaries as the minimum statutory capital and surplus requirements are satisfied by the share capital and additional paid-in capital of each of the Company's insurance subsidiaries. However, the payment of dividends or other statutorily permissible distributions by the Company's insurance subsidiaries is subject to the need to maintain shareholders' equity adequate to support the level of insurance operations. The Company's consolidated sources of funds consist primarily of net premiums written, investment income, and proceeds from sales and redemptions of investments. Funds are used primarily to pay claims, operating expenses and dividends and for the purchase of investments. For the nine months ended June 30, 1996, the Company's consolidated net cash flow from operating activities was $443.5 million, compared with $358.9 million for the nine months ended June 30, 1995. Cash flows are affected by claims payments, which due to the nature of the insurance 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 nine month periods ended June 30, 1996 and 1995, loss and loss expense payments amounted to $67.6 million and $47.8 million respectively. Total loss and loss expense payments amounted to $73.1 million, $126.6 million and $285.8 million in fiscal years 1995, 1994 and 1993, respectively. At June 30, 1996, total investments and cash amounted to approximately $3.5 billion, compared to $3.1 billion at September 30, 1995. The significant increase in investable assets can be attributed mainly to strong cash flows from operating activities 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 polices. The Company has a $150 million committed line of credit provided by a syndicate of five major international banks, led by Morgan Guaranty Trust Company of New York. 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 $950 million. There were no draw-downs from the line of credit during the nine months ended June 30, 1996 and there were no outstanding borrowings at June 30, 1996. On November 1, 1993, the Company completed the acquisition of CODA. In consideration of this acquisition, the Company paid approximately $250 million in cash and agreed to pay on December 31, 1994 up to an additional $25 million in cash based upon development of CODA's June 30, 1993 loss reserves as estimated on September 30, 1994. The review of the loss reserves was completed and the additional payment was made in December 1994. 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 3, 1995, the Board of Directors terminated an existing share repurchase program and authorized a new program for up to $75.0 million of the Company's Ordinary Shares. At June 30, 1996, $45.0 million of the Board authorization had not been utilized. Between July 1, 1996 and August 8, 1996, 536,200 Ordinary Shares were repurchased by the Company under the February 3, 1995 authorization for a total cost of $23.6 million. On August 9, 1996, the Board of Directors authorized a new share repurchase program in an aggregate amount not to exceed $100 million. This program supercedes and replaces the balance of the February 3, 1995 authorization. On July 19, 1996 the Company paid a quarterly dividend of 18 cents per share to shareholders of record on June 14, 1996. On October 19, 1995, January 18, 1996 and April 19, 1996, the Company paid quarterly dividends of 14 cents per share to shareholders of record on September 29, 1995, December 29, 1995, (rather than December 31, 1995 as stated in the Form 10K) and March 29, 1996 respectively. On August 9, 1996, the Board of Directors declared a quarterly dividend of 18 cents per share payable on October 18, 1996 to shareholders of record on September 30, 1996. 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 $34.18 at June 30, 1996, compared with $31.19 at September 30, 1995. 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 reserve for unpaid losses and loss expenses of $1.7 billion at June 30, 1996, includes $893.7 million of case and loss expense reserves. The ultimate liability is estimated using actuarial and statistical projections. While the Company believes that its reserve for unpaid losses and loss expenses at June 30, 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 insureds. The Company does not have adequate data upon which to anticipate any funding schedule for the payment of these liabilities, although it expects that the amount of time required to determine which current claimants will select which of the two options may extend well into 1996. Payments may be accelerated for some policyholders, as a function of the resolution of opt-out cases, and claim payments by the Company could begin during fiscal 1996 (see "Breast Implant Litigation"). On July 1, 1996, the Company completed the acquisition of Tempest. Under the terms of the Agreement and Plan of Amalgamation, Tempest shares outstanding at the time of acquisition were cancelled and converted into approximately 13.3 million Ordinary Shares of the Company. The acquisition will be recorded using the purchase method of accounting. Under purchase accounting, the total purchase price is allocated to the acquired assets and liabilities based on their values. The excess of the cost of the transaction over the fair value of the net assets acquired will be recorded as goodwill and amortized on a straight line basis over a 40-year period. After the amalgamation, Tempest will operate as a wholly-owned subsidiary of the Company. 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"). But, because of the anticipated reduction in benefit amounts as a result of the high number of claim registrations 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 May 15, 1995, the Dow Corning Corporation, a significant participant in the global settlement, filed for protection under Chapter 11 of the U.S. Bankruptcy Code. 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 reduction, 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. Option One: Accept a fixed amount based on disease criteria and severity levels in the Global I settlement. These amounts - ranging from $10,000 to $100,000 - although substantially less than the amounts shown in the initial notices for Global I, are greater for many claimants than the amounts that, after reduction, would have been offered under Global I and are not subject to a "walkaway" by defendants because of such opt-outs. Qualifying claimants who submit proof of rupture by December 1996 would qualify for specified higher benefits but not in excess of $100,000 in total. Option Two: Elect 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. Each Current Claimant, regardless of the option selected, would be paid an advance payment of $5,000 as soon as administratively feasible, 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. Timely-registered class members with implants from one or more of those defendants, who did not submit current claims, would receive compensation, under Settlement II ranging from $75,000 to $250,000 if, during the 15-year period, they have or develop, any of the diseases defined under the more restrictive criteria. They 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. Timely-registered class members with qualifying implants 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. By November 13, 1995 Settlement II was approved by the boards of directors of the three defendants subject to finalizing certain details. 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 in the MDL proceeding approved Settlement II and the materials for giving notice to claimants. On December 29, 1995, the judge also approved for distribution, as part of the notice, a "Question and Answer Booklet" about Settlement II. 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 notice materials were sent out in the second half of January 1996. In addition, a televised program, regional meetings, and a national telephone meeting are being implemented to explain the Settlement II plan and the rights and options of implant recipients. The judge has started to remand or transfer opt-out cases to the originating or other courts for further pretrial proceedings and trail. Notifications of status to certain claimants (who have submitted implant manufacturer proof) were sent out by the Claims Administrator starting in late May 1996. At the present time, it cannot be determined how many claimants will accept and qualify under the terms of Settlement II; similarly, the number of opt-outs cannot be estimated. Although the Company has underwritten the coverage for a number of the defendant companies including 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 are trying to involve the Company in those lawsuits. To date, one court has stayed any 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 in Texas who have attempted to bring the Company into coverage litigation there involving one of the insureds. On appeal in the Texas lawsuit, the appellate court has affirmed the lower court's order refusing to dismiss the claims against the Company by other insurers; further appellate review in the Texas Supreme Court is being 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, following the announcement of Global I, 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 relating to breast implant claims was originally based on information made available in conjunction with Global I (including information relating to opt-outs) and is continually reviewed on the basis of additional information made available from the Company's insureds. The increase 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 believes that its reserves for unpaid losses and loss expenses including those arising from breast implant claims is adequate as of June 30, 1996. The Company continually evaluates its reserves in light of developing information. However, significant uncertainties continue to exist, especially with regard to the ultimate outcome and cost of Settlement II and the number and value of the opt-out claims. 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.
ACE LIMITED PART II - OTHER INFORMATION ---------------------------- ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ----------------------------------------------------------- An Extraordinary General Meeting was held on July 1, 1996 to consider and vote upon a proposal to approve the issuance of Ordinary Shares, par value $0.125 per share, of the Company pursuant to the terms of the Agreement and Plan of Amalgamation between the Company and Tempest. The holders of 35,511,787 shares voted in favor, 9,418 shares voted against and 620,557 shares abstained. ITEM 5. OTHER INFORMATION - -------------------------- 1) On August 9, 1996 the Company declared a dividend of $0.18 per Ordinary Share payable on October 18, 1996 to shareholders of record on September 30, 1996. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------------------------------------------ a) Exhibit 11.1 - Statement regarding computation of earnings per share. b) Exhibit 10.48 - Employment Agreement, dated April 1, 1996 between ACE Limited and Peter N. Mear. c) The Company filed the following Form 8-K current reports during the quarter: -Form 8-K dated June 4, 1996 pertaining to the Registrant's press release related to the unsolicited offer by IPC Holdings, Ltd. to acquire Tempest. -Form 8-K dated June 8, 1996 pertaining to the Registrant's press release announcing the Company's improved bid to acquire Tempest. -Form 8-K dated June 19, 1996 pertaining to the Registrant's press release announcing that the Company and Tempest had revised the terms of the previously announced amalgamation. -Form 8-K dated June 20, 1996 pertaining to the Registrant's press release announcing that the Company and Tempest had supplemented their joint Proxy Statement / Prospectus dated May 22, 1996.
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 ---------------------------- August 13, 1996 Brian Duperreault ---------------------------- Chairman, President and Chief Executive Officer August 13, 1996 Christopher Z. Marshall ------------------------------ Executive Vice President and Chief Financial Officer
EXHIBIT INDEX - -------------- Exhibit Number Description Numbered Page - ------- ----------- -------------- 11.1 Computation of earnings per share 25 10.48 Employment contract dated April 1, 1996 between ACE Limited and Peter N. Mear