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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant x   Filed by a Party other than the Registrant ¨

Check the appropriate box:

ACE Limited

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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NOTICE OF ANNUAL GENERAL MEETING

April 10, 2007

Hamilton, Bermuda

TO THE SHAREHOLDERS OF ACE LIMITED:

The Annual General Meeting of ACE Limited will be held on Thursday, May 17, 2007, at 8:00 a.m. at ACE Global Headquarters, 17 Woodbourne Avenue, Hamilton, Bermuda, for the following purposes:

Only shareholders of record, as shown by our transfer books, at the close of business on March 30, 2007, are entitled to notice of, and to vote at, the Annual General Meeting.

PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE RETURN ENVELOPE FURNISHED FOR THAT PURPOSE, AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT. YOU MAY ALSO VOTE OVER THE INTERNET OR VIA TELEPHONE BY FOLLOWING THE VOTING INSTRUCTIONS PROVIDED ON THE ACCOMPANYING PROXY CARD. FOR FURTHER INFORMATION CONCERNING THE INDIVIDUALS NOMINATED AS DIRECTORS, THE PROPOSALS BEING VOTED UPON, USE OF THE PROXY AND OTHER RELATED MATTERS, YOU ARE URGED TO READ THE PROXY STATEMENT ON THE FOLLOWING PAGES.

By Order of the Board of Directors,

Brian Duperreault

Chairman

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ACE LIMITED

ACE Global Headquarters

17 Woodbourne Avenue

Hamilton HM 08 Bermuda

April 10, 2007

PROXY STATEMENT

INFORMATION ABOUT THE ANNUAL GENERAL MEETING AND VOTING

Why Did You Send Me This Proxy Statement?

We sent you this Proxy Statement and the enclosed proxy card because the Board of Directors of ACE Limited (which we refer to as we, us, our, ACE, or the Company) is soliciting your proxy to vote at the 2007 Annual General Meeting, which will be held on Thursday, May 17, 2007, at 8:00 a.m. Atlantic time at ACE Global Headquarters, 17 Woodbourne Avenue, Hamilton, Bermuda, and at any adjournments thereof. A copy of our Annual Report to Shareholders for the fiscal year ended December 31, 2006 accompanies this Proxy Statement.

This Proxy Statement summarizes the information you need to vote at the Annual General Meeting. You do not need to attend the Annual General Meeting to vote your shares. You may simply complete, sign and return the enclosed proxy card or vote by telephone or over the Internet.

What Proposals Will Be Voted on at the Annual General Meeting?

There are two proposals scheduled to be voted on at the Annual General Meeting:

Our Board recommends that you vote your shares “FOR” each of the nominees for directors and “FOR” the appointment of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2007.

Who Is Entitled to Vote?

March 30, 2007 is the record date for the Annual General Meeting. If you owned our Ordinary Shares at the close of business on March 30, 2007, you are entitled to vote at the Annual General Meeting. On that date, we had 328,309,225 Ordinary Shares outstanding and entitled to vote at the Annual General Meeting. Our Ordinary Shares are our only class of voting stock. We will begin mailing this Proxy Statement on or about April 17, 2007 to all shareholders entitled to vote.

How Many Votes Do I Have?

You have one vote for each of our Ordinary Shares that you owned at the close of business on March 30, 2007, unless you owned Controlled Shares that constituted 10 percent or more of the issued Ordinary Shares, in which case your voting rights with respect to those Controlled Shares will be limited, in the aggregate, to a voting power of approximately 10 percent pursuant to a formula specified in our Amended and Restated Articles of Association, which we refer to as our Articles. Our Articles define Controlled Shares generally to include all shares of the Company directly, indirectly or constructively owned or beneficially owned by any person or group of persons.

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What Is the Difference Between Holding Shares as a Shareholder of Record and as a Beneficial Owner?

Most of our shareholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially.

Shareholder of Record

If your shares are registered directly in your name with our transfer agent, Mellon Investor Services LLC, you are considered, with respect to those shares, the shareholder of record and these proxy materials are being sent to you directly by us. As the shareholder of record, you have the right to grant your voting proxy directly to the Company officers named in the proxy card or to vote in person at the Annual General Meeting. We have enclosed a proxy card for you to use. You may also vote on the Internet or by telephone as described below under the heading “May I Vote by Telephone or Via the Internet.”

Beneficial Owner

If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your broker, bank or other nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote your shares and are also invited to attend the Annual General Meeting. However, since you are not the shareholder of record, you may only vote these shares in person at the Annual General Meeting if you follow the instructions described below under the heading “How Do I Vote in Person at the Annual General Meeting.” Your broker, bank or other nominee has enclosed a voting instruction card for you to use in directing your broker, bank or other nominee as to how to vote your shares. You may also vote on the Internet or by telephone as described below under the heading “May I Vote by Telephone or Via the Internet.”

How Do I Vote by Proxy?

If you properly fill in your proxy card and send it to us in time to vote, your proxy, meaning one of the individuals named on your proxy card, will vote your shares as you have directed. If you sign the proxy card but do not make specific choices, your proxy will vote your shares as recommended by the Board:

If any other matter is presented, your proxy will vote in accordance with his best judgment. At the time we began printing this Proxy Statement, we knew of no matters that needed to be acted on at the Annual General Meeting other than those discussed in this Proxy Statement.

May I Vote by Telephone or Via the Internet?

Yes. Instead of submitting your vote by mail on the enclosed proxy card, you may be able to vote via the Internet or by telephone. We encourage you to do so because your vote is then tabulated faster than if you mailed it. Please note that there are separate Internet and telephone arrangements depending on whether you are a shareholder of record (that is, if you hold your stock in your own name) or a beneficial owner that holds your shares in street name (that is, if your stock is held in the name of your broker, bank or other nominee).

If you are a shareholder of record, you may vote by telephone, or electronically through the Internet, by following the instructions provided on your proxy card.

If you are a beneficial owner and hold your shares in street name, you may need to contact your broker, bank or other nominee to determine whether you will be able to vote by telephone or electronically.

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The telephone and Internet voting procedures are designed to authenticate shareholders’ identities, to allow shareholders to give their voting instructions and to confirm that shareholders’ instructions have been recorded properly. If you vote via the Internet, you may incur costs, such as usage charges from Internet access providers and telephone companies. You will be responsible for those costs.

Whether or not you plan to attend the Annual General Meeting, we urge you to vote. Returning the proxy card or voting by telephone or over the Internet will not affect your right to attend the Annual General Meeting and vote.

May I Revoke My Proxy?

Yes. If you change your mind after you vote, you may revoke your proxy by following any of the procedures described below. To revoke your proxy:

If you wish to revoke your proxy, you must do so in sufficient time to permit the necessary examination and tabulation of the subsequent proxy or revocation before the vote is taken.

How Do I Vote in Person at the Annual General Meeting?

You may vote shares held directly in your name as the shareholder of record in person at the Annual General Meeting. If you choose to vote your shares in person at the Annual General Meeting, please bring the enclosed proxy card or proof of identification. Even if you plan to attend the Annual General Meeting, we recommend that you vote your shares in advance as described above so that your vote will be counted if you later decide not to attend the Annual General Meeting.

Shares beneficially owned and held in street name may be voted in person by you only if you obtain a signed proxy from the shareholder of record giving you the right to vote the shares. If your shares are held in the name of your broker, bank or other nominee, you must bring to the Annual General Meeting an account statement or letter from the broker, bank or other nominee indicating that you are the owner of the shares and a signed proxy from the shareholder of record giving you the right to vote the shares. The account statement or letter must show that you were beneficial owner of the shares on March 30, 2007.

What Votes Need to Be Present to Hold the Annual General Meeting?

To have a quorum for our Annual General Meeting, six or more persons must be present, in person or by proxy, representing more than 50 percent of the Ordinary Shares that were outstanding on March 30, 2007.

What Vote Is Required to Approve Each Proposal?

Election of Directors

The election of each nominee for director requires the affirmative vote of a majority of the votes cast on such proposal at the Annual General Meeting.

Ratification of Appointment of Independent Registered Public Accounting Firm

The ratification of the selection of PricewaterhouseCoopers as our independent registered public accounting firm for 2007 requires the affirmative vote of a majority of the votes cast on such proposal at the Annual General Meeting.

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How Are Votes Counted?

In the election of our directors, your vote may be cast separately “FOR” or “AGAINST” each nominee or you may “ABSTAIN” from voting with respect to any nominee. For the ratification of our independent registered public accounting firm, your vote may be cast “FOR” or “AGAINST” or you may “ABSTAIN.” If you sign your proxy card or broker voting instruction card with no further instructions, your shares will be voted in accordance with the recommendations of the Board. We will appoint one or more inspectors of election to count votes cast in person or by proxy.

What Is the Effect of Broker Non-Votes and Abstentions?

A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner.

Ordinary Shares owned by shareholders electing to abstain from voting with respect to any proposal and broker non-votes will be counted towards the presence of a quorum but will not be considered present and voting with respect to elections of directors or other matters to be voted upon at the Annual General Meeting. Therefore, abstentions and broker non-votes will have no effect on the outcome of the proposals to elect directors or to ratify the appointment of our independent registered public accounting firm.

What Are the Costs of Soliciting These Proxies and Who Will Pay Them?

The Company will pay all the costs of soliciting these proxies. Although we are mailing these proxy materials, our directors and employees may also solicit proxies by telephone, by fax or other electronic means of communication, or in person. We will reimburse brokers, banks and nominees and other fiduciaries for the expenses they incur in forwarding the proxy materials to you. Georgeson Inc. is assisting us with the solicitation of proxies for a fee of $8,000 plus out-of-pocket expenses.

Where Can I Find the Voting Results?

We intend to publicly disclose the voting results on our website within 14 days following our Annual General Meeting. We will publish the voting results in our Form 10-Q for the second quarter of 2007, which we will file with the Securities and Exchange Commission, which we refer to as the SEC, in August 2007. You can find the voting results and the Form 10-Q on our website at www.acelimited.com.

Do Directors Attend the Annual General Meeting?

While we do not have a formal policy regarding Board member attendance at Annual General Meetings of shareholders, we encourage each member of the Board of Directors to attend each Annual General Meeting of shareholders. In practice, we schedule a regular Board of Directors meeting on the same day as our Annual General Meeting of shareholders, which facilitates director attendance at the shareholders meeting. All directors then in office attended the Annual General Meeting of shareholders held on May 18, 2006.

Can a Shareholder Communicate Directly with Our Board? If so, how?

Our Board provides a process for shareholders, employees and other interested parties to send communications to the Board. Shareholders, employees and other interested parties wanting to contact the Board concerning accounting or auditing matters may send an e-mail to the Chairman of the Audit Committee at chmnaudit@ace.bm. Shareholders, employees and other interested parties wanting to contact the Board, the non-management directors, the independent directors, the Chairman of the Board, the Lead Director, the chairman of any Board committee or any other director, as to other matters may send an e-mail to corpsecy@ace.bm. The Secretary has access to these e-mail addresses. Alternatively, shareholders, employees and other interested parties may send written communications to the Board c/o Secretary, ACE Global Headquarters,17 Woodbourne Avenue, Hamilton HM 08, Bermuda, although mail to Bermuda is not as prompt as e-mail. Communication with the Board may be anonymous. The Secretary will forward to the Lead Director all communications to the Board so received.

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PROPOSAL NO. 1: ELECTION OF DIRECTORS

General

Our Articles provide that our Board of Directors shall be divided into three classes with the terms of office of each class ending in successive years. Our Articles provide for a maximum of 20 directors and empower the Board of Directors to fix the exact number of directors and appoint persons to fill any vacancies on the Board until the next Annual General Meeting.

Following recommendation from the Nominating and Governance Committee, our Board of Directors has nominated Brian Duperreault, Robert M. Hernandez, Peter Menikoff, Robert Ripp and Dermot F. Smurfit for election as directors of the Company to serve three-year terms to expire at the Annual General Meeting in 2010 and until their respective successors shall have been elected and shall have qualified. Each of these individuals is currently serving as a director of the Company.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THESE NOMINEES AS DIRECTORS OF THE COMPANY.

It is the intention of the persons named as proxies, subject to any direction to the contrary, to vote in favor of the candidates nominated by the Board of Directors. If any one or more of the nominees is unable or unwilling to serve, the proxies will, subject to any direction to the contrary, be voted for such other person or persons as the Board of Directors may recommend.

Information with respect to the nominees for election as directors proposed by the Company and the other directors whose terms of office as directors will continue after the Annual General Meeting is set forth below.

Nominees for Election to Terms Expiring in 2010

Brian Duperreault, age 59, has served as one of our directors since October 1994. In May 2004, Mr. Duperreault relinquished the office of our Chief Executive Officer. Mr. Duperreault served as executive Chairman until June 2006, when he retired as an employee of the Company and became non-executive Chairman, which position he will hold through our upcoming Annual General Meeting. Mr. Duperreault served as our Chairman and Chief Executive Officer from November 1999 through May 2004 and as our Chairman, President and Chief Executive Officer from October 1994 through November 1999. Prior to joining the Company, Mr. Duperreault had been employed with American International Group, which we refer to as AIG, since 1973 and served in various senior executive positions with AIG and its affiliates from 1978 until September 1994, including as Executive Vice President, Foreign General Insurance and, concurrently, as Chairman and Chief Executive Officer of American International Underwriters Inc., which we refer to as AIU, from April 1994 to September 1994. Mr. Duperreault was President of AIU from 1991 to April 1994, and Chief Executive Officer of AIG affiliates in Japan and Korea from 1989 until 1991. Mr. Duperreault serves as a member of The American Academy of Actuaries, a member of the Board of Trustees of Saint Joseph’s University through June 2007, a member of the Board of Trustees of The School of Risk Management, Insurance and Actuarial Science of St. John’s University through June 2007, Chairman of the Bank of N.T. Butterfield & Son, Ltd., effective April 18, 2007, and a director of Tyco International Ltd. Mr. Duperreault is also Chairman of the Centre on Philanthropy, a member of the Board of Trustees of American Institute for Chartered Property Casualty Underwriters/Insurance Institute of America through June 2007, Chairman of the Bermuda Institute of Ocean Sciences, and a director of the Bermuda Monetary Authority.

Robert M. Hernandez, age 62, has served as one of our directors since September 1985 and is currently our Lead Director. Mr. Hernandez is Chairman of the Board of RTI International Metals, Inc. (metals) and has served on the Board of Directors of that company since 1990. Mr. Hernandez served as Vice Chairman, Director and Chief Financial Officer of USX Corporation (energy and steel) from December 1994 to December 2001, as Executive Vice President—Accounting & Finance and Chief Financial Officer of USX from November 1991 until November 1994 and as Senior Vice President—Finance & Treasurer from October 1990 to October 1991. Mr. Hernandez was

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President and Chief Operating Officer of the US Diversified Group of USX from May 1989 until October 1990. Mr. Hernandez is Vice Chairman, Board of Trustees of the BlackRock Funds and a director of Eastman Chemical Company. Mr. Hernandez is a nominee to the Board of Directors of Tyco Electronics Corporation.

Peter Menikoff, age 66, has served as one of our directors since January 1986. Mr. Menikoff is currently a private investor and most recently he was the Interim Chief Financial Officer of Vlasic Foods International Inc. (foods) from February 2000 to May 2001. Mr. Menikoff served as President and Chief Executive Officer of CONEMSCO, Inc. (oil and gas drilling/production supplies, services and equipment) from April 1997 until June 1998. Mr. Menikoff served as Executive Vice President and Chief Administrative Officer of Tenneco Energy Corporation (energy) from June 1995 to April 1997. Mr. Menikoff served as a Senior Vice President of Tenneco, Inc. (diversified industrial) from June 1994 until April 1997. Mr. Menikoff served as Executive Vice President of Case Corporation (agricultural and construction equipment), a subsidiary of Tenneco, Inc., from November 1991 to June 1994. Mr. Menikoff served as Treasurer of Tenneco, Inc. from May 1989 to November 1991.

Robert Ripp, age 65, has served as one of our directors since December 1991. Mr. Ripp is Chairman of the Board and a director of Lightpath Technologies Inc. (fiber optics components manufacturing), a NASDAQ listed company. Mr. Ripp also serves as a director of PPG Industries, Inc. (glass and coating manufacturer), a NYSE listed company. Mr. Ripp served as Director, Chairman and Chief Executive Officer of AMP Incorporated (electrical connectors) from August 1998 through May 1999. Mr. Ripp served as Executive Vice President of Global Sales and Marketing of AMP Incorporated from August 1997 to July 1998, as Vice President and Chief Financial Officer of AMP Incorporated from August 1994 through July 1997, and as Vice President and Treasurer of International Business Machines Corporation (electronic computer equipment) from July 1989 through September 1993.

Dermot F. Smurfit, age 62, has served as one of our directors since August 1997. Mr. Smurfit recently retired as Chairman of Smurfit Europe (paper, paperboard and packaging). Mr. Smurfit served as Chairman of Anker PLC (computer hardware and software), for a portion of 2005. Mr. Smurfit also was Chairman of Peach Holdings PLC (financial services) for part of 2006. He was Joint Deputy Chairman of Jefferson Smurfit Group plc, which we refer to as Jefferson Smurfit, from January 1984 until January 2003, Chairman and Chief Executive of Jefferson Smurfit’s continental European operations from 1994 to 1997, Director of Sales and Marketing since 1997, and has held a number of other senior positions with Jefferson Smurfit. Mr. Smurfit is Chairman of the World Containerboard Organisation, Chairman of Eurolink Motorway Operations Ltd. (toll road operator), Chairman of Powerflute Oy (paper manufacturing), President of the Federation European Fabrication Carton Ondule, Chairman of Sellu Trading Oy, and Chairman of Pankaboard Oy, a privately owned paper mill in Finland.

Directors Whose Terms of Office Will Continue After This Meeting

Directors Whose Terms Expire in 2008

Evan G. Greenberg, age 52, has served as one of our directors since August 2002. We appointed Mr. Greenberg to the position of our President and Chief Executive Officer in May 2004. Mr. Greenberg will also become our Chairman following our Annual General Meeting. We appointed Mr. Greenberg as our President and Chief Operating Officer in June 2003. In April 2002, Mr. Greenberg was appointed to the position of Chief Executive Officer of ACE Overseas General. Mr. Greenberg joined the Company as Vice Chairman, ACE Limited and Chief Executive Officer of ACE Tempest Re, in November 2001. Prior to joining the Company, Mr. Greenberg was most recently President and Chief Operating Officer of AIG, from 1997 until 2000. From 1975 until 1997, Mr. Greenberg held a variety of senior management positions at AIG, including Chief Operating Officer of AIU, AIG’s foreign general insurance organization, and President and Chief Executive Officer of AIU.

John A. Krol, age 70, has served as one of our directors since August 2001. Mr. Krol retired as Chairman and Chief Executive Officer of E.I. du Pont de Nemours and Company (chemicals, fibers, petroleum, life

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sciences and diversified business) in 1998. Mr. Krol is a member of the board of directors of MeadWestvaco Corporation, Milliken & Company and Tyco International Ltd., the advisory board of the Bechtel Corporation and the Board of Trustees of the University of Delaware.

Directors Whose Terms Expire in 2009

Michael G. Atieh, age 53, has served as one of our directors since September 1991. Mr. Atieh is currently Executive Vice President and Chief Financial Officer of OSI Pharmaceuticals (NASDAQ: OSIP). Previously, Mr. Atieh served as Group President of Dendrite International, Inc. (NASDAQ: DRTE) (technology and services) from January 2002 to February 2004, Senior Vice President and Chief Financial Officer of Dendrite International, Inc. from October 2000 to December 2001, as Vice President, U.S. Human Health, a division of Merck & Co., Inc. (NYSE: MRK) (pharmaceuticals) from January 1999 to September 2000, as Senior Vice President—Merck-Medco Managed Care, L.L.C. (managed health care), an indirect wholly-owned subsidiary of Merck from April 1994 to December 1998, as Vice President—Public Affairs of Merck from January 1994 to April 1994 and as Treasurer of Merck from April 1990 to December 1993.

Mary A. Cirillo, age 59, has served as one of our directors since May 2006. Ms. Cirillo has served as advisor to Hudson Venture Partners L.P. (venture capital) since 2003. She served as Chairman of OPCENTER, LLC (help desk and network operations services) from 2000 to 2004. She was Chief Executive Officer of Global Institutional Services of Deutsche Bank from July 1999 until February 2000. Previously, she served as Executive Vice President and Managing Director of Bankers Trust Company (which was acquired by Deutsche Bank), which she joined in 1997. From 1977 to 1997, she was with Citibank, N.A., most recently serving as Senior Vice President. Ms. Cirillo currently serves a director of DealerTrack Holdings, Health Care Property Investors, Inc. and Thomson Corporation (Canada).

Bruce L. Crockett, age 63, has served as one of our directors since May 1995. Mr. Crockett is chairman of Crockett Technologies Associates (consulting) and a private investor. Mr. Crockett served as President and Chief Executive Officer of COMSAT Corporation (information services) from February 1992 until July 1996 and as President and Chief Operating Officer of COMSAT from April 1991 to February 1992. As an employee of COMSAT since 1980, Mr. Crockett held various other operational and financial positions including Vice President and Chief Financial Officer. Mr. Crockett is Chairman of the AIM Family of Mutual Funds, and is Chairman of the Board of Captaris, Inc. Mr. Crockett is also a senior trustee of the University of Rochester.

Thomas J. Neff, age 69, has served as one of our directors since May 1997. Mr. Neff has worked for Spencer Stuart & Associates, N.A. (executive search consulting) since 1976, serving as President of the worldwide firm from 1979 to 1996. Since 1996, Mr. Neff has served as Chairman of Spencer Stuart, U.S. Mr. Neff is a director of Hewitt Associates Inc. where he serves on the Compensation and Leadership Committee and the Governance Committee. Before joining Spencer Stuart, he was a principal with Booz, Allen & Hamilton, Inc. from 1974 to 1976, served as President of Hospital Data Sciences, Inc. from 1969 to 1974, and held a senior marketing position with TWA from 1966 to 1969. Earlier he was a management consultant with McKinsey & Company in New York and Australia. He is a director of various mutual funds managed by Lord, Abbett & Co. Mr. Neff is a member of the Board of Trustees of Lafayette College.

Gary M. Stuart, age 66, has served as one of our directors since March 1988. Mr. Stuart served as Chief Financial Officer of Optimum Logistics Inc. (logistics services) from August 2000 through August 2001. From 1981 until November 1999, Mr. Stuart was an employee of Union Pacific Corporation (transportation), serving as its Executive Vice President and Chief Financial Officer from June 1998 through November 1999 and as its Vice President and Treasurer from January 1990 through May 1999. Mr. Stuart was on the adjunct faculty of the School of Business at Fairfield University from January through May 2000 and was a member of its Advisory Council from 2000 to 2005.

There are no arrangements or understandings between any director and any other person pursuant to which any director was or is selected as a director or nominee.

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CORPORATE GOVERNANCE

Overview

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The Board of Directors

Our Board oversees our business and monitors the performance of management. The directors keep themselves informed by discussing matters with the CEO, other key executives and our principal external advisors, such as legal counsel, outside auditors, and other consultants, by reading the reports and other materials that we send them regularly and by participating in Board and committee meetings.

The Board usually meets four times per year in regularly scheduled meetings, but will meet more often if necessary. The Board met four times during 2006. All directors attended at least 75 percent of the aggregate number of meetings of the Board of Directors and committees of the Board of which they were a member that were held during 2006, except for Ms. Cirillo, who joined the Board in May 2006 and attended 57 percent of the meetings held in 2006 after her election.

Director Independence

The Board has determined that the following directors are independent under the listing standards of the New York Stock Exchange, which we refer to as the NYSE: Michael G. Atieh, Mary A. Cirillo, Bruce L. Crockett, Robert M. Hernandez, John A. Krol, Peter Menikoff, Thomas J. Neff, Robert Ripp, Dermot F. Smurfit, and Gary M. Stuart. These independent directors constitute a substantial majority of our Board of Directors. In making its determination of independence, the Board applied its Categorical Standards for Director Independence and determined that no other material relationships existed between the Company and these directors. A copy of our Categorical Standards for Director Independence is attached as Exhibit A to this proxy statement and is also available by accessing the Company’s website at www.acelimited.com, then clicking on “Investor Information,” followed by “Corporate Governance” and the relevant button under the Corporate Governance listing. The Board also considered the other directorships held by the independent directors and determined that none of these directorships constituted a material relationship with the Company.

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The Committees of the Board

The Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating and Governance Committee, all of which consist exclusively of members who qualify as independent directors under the applicable requirements of the NYSE. The Board has also established a Finance and Investment Committee and an Executive Committee.

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How Are Directors Nominated?

As needed, the Nominating and Governance Committee reviews the qualifications of various persons to determine whether they might make good candidates for consideration for membership on the Board of Directors. The Nominating and Governance Committee considers the person’s judgment, experience, independence, understanding of our business or other related industries and such other factors as the Nominating

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and Governance Committee determines are relevant in light of the needs of the Board of Directors and the Company. The Nominating and Governance Committee will select qualified candidates and review its recommendations with the Board of Directors, which will decide whether to invite the candidate to be a nominee for election to the Board of Directors.

Our Corporate Governance Guidelines require the Nominating and Governance Committee to review annually the skills and attributes of Board members within the context of the current make-up of the full Board. Board members should have individual backgrounds that when combined provide a portfolio of experience and knowledge that well serve our governance and strategic needs. We consider Board candidates on the basis of a range of criteria including broad-based business knowledge and contacts, prominence and sound reputation in their fields as well as a global business perspective and commitment to good corporate citizenship. Directors should be able and prepared to provide wise and thoughtful counsel to top management on the full range of potential issues facing the Company. They should represent all shareholders and not any special interest group or constituency. Directors must possess the highest personal and professional integrity and commitment to ethical and moral values. Directors must have the time necessary to fully meet their duty of care to the shareholders and be willing to commit to service over the long haul, if called upon.

In accordance with its charter, the Nominating and Governance Committee identifies nominees for directors from various sources. We do not generally retain third party consultants to assist in identifying and evaluating potential nominees, although the Nominating and Governance Committee may do so if it desires. Thomas J. Neff, who serves on the Nominating and Governance Committee, is the chairman of Spencer Stuart, U.S., an executive search consulting firm. We have drawn upon Mr. Neff’s expertise and resources with respect to identifying and evaluating prospective nominees for directors, but have not made any payments with respect to such advice to Spencer Stuart or Mr. Neff, other than director’s fees to Mr. Neff. The Nominating and Governance Committee will consider shareholder recommendations for director candidates, but the Nominating and Governance Committee has no obligation to recommend such candidates. Assuming that appropriate biographical and background material (including qualifications) is provided for candidates recommended by shareholders, the Nominating and Governance Committee will evaluate those candidates by following substantially the same process and applying substantially the same criteria as for candidates recommended by other sources. If a shareholder has a suggestion for candidates for election, it should be mailed to: Secretary, ACE Limited, ACE Global Headquarters, 17 Woodbourne Avenue, Hamilton HM 08 Bermuda. If a shareholder desires to nominate a person for election as director at a shareholders’ meeting, that shareholder must comply with Article 40 of our Articles, which requires that notice be provided no later than 60 days prior to the anniversary date of the immediately preceding Annual General Meeting. With respect to the 2008 Annual General Meeting, such written notice must be received on or prior to March 18, 2008. Such notice must describe the nomination in sufficient detail to be summarized on the agenda for the meeting and must set forth:

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What Is Our Related Party Transactions Approval Policy and What Procedures Do We Use to Implement It?

The Board of Directors has adopted Related Party Transactions Guidelines which require that the Nominating and Governance Committee review, and approve or ratify, transactions in which we, on the one hand, and a related party, on the other hand, participate that involve payments of at least $120,000 in the aggregate per fiscal year. In conjunction with such review, the Nominating and Governance Committee must make a determination that the transaction does not constitute a conflict of interest. Transactions involving our sale of insurance or reinsurance in the ordinary course of business on terms that are generally available to similarly situated parties who are not related to us, and payments or settlements of claims on such policies in the ordinary course of business on commercially reasonable terms, are deemed pre-approved by virtue of the Board’s adoption of the Related Party Transactions Guidelines, unless they involve payments to an entity that is a related party because of the interest of a director (or a nominee for director) or his or her immediate family member in such entity. Transactions with any related party that involve less than $120,000 in the aggregate per fiscal year generally are also deemed pre-approved under our guidelines.

Our Related Party Transactions Guidelines require the Board of Directors to review, approve or ratify, and determine that no conflict of interest exists with respect to, financial contributions to not-for-profit organizations for which a director or an executive officer or his or her spouse or child serves on the board or as a senior officer. By adopting these guidelines, the Board has determined that financial contributions of $50,000 or less in the aggregate per fiscal year to a not-for-profit organization of which an executive officer or his or her spouse or child serves as a director, trustee or senior officer do not constitute conflicts of interest and are deemed to be pre-approved. We submit financial contributions to any not-for-profit organization of which an executive officer or his or her spouse or child is a director, trustee or senior officer to the Nominating and Governance Committee if they involve in the aggregate more than $50,000 per fiscal year but less than $100,000, or to the Board of Directors if they involve in the aggregate $100,000 or more per fiscal year.

We have established a number of procedures to monitor related party transactions so that we can submit them to the Nominating and Governance Committee or the Board of Directors pursuant to the Related Party Transactions Guidelines. For example, we have compiled a list of relevant persons and entities, which we update on a regular basis, and search various databases to identify payments to or from these persons or entities. In some circumstances, our directors, nominees for directors and executive officers are also required to report transactions of which they are aware to the Lead Director, such as transactions in which an immediate family member or entity associated with such family member has an interest. We also circulate directors’ and officers’ questionnaires which inquire as to related party transactions. Our Code of Conduct addresses procedures to follow with respect to matters that raise potential conflicts, including a requirement that our employees, officers and directors report potential conflicts as part of their annual Code of Conduct affirmation statement. In addition, we poll key officers to determine whether they are aware of any transactions that may be subject to the Related Party Transactions Guidelines.

For the purposes of our Related Party Transactions Guidelines, related parties include:

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What Related Person Transactions Do We Have?

Some of our shareholders and their affiliates and employers of or entities otherwise associated with some of our directors and officers and their affiliates, have purchased insurance from us on terms we believe were no more favorable to these insureds than those made available to other customers. During 2006, we also engaged in certain transactions with shareholders who owned more than 5 percent of our Ordinary Shares at the time of the transaction, or their affiliates, as described below.

Barclays Bank PLC has agreed to provide up to $149 million, £83 million and A$16 million of credit in total to the Company and some of our subsidiaries in the form of loans and letters of credit under six syndicated credit facilities. Barclays Bank PLC acts as syndication agent or lead arranger under certain of these facilities. During 2006, the largest aggregate principal amount of loans made by Barclays Bank PLC outstanding under these facilities was £16 million and A$16 million and, as of March 31, 2007, the aggregate principal amount of loans made by Barclays Bank PLC outstanding under these facilities was £16 million and A$16 million. During 2006, we paid Barclays Bank PLC £850,000 and A$1 million in interest on these loans. We did not make any principal payments on these loans during 2006. Certain of these facilities provide for fixed rate loans and have interest rates ranging from 5.2505 percent to 6.145 percent, and others of these facilities provide for floating rate loans and have interest rates ranging from LIBOR plus 0.35 percent to LIBOR plus 0.45 percent. The letter of credit facilities charge fees on levels of utilization ranging from 0.275 percent to 0.50 percent and fees on unutilized capacity ranging from 0.07 percent to 0.10 percent. Barclays Bank PLC also charges a fronting fee of 0.10 percent when it is the issuer of a letter of credit under the facility. In May 2006, Barclays Capital Inc. served as a co-manager and underwriter on the Company’s offering of 6.70 percent Senior Notes due 2036. Also in 2006, Barclays Global Investors Limited provided investment management services to certain of our UK pension scheme funds. Barclays Global Investors Limited and Barclays Global Investors Canada Limited provided investment management services to some of our subsidiaries in 2006, managing approximately 6 percent of our investment assets. Barclays Bank PLC also provided commercial banking services to some of our subsidiaries in 2006. We paid the Barclays Group approximately $7.5 million in 2006 related to the services and transactions described above, inclusive of interest on the loans described above. In addition, during 2006 some of our subsidiaries and Barclays Bank PLC engaged in foreign currency exchange transactions in the approximate aggregate notional United States dollar equivalent amount of $64 million and interest rate derivatives transactions in the approximate aggregate notional United States dollar equivalent amount of $2.6 billion.

Wellington Management Company, LLP provided investment management services to some of our subsidiaries in 2006, managing approximately 20 percent of our investment assets. We paid Wellington approximately $8.6 million in 2006 for these services.

Certain subsidiaries of AXA, which we understand owned more than 5 percent of our Ordinary Shares during the first six months of 2006, provide reinsurance to certain of our subsidiaries. During 2006, we ceded approximately $53 million in reinsurance premium to subsidiaries of AXA. Also in 2006, AXA provided investment management services for the contributions made by employees under certain of our UK defined contribution plans. We did not pay AXA for these investment management services. AXA’s compensation for these services is reflected in the rate of return provided to ACE employees whose retirement funds AXA manages.

We made two loans to Brian Dowd in 2002. In May 2002, we loaned Mr. Dowd $250,000 in connection with a work transfer from Philadelphia, Pennsylvania, to Atlanta, Georgia. Principal on this note is due in annual installments of $50,000, with the final principal payment due on June 1, 2007. Mr. Dowd has received a discretionary bonus of $50,000 in each year in which principal has been due under this loan, and we have offset this bonus against such principal payment. Interest on this note accrues at 4.66 percent per year. We forgive any interest on this note as long as Mr. Dowd is an employee of the Company. In July 2002, we loaned Mr. Dowd $200,000 also in connection with his work transfer. Mr. Dowd used the proceeds of this loan to acquire a residence and he granted us a mortgage on that residence. The residence was sold in 2005. Principal on this note is due in annual installments of $20,000, with the final principal payment due on August 1, 2012. No interest accrued on this note until April 1, 2005, at which time the interest rate increased from 0 percent to 6 percent per

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year. In 2006, Mr. Dowd offset his discretionary bonus of $50,000 against the principal due on the first note and in December 2006 repaid $20,000 in principal on the second note. In addition, the Company forgave an aggregate of $7,447 and $14,693 in interest on these notes in 2005 and 2006, respectively. Since January 1, 2006, the largest amount outstanding under these notes in the aggregate was $260,000. As of March 31, 2007, $170,000 was outstanding under these notes in the aggregate.

The ACE Foundation–Bermuda, which we refer to as the ACE Foundation, is an unconsolidated not-for-profit organization which was established to strengthen the community by utilizing its financial resources to actively address social, educational, and other issues of community concern in Bermuda. It strives to be consistent in its community support by contributing to those charitable organizations that are specifically focused on clearly defined needs and problems. Five of the trustees of the ACE Foundation are current officers or directors of the Company, and the sixth trustee is a retired officer of the Company. We annually make contributions to the ACE Foundation which are in turn used to fund charitable causes in Bermuda. At December 31, 2006 and 2005, the Company maintained a non-interest bearing demand note receivable of $37 million and $39 million, respectively, from the ACE Foundation. The ACE Foundation has used the related proceeds to finance investments in Bermuda real estate, including investments in three properties that it rents to ACE employees at rates established by independent, professional real estate appraisers. The income generated from the real estate will initially be used to repay the note. However, the primary purpose of purchasing real estate was to pursue a fundamental financial objective of the ACE Foundation, which is to become a self-funding institution. The real estate assets assist the ACE Foundation in its endeavors to meet this goal by producing annual cash income that supports the ACE Foundation’s charitable objectives. Evan Greenberg and Philip Bancroft have rented real estate from the ACE Foundation. Lease payments under Mr. Greenberg’s lease with the ACE Foundation are $22,000 per month. Lease payments under Mr. Bancroft’s lease with the ACE Foundation are $18,000 per month.

In 2006, some of our subsidiaries entered into an agency agreement with Starr Technical Risks Agency, Inc., which we refer to as Starr, a wholly owned subsidiary of C.V. Starr & Co., Inc., which we refer to as C.V. Starr, of which Maurice Greenberg, the father of our CEO, is the Chairman and Chief Executive Officer. Under this agreement Starr serves as our non-exclusive agent for writing policies, contracts, binders or agreements of insurance or reinsurance classified as property and/or inland marine risks. The program applies to risks attaching in the United States of America or Canada and worldwide risks for entities domiciled, having their principal places of business in or conducting a substantial portion of their business in the United States or Canada. C.V. Starr has guaranteed some of Starr’s obligations under the agency agreement. Under the agency agreement, we pay Starr a commission on written premiums that it underwrites on our behalf. In 2006, we paid Starr a total of approximately $45.5 million in commissions under this agreement. An affiliate of Starr provides claims services for the program, but we do not pay any additional fee for those services. We also have entered into a profit sharing arrangement based on loss ratios in connection with the program if Starr writes a minimum of $20 million of net written premiums of program business per annum. Profit share amounts are payable on June 30 of each year. The profit share amount we will pay in any year will depend on how much program business Starr underwrites on our behalf and the calculation of the profit share amount. Each party to the agency agreement may terminate it without cause on 180 days’ notice and with cause on 30 days’ notice. We can terminate Starr’s binding authority for new business on 30 days’ notice, in which event Starr may terminate the agency agreement on 30 days’ notice.

Did our Officers and Directors Comply with Section 16(a) Beneficial Ownership Reporting in 2006?

Executive officers and directors of the Company are subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, as amended. We believe that all our directors and executive officers complied with all filing requirements imposed by Section 16(a) of the Exchange Act on a timely basis during 2006.

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INFORMATION ABOUT OUR ORDINARY SHARE OWNERSHIP

How Many Ordinary Shares Are Owned by Directors and Executive Officers?

The following table sets forth information, as of March 31, 2007, with respect to the beneficial ownership of Ordinary Shares by our executive officers and retired executive officers whose compensation is reported in the compensation tables that appear later in this proxy statement and to whom we refer as the NEOs, by each of our directors and by all our directors and executive officers as a group. Unless otherwise indicated, the named individual has sole voting and investment power over the Ordinary Shares listed in the Ordinary Shares Beneficially Owned column. The Ordinary Shares listed for each director and each NEO constitute less than one percent of the outstanding Ordinary Shares. The Ordinary Shares beneficially owned by all directors and executive officers as a group constitute approximately 1.3 percent of the outstanding Ordinary Shares.

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Which Shareholders Own More than 5 Percent of Our Ordinary Shares?

The following table sets forth information regarding each person, including corporate groups, known to us to own beneficially or of record more than five percent of our outstanding Ordinary Shares as of December 31, 2006.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Individual Performance Criteria:

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We have two types of performance-based restricted stock awards described below: Target Awards and Premium Awards.

Each Target Award of performance-based restricted stock consists of four installments. The vesting of each annual installment is subject to the following criteria:

In addition, if the performance-based restricted stock does not vest in the initial one-year period applicable to that installment, it may later vest if we achieve Cumulative Performance at the levels described below.

If our Per Share Tangible Book Value Growth compared with the growth of other companies included in the S&P 500 Property & Casualty Index over the four-year performance period, which we refer to as our Cumulative Performance, exceeds the 65^th percentile, a Premium Award of additional shares, over and above the yearly base award, will be earned as follows:

We retain Ernst & Young LLP, an independent public accounting firm and to whom we refer as Ernst & Young, to verify the calculations of our Per Share Tangible Book Value Growth, to compare our Per Share Tangible Book Value Growth to that of the median for the S&P 500 Property & Casualty Index and to prepare a

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Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s annual report on Form 10-K for the year ended December 31, 2006 and this proxy statement.

The foregoing report has been approved by all members of the Committee.

John A. Krol, Chairman

Mary A. Cirillo

Robert M. Hernandez

Thomas J. Neff

Dermot F. Smurfit

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Summary Compensation Table

The following table sets forth compensation for 2006 for our NEOs.

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Employment Arrangements

We employ Mr. Greenberg pursuant to an offer letter dated October 29, 2001 that provided for an annual salary and living allowance with an annual discretionary cash and long-term incentives. His base salary is annually adjusted as described in “Compensation Discussion and Analysis.” The offer letter also provided for customary executive benefits such as participation in our current benefit plans, a housing allowance, a car loan and allowance and a club membership.

Until Mr. Duperreault’s retirement as an employee of the Company on June 1, 2006, we had employed him pursuant to an agreement dated as of October 1, 1994 that provided for a base salary that was subject to increase. At the time of his retirement, Mr. Duperreault’s base salary plus living allowance was $600,000 per year, prorated for partial year service. The agreement also provided for an annual discretionary bonus and permitted Mr. Duperreault to participate in our benefit plans. The agreement also provided Mr. Duperreault with customary executive benefits, including participation in our retirement plan, our supplemental executive retirement plan, various insurance plans, reimbursement of housing and certain personal travel expenses and, generally, such other benefit programs as are available to our other senior executives. Pursuant to the agreement, Mr. Duperreault agreed not to engage in any activity in Bermuda or the Cayman Islands for a period of 12 months following termination of his employment with us that would compete with any business we conduct or which we were actively developing during the term of Mr. Duperreault’s employment.

On May 17, 2006, we provided a letter agreement to Mr. Duperreault setting forth his compensation arrangements for his transition from executive Chairman to non-executive Chairman of the Board of Directors, effective as of June 1, 2006. Our Board authorized a $2,000,000 cash bonus in recognition of Mr. Duperreault’s

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role as executive Chairman for the first five months of 2006. Mr. Duperreault’s total cash compensation for 2006, including salary and bonus for service as an executive officer prior to June 1, 2006 and fees for service as a director thereafter, inclusive of Board fees and a stipend for service as non-executive Chairman, was $2,603,750. Mr. Duperreault will receive fees in 2007 for his service as a director and non-executive Chairman through our Annual General Meeting at the annualized rate of $630,000, prorated for partial year service. Following our Annual General Meeting, Mr. Duperreault will receive compensation as a director on the same basis as provided to other directors, as described in “Director Compensation.” Now that Mr. Duperreault has retired as an executive officer, Mr. Duperreault is no longer eligible for annual cash incentives or long-term incentive awards given to our officers. We provided Mr. Duperreault with the opportunity to purchase medical coverage and convert his life insurance coverage to individual coverage. His current retirement funding benefits, such as the Company contribution, the Company match and the discretionary contribution, ceased at the end of May 2006. Similarly, Mr. Duperreault’s executive perquisites ended as of the end of May 2006. Mr. Duperreault’s personal use of the corporate aircraft is limited to space available on normally scheduled management business flights with no authority to requisition the aircraft. We will provide Mr. Duperreault with administrative support and office space for up to five years after he steps down as non-executive Chairman.

We employ Mr. Bancroft pursuant to an offer letter dated October 31, 2001 that provided for an annual salary with an annual discretionary cash and long-term incentives. His annual base salary is adjusted annually as described in the “Compensation Discussion and Analysis.” The offer letter also provided for customary executive benefits such as participation in our current benefit plans, a housing allowance, a car loan and allowance and a club membership.

We employ Mr. Cusumano pursuant to an offer letter dated February 25, 2005 that provided for an annual compensation target of $2,000,000 with a base salary of $500,000 per year. His annual base salary is adjusted annually as described in the “Compensation Discussion and Analysis.” The offer letter provided for Mr. Cusumano to participate in our discretionary bonus program based on individual and Company performance. The offer letter also provided that Mr. Cusumano is eligible to participate in our long-term incentive plan, but at the discretion of the Board of Directors. Under the terms of the offer letter, Mr. Cusumano is eligible to participate in all benefit plans offered to our senior executive group and specified perquisites such as housing and car allowances and club dues.

Mr. Medini is employed pursuant to an offer letter dated April 7, 2003. Mr. Medini is eligible to participate in all benefits plans offered to our senior executive group. His annual base salary is adjusted annually as described in the “Compensation Discussion and Analysis.”

In connection with Mr. Schmalzriedt’s retirement on September 30, 2006, one of our subsidiaries entered into a consulting services agreement with GTS Consulting, LLC, which is owned by Mr. Schmalzriedt. Under this agreement, GTS Consulting, through Mr. Schmalzriedt, provides consulting services to us, as requested by us and agreed to by Mr. Schmalzriedt. The term of this consulting agreement is from October 1, 2006 through September 30, 2007. The consulting services relate to duties and responsibilities prescribed from time to time by our Board of Directors and/or our CEO, to matters for which Mr. Schmalzriedt was responsible in connection with his former position with the Company and to the establishment and operation of a training program. As consideration for the consulting services, GTS Consulting will receive $100,000, payable quarterly, plus reasonable out-of-pocket expenses. In addition, Mr. Schmalzriedt’s unvested stock options will continue to vest in accordance with the terms of the awards under applicable long-term incentive plans, and his restricted stock will continue to vest during the term of his consulting agreement. We may terminate the consulting agreement with or without cause at our discretion and convenience at any time prior to September 30, 2007 by giving 30 days’ prior written notice. In addition, we may terminate the consulting agreement immediately for cause without prior written notice. In the event that we terminate the consulting agreement for cause, all consideration to be paid pursuant to the consulting agreement ceases as of the termination date. If we terminate the consulting agreement without cause, we are still obligated to provide the consideration described above. GTS Consulting and Mr. Schmalzriedt are subject to confidentiality obligations and a covenant not to compete with us during the term of the consulting agreement. We have agreed to indemnify Mr. Schmalzriedt for claims and liabilities in connection with the consulting services.

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Employee Stock Purchase Plan

We maintain a broad based employee stock purchase plan, which gives our eligible employees the right to purchase our Ordinary Shares through payroll deductions at a purchase price that reflects a 15 percent discount to the market price of our Ordinary Shares. No participant may purchase more than $25,000 in value of Ordinary Shares under this plan in any calendar year. Messrs. Cusumano, Dowd and Medini participated in the employee stock purchase plan in 2006.

Indemnification Agreements

We have entered into indemnification agreements with our directors and executive officers. These agreements are in furtherance of our Articles which require us to indemnify our directors and officers to the fullest extent permitted by law. The indemnification agreements provide for indemnification arising out of specified indemnifiable events, such as events relating to the fact that the indemnitee is or was one of our directors or officers or is or was a director, officer, employee or agent of another entity at our request or relating to anything done or not done by the indemnitee in such a capacity, including indemnification relating to the government investigation of industry practices. The indemnification agreements provide for advancement of expenses. These agreements provide for mandatory indemnification to the extent an indemnitee is successful on the merits. The indemnification agreements set forth procedures relating to indemnification claims. To the extent we maintain general and/or directors’ and officers’ liability insurance, the agreements provide that the indemnitee shall be covered by such policies to the maximum extent of the coverage available for any of our directors or officers.

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Grants of Plan-Based Awards

The following table sets forth information concerning grants of plan-based awards to the NEOs during the calendar year ended December 31, 2006. Because the Compensation Committee made plan-based awards at its February 28, 2007 meeting which it intended as compensation for 2006, we have included those grants in this table along with grants made during 2006.

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Outstanding Equity Awards at Fiscal Year End

The following table sets forth the outstanding equity awards held by our NEOs as of December 31, 2006.