ACE Ltd. Signs Definitive Agreement to Acquire CAT Ltd.

ACE Ltd. and CAT Ltd. have signed an agreement under which ACL will acquire all of the outstanding capital stock of CAT, a privately held, Bermuda-based property catastrophe reinsurer. The acquisition will cost ACL about $711 million in cash, subject to certain post-closing adjustments.

ACL said the acquisition will be financed initially with a mix of about $390 million of short-term borrowing from the current undrawn credit facility established in December 1997, and from cash on hand.

ACL said it expects to publicly offer up to 16,500,000 of its ordinary shares, excluding any over-allotment option shares, in a registered public offering. The purpose of such offering is to finance the acquisition of CAT and for general corporate purposes.

CAT will be integrated with ACL's existing property catastrophe subsidiary, Tempest Reinsurance Company Limited. The combined property catastrophe reinsurers will operate under the Tempest Re name.

ACL said Donald Kramer will continue to hold the position of president and chief executive officer of Tempest Re. Paul Hasse, CEO of CAT and Charles Kline, president of CAT, will become co-chief executives of ACL Capital Products.

The transaction is expected to close in early April.