Standard & Poor's Revises ACE Ltd.'s Outlook From Negative To Stable

Standard & Poor's has affirmed its 'A+' financial strength rating on ACE Limited's subsidiaries, and revised the outlook for ACE from negative to stable, reflecting the company's excellent operating performance and strong capitalization. This is offset by an aggressive acquisition strategy, characterized by the speed at which new entities have been added, the substantial size of its targets, and the geographical spread of its reach.

ACE group insurers rated by Standard & Poor's include A.C.E. Insurance Co. Ltd. (ACE) and Corporate Officers and Directors Assurance Ltd., ACE's wholly owned subsidiary; Tempest Reinsurance Co. Ltd.; Westchester Fire Insurance Co.; and Westchester Surplus Lines Insurance Co.

Since its 1985 inception, ACE has primarily been a low-frequency, high severity casualty underwriter, and until 1994, high layer excess liability and directors and officers liability insurance represented more than 90% of ACE writings. Since that time, the company's rapid diversification efforts (through acquisition and internal growth) have resulted in significant contributions from satellite, property catastrophe, and financial lines. ACE has demonstrated high levels of client retention, and wide geographical dispersion of risk, offset by declining premium rates.

During 1996, ACE acquired Tempest Reinsurance Ltd., a Bermuda domiciled property catastrophe writer, and three Lloyds managing agencies, which have become significant sources of revenues to ACE Insurance. Capacity purchases have grown from £24.8 million in 1996 to £301.8 million for the 1998 year of account. ACE has become the second largest corporate contributor of capacity at Lloyds, and syndicates under its management control the second largest source of capacity in that market. On Jan. 2, 1998, ACE acquired Westchester Specialty Group (formerly part of Talegen Holdings, now renamed ACE USA), including a property casualty primary carrier licensed in all 50 states. On April 1, 1998, ACE acquired CAT Ltd., a Bermuda domiciled property catastrophe writer which is managed as an integral part of Tempest, and will be merged into Tempest by the beginning of 1999.