A.M. Best Affirms Financial Strength and Debt Ratings of ACE Limited; Upgrades ACE Tempest Re.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Jan. 16, 2001

A.M. Best Co. has affirmed the financial strength ratings of ACE Limited (NYSE: ACL) insurance subsidiaries (ACE Group) and has raised the financial strength rating of ACE Tempest Reinsurance Limited to A+(Superior) from A (Excellent) to reflect its contribution to the group.

A.M. Best maintains separate ratings for members of the ACE Group of companies. In addition, the "a" senior unsecured debt rating for ACE INA Holdings, and the "a-" trust preferred securities rating for ACE INA Holdings and ACE Capital Trust I and II, have been affirmed. ACE Financial Services' Capital Re Corporation has been assigned an "a-" senior unsecured debt rating while an "a-" rating has been assigned to the trust preferred securities issued by Capital Re LLC.

The ratings reflect ACE Groups' substantial diversity of business lines and earnings, excellent operating performance and strong niche market position as a leading provider of large program limits to upper tier multinational companies. These strengths are derived from ACE's strong franchise as an international insurer and reinsurer, its outstanding management team and an operating strategy that emphasizes strict underwriting, reserving and risk management discipline. Management has successfully executed the planned objective of reducing the debt level and lengthening the maturity profile following the 1999 acquisition of CIGNA P&C business (ACE INA) which was financed with short-term debt. Total debt plus preferred currently stand at approximately 30% of capital, a 10% reduction since the ACE INA acquisition.

Conversion of preferred securities into common shares within the next two years will further bolster financial flexibility. A.M. Best believes superior profitability and declining debt levels will prospectively improve fixed charge coverage and expects the company will reduce its financial leverage--debt plus preferred to capital--in the near to intermediate term.

Through the acquisition of ACE INA's domestic and international property/casualty operations, ACE has substantially expanded and broadened its geographic platform, with the international operations offering unique growth opportunities. A.M. Best believes ACE has the intellectual capital to meet the growing demands of the marketplace and the vision of management to execute its business strategies. A.M. Best views the rating outlook as stable.

These strengths are partially offset by the elevated level of financial leverage albeit declining, risks associated with the ACE INA acquisition and the company's venture into financial products. However, while financial leverage is at the upper bounds of its rating category, A.M. Best expects that ACE will continue to reduce its debt to a level that is more representative of its peers. Further, the increased debt level has served to support the group's growth strategies and management has demonstrated its ability to successfully execute its corporate strategy.

ACE Ltd., headquartered in Hamilton, Bermuda, is a publicly traded holding company that, through its operating subsidiaries, provides a broad range of specialty insurance and reinsurance products to a diverse group of multinational clients. At September 30, 2000, the company reported consolidated assets of $31.5 billion and shareholders' equity of $5.2 billion.

For the complete report, listing of companies and debt issues go to: http://www.ambest.com/news/ace.pdf

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.