A.M. Best Assigns "a-" to Capital Securities Issued by ACE Capital Trust II.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--March 31, 2000

A.M. Best Co. has assigned an "a-" rating to $300 million of capital securities issued by ACE Capital Trust II, which are guaranteed by ACE Limited. The net proceeds from the sale of these securities, representing a draw down from ACE's existing shelf registration, are expected to be used to repay a portion of ACE's outstanding commercial paper. A.M. Best's existing ratings for ACE's senior debt, trust preferred stock and insurance financial strength, including ACE INA, remain unaffected.

In July 1999, ACE acquired CIGNA's property/casualty operations (renamed ACE INA) for $3.5 billion. The transaction was financed by a combination of $1 billion of existing cash, $400 million in privately placed trust preferred securities and the remainder from the issuance of $2.1 billion of commercial paper. As A.M. Best noted, ACE planned to refinance the commercial paper with longer-term, more permanent financing when market conditions improved. ACE subsequently refinanced this commercial paper with the issuance of $800 million in senior debt and $100 million in trust preferred securities, rated "a" and "a-", respectively, by A.M. Best.

The ACE Capital Trust II capital securities presently being issued are backed by junior subordinated debt issued by ACE INA Holdings Inc.--ACE's U.S.-based intermediate holding company--and, along with the senior debt and trust preferred securities previously issued, are guaranteed by ACE Ltd., its financially strong Bermuda-based parent.

ACE's interest coverage ratio was negatively affected by the additional leverage required to finance the CIGNA property/casualty acquisition. In the near-term, it is anticipated ACE will issue common stock as part of the permanent acquisition financing, which will considerably lower the company's leverage position. In addition, A.M. Best believes interest and fixed-charge coverage will remain strong because of ACE's historically excellent financial results as a stand-alone operation and the expected improvement in profitability of the ACE INA operation.

While the acquisition of ACE was completed almost a year ago, A.M. Best continues to monitor the integration progress of CIGNA property/casualty into ACE's operations. A.M. Best believes that ACE INA's operations will improve through a domestic restructuring that will include a realignment of profit centers, enhanced claims methods and processing, along with reductions in office sites and staff.

CIGNA's property/casualty historical results have been adversely affected by its middle-market accounts and business that currently resides in its Brandywine Group run-off operations. Somewhat mitigating these risk factors is ACE's adoption of an integration strategy to re-evaluate or potentially sell any underperforming units of CIGNA's property/casualty operations. ACE partially executed this plan through its Oct. 11, 1999 agreement to sell the renewal rights of its middle-market business to Wausau Commercial Insurance, a unit of Liberty Mutual Group. On Nov. 1, 1999, ACE completed the divestiture of its remaining middle-market business through the sale of its California workers' compensation book of business to Superior National.

In addition, at the outset of the acquisition of CIGNA's property/casualty operation, ACE established a reinsurance agreement with Berkshire Hathaway's National Indemnity unit. The agreement provides for $1.25 billion of unfavorable claims development above carried reserves prior to the sale. However, ACE could be negatively affected by unforeseen losses in this business over the long term.

Operationally, the acquisition of CIGNA's property/casualty operations strengthens ACE's market profile as a leading global property/casualty organization with a high degree of geographic, customer and product diversification. The acquisition gives ACE access to one of the largest U.S.-based commercial insurers, along with its customers and distribution channels. A.M. Best also acknowledges the potential cross-selling opportunities from the merger. While ACE is a leading provider of excess liability and specialty coverages to Fortune 1000 and multinational corporate clients, CIGNA's property/casualty operations offer primary coverages and risk-management services to a similar core client base through a global service platform. In general, the combined entity will offer complementary products to a larger client base.

Finally, there was a material amount of goodwill created as a result of the merger that has reduced the tangible net worth of the organization.

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 international clients. Operations are conducted worldwide, including the United States, Bermuda, London, continental Europe and Asia. The company is among the largest insurance organizations in the world, with reported consolidated assets of $30.1 billion and shareholders equity of $4.5 billion as of Dec. 31, 1999.

The following new debt security rating was assigned:

-- ACE INA Holdings Inc.--"a-" rating on new capital securities

backed by junior subordinated debt that is guaranteed by ACE Ltd.

The following debt ratings remain unaffected:

-- ACE Ltd.--"a" rating on senior debt; "a-" rating on subordinated debt; "a-"
rating on preferred stock.

-- ACE INA Holdings Inc.-- "a" rating on senior debt; "a-" rating on the
subordinated debt.

-- ACE Capital Trust I, II, and III -- "a-" rating on trust preferred
securities.

The ratings of the following securities available under shelf registration remain unaffected:

-- ACE Ltd.--"a" rating on senior debt; "a-" rating on subordinated debt; "a-"
rating on preferred stock.

-- ACE INA Holdings Inc.-- "a" rating on senior debt; "a-" rating on the
subordinated debt.

-- ACE Capital Trust I, II, and III -- "a-" rating on trust preferred
securities.

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.