ACE Ltd. Revised To Stable

S&P revised its outlook on ACE Ltd. and its operating companies to stable from negative. S&P also affirmed its “A+” counterparty credit and financial strength ratings on ACE Ltd.’s operating units, and its “BBB+” counterparty credit and senior debt ratings on ACE Ltd.

ACE’s ratings are based on a strong competitive position as a global and diversified property/casualty company, strong capitalization, and strong financial flexibility. In addition, operating performance dramatically improved in 2003, adding significant strength to the rating.

Negative factors constraining the rating on ACE over the long-term include: a high amount of reinsurance recoverables, a significant amount of runoff reserves, and a large amount of intangibles. ACE is expecting proceeds of almost $1 billion from the initial public offering (IPO) of Assured Guaranty Ltd. S&P views this additional financial flexibility as a strength to the rating. ACE will likely this capital to expand its international franchise.

The outlook is stable based on the view that earnings in 2004 will be another very strong year with a combined ratio of 88-90 percent. ACE’s combined ratio is not expected to improve further as the company is shifting its business profile to casualty and away from property. The additional financial flexibility resulting from Assured Guaranty’s IPO is expected to strengthen ACE’s position in some international markets. ACE’s high amount of recoverables, asbestos and environmental (A&E) and runoff reserves, and intangibles will be long-term limiting factors.