NEW YORK (Bloomberg) ? Bonds of ACE Ltd., a Bermuda-based property and liability insurer, were cut to ?hold? from ?buy? at UBS Securities LLC on concern about a review of ACE loss reserves by Pennsylvania insurance regulators due later this year.

ACE?s 5.875 percent 2014 notes are bid at a spread of 110 basis points more than Treasuries and offered at 105 basis points more than Treasuries, levels UBS views as ?fair value,? analyst David Havens wrote in a research note.

UBS last week reduced the ratings of US insurance companies to ?underweight? because profit growth in the industry may not be sustainable. UBS recently cut life insurers from ?market weight?, and non-life insurance companies from ?overweight?.

The cut ?brings our rating of the company?s bonds in line with our rating of the overall sector?, Havens said in an interview. ?Fixed-income investors should also be concerned about the results of the biennial review of ACE reserves by the Pennsylvania Insurance Department, due later this year,? he said.

ACE recently reported second-quarter profit rose to $413 million, or $1.14 a share, from $371 million, or $1.32 a share, a year earlier.

Excluding realised investment gains and losses, profit was $1.29 a share, compared with the $1.25 average estimate of 20 analysts surveyed by Thomson Financial.