A.M. Best Co. announced that it has assigned a rating of ?bbb+? to ACE INA Holdings, Inc.?s $500 million ten-year 5.875 percent senior unsecured notes. Moody?s Investors Service has assigned the notes an A3 rating.

ACE INA Holdings announced the plan last week. The company?s ultimate parent, Bermuda-based ACE Limited, will guarantee the notes. The proceeds are earmarked to repay $400 million of 8.2 percent senior notes maturing in August 2004 and to redeem $75 million of subsidiary trust preferred securities.

Both rating agencies said their outlook on the company remains stable.

?The rating reflects ACE?s excellent consolidated operating performance, management?s determined focus on underwriting profitability, well-defined and executed business strategies and decreased financial leverage,? said Best. ?Operating results have included rather modest levels of net reserve increases on core business lines that were easily managed in 2003.?

Moody?s said its rating ?reflects the company?s reasonably strong competitive positions in its principal business segments; its good spread of risk and internal liquidity; its sound capitalisation; and the good financial and business profile of its principal subsidiary operations. These fundamental strengths are tempered by challenges associated with managing an increasingly complex global operation, the intrinsic volatility of some of ACE?s insurance and reinsurance businesses, and exposures to adverse claim development trends in its core casualty and mass-tort liability exposures.?

Best commented favourably on ACE?s initial public offering of shares in ACE Guaranty Corp. and ACE Capital Re International Ltd., indicating that it had ?essentially decreased the company?s exposure connected with the financial guaranty businesses, limiting the downside to the remaining 35 percent ownership investment.? The proceeds, just over $1 billion, has been ?redeployed into ACE?s core businesses, allowing improved surplus levels in various segments of ACE?s property/casualty businesses, as well as increased financial flexibility over the near term,? said Best.

It noted that this additional capital ?was infused at a time when the company?s business mix is shifting to a heavier proportion of casualty lines that carry a longer tail and higher loss ratios, which also applies to new business production.? Best said it ?expects management?s disciplined underwriting culture to cause the positive earnings momentum to continue as the new capital is utilised.?

According to Moody?s, the rating reflects the company?s ?reasonably strong competitive positions in its principal business segments; its good spread of risk and internal liquidity; its sound capitalisation; and the good financial and business profile of its principal subsidiary operations. These fundamental strengths are tempered by challenges associated with managing an increasingly complex global operation, the intrinsic volatility of some of ACE?s insurance and reinsurance businesses, and exposures to adverse claim development trends in its core casualty and mass-tort liability exposures.?