ACE Ltd. and a World Bank Group Plc agency have signed a major reinsurance agreement, it was announced.

Under a quota share treaty, ACE Insurance Company, Ltd. will reinsure the Multilateral Investment Guarantee Agency's (MIGA) political risk insurance for developing countries.

In a joint release, ACE and MIGA called the agreement an "unprecedented development in the investment insurance market.'' ACE's treaty reinsurance of MIGA's guarantee operations marks the first time tong term reinsurance has been made available by a private reinsurer on the same terms as contracts offered by MIGA, they said.

It is also believed the first time an insurance company has forged a partnership with a US government agency.

MIGA has a proven track record of successful underwriting of political risk guarantees, ACE chairman, president and CEO Brian Duperreault said.

MIGA executive vice president Akira Iida said: "This agreement is an important milestone in MIGA's collaboration with the private insurance market in assisting the promotion of increased flows of foreign direct investment into the developing world.'' ACE and MIGA will be better positioned for the higher demand for political risk insurance, which provides coverage for foreign investments in developing countries, they said.

It also means MIGA can now provide private investors and developing countries additional capacity for investment projects.

The coverages offered will be the same as those offered by MIGA's guarantee programme including transfer restriction, expropriation, war and civil disturbance, and breach of contract.

The World Bank Group is the collective name for the International Bank for Reconstruction and Development and its affiliates: the International Finance Corporation which provides long term project financing to developing countries and the International Development Association which provides long term loans at low interest rates.