Ace Ltd.'s ratings outlook was revised to positive from stable by Standard & Poor's on Friday on the strength of strong operating performance and investment losses that were low in comparison to peers.

S&P also affirmed the financial strength and counterparty credit ratings of A+ on the insurer's operating companies and said it could upgrade the ratings within the next year to two years if improvement continues.

The New York-based ratings agency said Ace has a "very strong" competitive position and a well diversified business platform.

Ace, which moved its holding company from the Cayman Islands to Switzerland last year, has its principal executive offices in Bermuda.

"The positive outlook is based on Ace's very strong operating performance over the past five years, which compares favourably with many global insurance and reinsurance peers, both in terms of average returns as well as quality of earnings, as measured by earnings volatility," said Standard & Poor's credit analyst Laline Carvalho.

S&P said Ace's investment losses in the first nine months of 2008 and related seven-percent drop in shareholders' equity relative to year-end 2007 had been moderate and compared favourably with a number of global peers.

"Capital remains supportive of the ratings in the strong range, and the company's liquidity is also strong," S&P commented. "Given the weakened competitive position of some of Ace's peers over the past year, we believe Ace is in a solid position to take advantage of current market dislocation."