incredible liability they assume.

Speaking at the Hamilton Rotary Club luncheon yesterday, Mr. Scott said many people are not aware of the extent of personal liability that goes along with the symbol of achievement.

"You effectively put the full value of your personal assets on the line for what, in the overall scheme of things, is a relatively small director's fee,'' Mr. Scott said.

"Without ACE's directors and officers insurance, these people could find their families destitute because of a decision made by another person. We help them accept their director and officer responsibilities.'' ACE was formed as a result of the liability crisis of the 1980's, when there was a shortage of certain types of insurance coverage for excess liability.

Mr. Scott said, "It was in such short supply that even the biggest US corporations, who were prepared to pay the earth for their insurance, found that they were unable to secure the kind of coverage they really needed. In short, they were having to pay considerably more for less.'' Mr. Scott stated that ACE used to be the only seller of top-end excess liability insurance. Policies generally start at $100 million, meaning they take on a layer of coverage that doesn't kick in until the claim goes past $100 million.

They are competing with Starr Excess and Lloyds of London, he said, "But you still can't buy as much as we sell anywhere else in the world.

"In fact, no other insurance market in the world can provide the capacity which ACE, XL, Starr and Oil Insurance are offering. And that's part of the reason why we and Bermuda are the leaders in this par ticular field of excess liability insurance.'' Mr. Scott said that ACE concentrates on selling liability insurance as some others concentrate on property and catastrophe insurance.

He answered critics who see Bermuda's insurance companies as "cash cows,'' saying that some of the companies have large financial resources because they need it to do what they do.

"ACE,for example, has almost $1.5 billion of capital and retained earnings.

We have total investments and cash of almost $3 billion. Why so much? "First, we need to pay claims as they become payable. Second, we have to show our customers that we are financially strong, or we won't get people to trust us with their business in the first place,'' he said.

"Last year we paid $286 million -- cash -- to eight of our insureds to cover their catastrophic liability losses.'' Mr. Scott also made the point that many times ACE's customers are also the same people that bring in tourism dollars, flying to Bermuda, staying in hotels, using cabs and eating in local restaurants.

His firm put up the money to build the office block on Pitts Bay Road which they occupy. "We actually chose to be in Bermuda,'' he said.

"We are not here just for tax reasons, although it is part of what keeps us competitive in the global insurance markets. We are here because it makes good business sense. We write the single largest insurance limit retained by any insurance company,'' Mr. Scott said.

"We need to write our coverage worldwide in order to collect enough premium to provide this broad coverage. Bermuda enables us to seek our business worldwide and have our contract interpreted on its own merits through arbitration, not by arbitrary courts in the United States or France.'' BEWARE OF LIABILITY -- ACE Insurance CEO Mr. Walter Scott cautions aspiring corporate directors.