ACE CEO Brian Duperreault said he was optimistic that class action and asbestos legislative reforms stood a good chance of being pushed through by US lawmakers in 2004.

Mr. Duperreault spoke to the possibility of legislative reform in the US yesterday on a call with analysts after the company announced record earnings of $1.4 billion for 2003.

Although optimistic on both fronts, Mr. Duperreault said he saw class action reform as being further along the path than asbestos reform as indications were that it may have already garnered the necessary legislative support in the US Congress. Federal laws in the US require the support of a majority of both the House and Senate before they can be passed and signed into law by the President.

The need for reform in both areas comes on the back of the near-crisis situation now facing America. Years of escalating settlements and awards handed down in class action suits and to asbestos victims, sometimes with no signs of illness, are cited by critics of the system as having had a profoundly crippling effect on the US economy.

Insurers, including ACE, have been hard hit by the state of American tort system ? with billions of dollars having to be set aside in anticipation of claims ? but they are not the only ones with a growing number of corporations having to cut jobs or close their doors altogether.

Last year ACE announced it was taking a $354 million charge in the fourth quarter of 2002 to boost its reserves for future asbestos claims.

This week the company said its reserve levels were adequate and though Mr. Duperreault spoke hopefully of reform ? which could see ACE get back some of the money it has had to set aside ? he said ACE was not banking on it.

Mr. Duperreault told ACE?s ?asbestos reserves do not anticipate any federal reform.?

But he said that did not mean he did not have high hopes for reforms, and was optimistic they could happen as there was now better recognition of the abuses of the system, with the dire need for legislative change now recognised at the state level, the federal level and at the court level.

?It seems possible that Congress will enact some form of class action reform. We view this possibility favourably because it could lower the cost of insurance which has been a sore spot among consumers.

?In addition there may also be some constructive movement with regard to asbestos legislation in 2004. Just the prospect of providing certainty of our outcome to the asbestos issue would in itself be a positive development for ACE. ?

Analysts yesterday grilled the company?s executives about its asbestos reserves after rival insurer Chubb boosted their asbestos reserves in the last quarter, which could be a sign that claims trends may have deteriorated since ACE took its charge in the fourth quarter of 2002.

But Mr. Duperreault told analysts the company was confident that its reserve levels for asbestos claims were sufficient.

?We review the asbestos reserves every quarter and we feel comfortable. Certainly there is some increase in frequency and severity (of claims) ? I think that is probably true, but it was within our range of expectation.?

Mr. Duperreault also spoke of what he saw as the ?sticking points? that could delay or halt reform of class action and asbestos legislation at the federal level.

He said class action issues included the size of the class, where the case would be heard and what state-level laws were, but he said that most of these issues had been ?basically resolved?.

?I think it is a question of whether the Senators who signed up for this at the end of last year continue to support it. They had more than the 60 required for cloture. So, frankly, I am optimistic about class action. I think it will get done. Nothing goes in a straight line in our Congress but I would say that there are not a lot of sticking points to get this past cloture.?

On the asbestos front, Mr. Duperreault said he was also optimistic but the biggest sticking point was money.

He said there was still some differing opinions on what victims with varying asbestos-related illnesses should be paid ? with the highest levels going to those suffering from asbestos-related cancer asbestosis ? and the number of anticipated claims in each area.

?The asbestos bill is particularly complicated. One of the issues is just the mechanics of it, how the administration is going to work, an issue the labour has been particularly concerned about. And there has been a lot of progress there.? Mr. Duperreault said that many of the issues had been ironed out, and the last big question was the money.

?You really get down to money and there is a bid/ask. The bid/ask is still quite wide,? Mr. Duperreault said, adding that reforms put forward by Senate Majority Leader William Frist could make a real difference but would not, in effect, put a ceiling on how high awards could go as cases could still be referred to federal court.

He said that insurers and manufacturers had put an offer on the table for $114 billion, which he said was conservative on the high end. But others have come up with estimates as high as $150 billion.

?I think there is a lot of good will across the board from both sides. I?m an optimist about this. I think it should work its way through.

?Asbestos still makes the headlines everyday in our country, ? he said, ?the problem is not going away.

?We certainly could come to an agreement on the outcome,? he said, adding that reforms did not ?put in place a ceiling, it is a shift.?