ACE Limited yesterday announced plans to sell $1.25 billion of its ordinary shares in a public stock offering with the proceeds targeted for funding growth opportunities in the global insurance and reinsurance markets.

The Bermuda-based property and casualty insurer said it will also offer up to an additional $187.5 million of ordinary shares which are subject to a 30-day option granted to the underwriters of the offering.

Citigroup Markets Inc. and Goldman, Sachs & Co. will act as joint book-runners of the offering.

ACE Ltd. also said in a regulatory filing that it expects to post an operating loss excluding net investment gains or losses ? of 50 cents to 70 cents per share for the third quarter. The total net loss of $593 million includes losses of $191 million from total primary insurance and $402 million from reinsurance.

ACE forecast costs totalling $550 million from Katrina and between $100 million and $150 million from Rita.

Moody?s Investors Service changed the outlook for ACE Limited?s debt ratings to stable from negative in reaction to the share issuance and Ace?s bid to improve its capitalisation and financial flexibility. Moody?s said that its action also reflects expected improvements in pricing conditions for commercial lines following Hurricanes Katrina and Rita, which Moody?s said will allow ACE to continue to strengthen its balance sheet and provide further earnings growth opportunities.

ACE closed at $45.58 a share yesterday, down $1.49 or 3.17 percent on the New York Stock Exchange.