NEW YORK (Dow Jones) - A hard market for property-casualty insurance - consisting of rising rates and tighter underwriting - will likely continue for some time, ACE Ltd.'s (ACE) top executive said yesterday.

Brian Duperreault, ACE's chairman and chief executive, told Dow Jones Newswires that rate increases are varying by line. Rates are moderating somewhat in the property business, while rising significantly in casualty lines - namely directors and officer insurance and excess liability, he said.

"There is a continuing momentum (in casualty lines)," Duperreault said. "This is true across the globe, not just true in the United States.

"We're seeing those rates continue to go up.

"We saw that at the beginning of this year and we expect that trend will continue throughout 2003."

After the bell on Wednesday, ACE reported a fourth-quarter loss of $168 million, or 67 cents a share, compared with net income of $46 million, or 15 cents a share, in the prior-year period. Results included a previously announced after-tax charge of $354 million as the company boosted prior-year asbestos and environmental reserves by $2.18 billion, offset by $1.86 billion of reinsurance.

Duperreault said property-casualty insurance and reinsurance will be the driver for Ace in the coming year. Net premiums written in its property-casualty operations increased 54% in the fourth quarter.

The Bermuda insurer made a conscious decision in early 2002 to de-emphasise its life reinsurance business, as the long-term market opportunities weren't there.

Duperreault said it has a small life reinsurance business, but it certainly won't be a large part of the insurer's business in the future.

ACE's financial services operations remain lumpy, but ACE sees increasing opportunities in 2003, Duperreault said. That business has started out "quite well" this year, he said.

Meanwhile, Duperreault said he feels very confident ACE's reserves are now in good shape.

He noted that ACE made a decision in the 1990s to reduce its business in a number of excess casualty lines that have been problematic for other insurers and caused American International Group Inc. (AIG) to add $1.8 billion after-tax to its reserves in the fourth quarter.

The insurer hasn't been immune to changing trends in those lines, but had reduced its exposure.

Duperreault said the risk vs. reward in a number of those lines is becoming attractive, as higher rates and better terms and conditions have tightened.

"It's not 100 percent yet, but as the market continues to go up in price, more and more risk becomes acceptable to us," he said.

Workers compensation remains a business where underwriters have to be disciplined - namely not succumbing to competition that wants to write the business at an unprofitable level, Duperreault said.

Conditions are improving medical malpractice, but ACE remains cautious about the line, Duperreault said.

ACE only began writing a small amount of that insurance in 2002, he said.

Excess liability, or umbrella coverage, is also beginning to look reasonable after being priced downward through much of the 1990s, Duperreault said.

However, rates need to rise higher in that area, he said.

ACE shares were recently up 65 cents, or 2.3 percent, at $28.40 on volume of 1.7 million shares, compared with average daily volume of 1.5 million.