of a US insurer because of its intended purchase by ACE Ltd.

The move by S&P came as ACE stock (NYSE: ACL) rose as much as $4.375 on Friday to an all-time high of $93.375, before closing at $92.5625, up $3.5625 for the day.

It was for ACE, the holding company for ACE Insurance Co. Ltd., affirmation of market approval of the latest strategic diversification.

The activity came after ACE agreed to buy Atlanta-based Westchester Specialty Insurance Group (WSIG) for $333 million in cash. Westchester is an insurance unit of Talegen Holdings Inc., which is a subsidiary of Xerox Corp.

The acquisition is a significant platform for ACE's future development as its first US-based insurance operation and a staging ground that can be used to attract the talent it will need to build a major operation in the US.

S&P's single-'A'-minus claims paying ability and counterparty credit ratings on WSIG subsidiaries Westchester Fire Insurance Co., Industrial Underwriters Insurance Co. and Westchester Surplus Lines Insurance Co. have been on CreditWatch since January last year.

But the implications were last week revised from "developing'' to "positive'', an indication that the rating may be affirmed or raised by S&P.

S&P said last week that while it believes "that the historically good underwriting performance and capitalisation of Westchester Specialty will continue at its present level, the strength of ACE Ltd. is impetus for the positive CreditWatch implications''.

WSIG employs some 210 people with its headquarters in Atlanta and branches in San Francisco and Los Angeles and had annual gross written premiums of $258 million and net written premiums of $125 million in the year to December 31, 1996.

ACE was attracted to the company for a number of reasons, including a strong management team, healthy investment portfolio, and a long term relationship with numerous US wholesale brokers.

WSIG's products are distributed through about 70 wholesale brokers, including many of the largest in the US.

Their products include specialised inland marine, fire and commercial multi-peril coverages in the catastrophe and non-catastrophe markets; umbrella and excess coverages for products and completed operations; and premises, automobile and employers' liability coverages.

WSIG will be a subsidiary under a US holding company being established by ACE.

ACE gets US platform: Page 12