property and casualty businesses of Cigna Corp.

In a telephone interview from Philadelphia where the deal was signed ACE chairman, president and chief executive officer Brian Duperreault said the purchase allows the company to diversify significantly in one transaction.

ACE has been on a buying spree over the past two years in an effort to compete with the big players on the world stage.

"We want to grow but in a very focused manner,'' he told The Royal Gazette .

"We want to diversify our company. If you don't grow at some point you disappear. We looked at the Cigna organisation and we saw in one place, in one organisation, a truly global company that was specialising and had taken the right underwriting steps. Therefore, putting that together with us moved us toward where we were trying to get to in a very quick way but in a way that was much easier than trying to buy companies on a country to country basis over the long haul.'' The deal allows ACE to significantly expand its US presence in the property and casualty business and allows Cigna, the third-largest US health insurer to exit the business to concentrate on employee benefits.

ACE will vault into one of the top 20 players in the US property and casualty market, and will have a significant presence in all major insurance markets worldwide. The company will now have about 9,000 employees with operations in 47 countries, and 90 offices in the US.

The headquarters of ACE's US operations will now shift from Atlanta to Philadelphia where Cigna's property and casualty operations are headquartered.

Gerald Isom, president of Cigna Property & Casualty will become president and chief executive officer of ACE USA. Kingsley Schubert, president of Cigna International, will be president and chief executive officer of the international operations being acquired by ACE.

ACE is buying the operations with cash. ACE will acquire Cigna's domestic property and casualty business, including Brandywine Holdings which was formed as a run-off operation for the company's asbestos and environmental claims.

ACE will also acquire Cigna's international property and casualty business.

Cigna will retain its domestic and international health, life and pension business.

The deal will also create an alliance in which ACE will offer corporate clients Cigna's group life, health, pension and managed care coverage. Cigna will in turn offer clients insurance products produced by ACE's property and casualty business.

"We acquire a company with a single corporate culture operating on a global scale in a way that matches up pretty nicely with what we do,'' Mr.

Duperreault said about the deal. "They are very compatible companies, That's what we saw. It's rare to find something like this.'' Cigna's property and casualty business had come through a tough period. The company was struggling with a large amount of asbestos-related claims in the early 1990s, and managed to return its property-casualty insurance business to profitability.

ACE-Cigna in $3.45bln deal But that was after it put the troublesome policies into the newly-formed Brandywine Holdings Corp. unit in 1995 to allow them to expire.

According to Bloomberg News, analysts predicted ACE may boost the entire business's profits by using a subsidiary in tax-free Bermuda to reinsure the Brandywine policies.

Mr. Duperreault said that third party protection against adverse development at Brandywine will be in place before the transaction is completed to protect ACE. He said the third party protection will not necessarily be placed with ACE in Bermuda.

"We looked at it thoroughly,'' he said. "We are comfortable with it. We think it's structurally sound. We will expect to receive a third party protection that would be significant to cover it. That does not necessarily mean we are going to take anything to Bermuda.'' He also acknowledged the down cycle in the US property and casualty market.

"It's a platform to grow,'' he said. "You have to match it with the current markets. Growth opportunities aren't popping up everywhere. But that's okay.

We'll maintain our discipline. We'll take advantage of it. We'll grow where it makes sense but because we have a diversified organisation with business operations on a global scale there are places we will grow and places where we won't. That's the benefit of having that diversification.'' Asked whether the acquisition could eventually lead to a much rumoured merger with Bermuda-based Exel, Mr. Duperreault laughed and said he gets asked the question all the time.

"I like Exel,'' he said. "I think they are a terrific company. They have lots going for them as a group and individually. They are running their company and I'm running mine. I hope they are always on the Island and operating in a sound way and we are going our separate ways.'' He hailed the Cigna deal as a significant step in the maturing of the Bermuda marketplace.

"This is a great moment for Bermuda,'' he said. "We have a company operating in Bermuda on a global basis. That is a big jump for Bermuda. Bermuda has a great reputation in the insurance world.'' ACE IS THE PLAE FOR GROWTH (Dates reflect when announced and not necessarily when acquired or formed; numbers in brackets reflect cost of purchase).

1985 ACE Insurance formed.

1993 Acquires Corporate Officers and Directors Assurance Ltd.

1994 Starts product diversification with satellite coverage.

1995 Adds excess property aviation and financial lines.

Purchase of Tempest Reinsurance ($641.7 million stock).

1996 Purchase of 51 percent of Methuen, a Lloyd's of London managing agent, and agreement to complete full acquisition by 2000.

Purchase of Ockham Worldwide Holdings Plc, a Lloyd's of London underwriter.

1997 Formation of Sovereign Risk, a joint venture with XL Insurance Co. Ltd. to provide political risk coverage.

Opens up Dublin office, formation of ACE Insurance Co. Europe Ltd.

1998 Purchase of Westchester Specialty Group ($338 million), holding company ACE USA formed.

Formation of ACE Capital Re in joint venture with US-based Capital Re.

Purchase of Bermuda-based CAT Ltd. ($711 million).

Acquires majority of stock in Creditor Resources Canada Ltd. in British Columbia.

Purchase of Tarquin Ltd., a Lloyd's of London underwriter ($500 million).

Airline Risk Consortium -- formed with Exel Ltd. and Overseas Partners Re Ltd.

Alliance with Blackthorn Reinsurance Services, Inc. in US.

1999 Purchase for $3.45 billion in cash of US-based Cigna Corp. international and domestic property and casualty insurance business.

Brian Duperreault Gerry Isom