Westchester Specialty Group, Inc. from Talegen Holdings, Inc.

Westchester is an insurance holding company and ACE's platform for the future development of US-based business. It has now been re-named ACE USA. The subsidiaries will all retain their names.

ACE paid Talegen Holdings, an indirect subsidiary of Xerox Corporation, $338 million for the purchase, including adjustments of $5 million. The deal was first announced in September.

ACE chairman, president and CEO, Brian Duperreault, said, "We can think of no better way to begin the new year than by formally welcoming Westchester to the ACE group of companies.

"As we said when we announced this proposed acquisition a few months ago, Westchester introduces us to a large new client base. Given our focus on product diversification, we are pleased that business development in this important market can now begin in earnest.'' Xerox said the purchase price, less approximately $70 million in Talegen-related costs, was consistent with the estimated value of the unit established when Xerox discontinued its insurance operations in 1995.

Westchester Specialty is a leading provider of specialty property, umbrella and excess casualty insurance coverages in the US. Based in Atlanta, it employs 210 people in three locations. The company had net written premiums of $125 million in 1996.

ACE had gross premiums written for 1997 of nearly $743 million, almost $100 million above the year before (1996: $645.8 million) and more than $300 million better than 1995 (1995: $435.8 million). Total revenues topped a billion dollars for the first time and net income soared nearly 60 percent to almost $461.4 million. Earnings per share rose from $5.82 in 1996 to $8.02 in 1997.

Meanwhile, ACE's loss and expense ratio has improved markedly in recent years, from 81.8 percent in 1995, to 79.1 percent in 1996 and 67.6 percent in 1997.

The underwriting and administrative expense ratio for the same years were 16.9 percent, 16.1 percent and 17.6 percent, respectively. It left the combined ratio (1997: 85.2 percent) at the lowest and most favourable point by far in seven years.

The underwriting results of a property and casualty insurer are often considered through the monitoring of its loss and expense ratio, underwriting and administrative expense ratio and combined ratio.

Each ratio is derived by dividing the relevant expense amounts by net premiums earned. The combined ratio is the sum of the first two ratios. A combined ratio under 100 percent indicates underwriting profits and a combined ratio over 100 percent indicates underwriting losses.

The ACE group of companies provides insurance and reinsurance for a diverse group of international clients. ACE Ltd., through its Bermuda-based subsidiaries, ACE Insurance Co., Ltd., Corporate Officers & Directors Assurance Ltd. and Tempest Reinsurance Co. Ltd., provides excess liability insurance, D&O liability insurance, and property catastrophe reinsurance, as well as satellite, aviation, excess property, financial lines and political risk coverages.

ACE also owns two Lloyd's managing agencies, ACE London Aviation Ltd. and ACE London Underwriting Ltd. and provides corporate capital to Lloyd's syndicates under their management.

At September 30, ACE Ltd. had some $2.6 billion in shareholders equity and $5.0 billion in assets.