ended June 30, a gain of 32 percent over the same period 1997.

Income excluding net realised gains was $102.7 million, about 22 percent above that of last year's third quarter. The gains also represent the inclusion of contributions from CAT Ltd. and ACE USA.

Per share income excluding net realised gains was 57 cents, a 14 percent increase.

Company chairman, president and chief executive officer Brian Duperreault said the good results were achieved in a market where premiums in the property catastrophe business were declining by up to 20 percent.

"Our premium production increase reflects the inclusion of CAT Ltd. and ACE USA as well as excellent contributions from our financial lines division and Lloyd's operations,'' he said. "Our global diversification strategy continues at a rapid pace with new ventures and acquisitions announced throughout the quarter in our major markets including Lloyd's, North America and Bermuda.'' The company's subsidiaries wrote gross premiums of $372.5 million during the quarter, an increase of about 67 percent. Net premiums increased about 44 percent to $281.2 million while net premiums earned were up 30 percent to $213.1 million compared to third quarter 1997.

Net premiums earned for the first nine months increased by 16 percent to $565.7 million compared to the same period in the previous financial year.

Net investment income for the quarter, excluding net realised gains, was $88.2 million, a 48 percent increase.

In a press statement Mr. Duperreault said during the quarter the company continued its strategy of diversification. Earlier this year ACE bought Bermuda-based CAT Ltd., which has been integrated with ACE subsidiary Tempest Re. ACE also expanded in the US.

During the quarter ACE established a captive reinsurance facility, and ACE USA added four more lines of business and bought a majority holding in a Canadian insurer.

After the quarter ended ACE completed the acquisition of Tarquin Ltd., a UK-based holding company which owns Lloyd's managing agency Charman Underwriting Agencies Ltd. and Tarquin Underwriting Ltd., its corporate capital provider.

Mr. Duperreault said ACE will continue its reorganisation of its Lloyd's syndicates into one capital base by 2000.

"We have built a platform for growth regardless of market conditions,'' he said.

At June 30 ACE had about $3.5 billion in shareholders' equity and $8 billion in assets.

BRIAN DUPERREAULT -- "We have built a platform for growth regardless of market conditions''.