its principal operating base in Bermuda, is consolidating its position on the Island by merging a Cayman subsidiary with another subsidiary already based here.

Cayman-based ACE Insurance Company Ltd. is being merged with ACE Insurance Company (Bermuda) on July 7, 1993.

The amalgamated company will be ACE Insurance Company Ltd. and will be based in Bermuda.

ACE chairman Mr. Walter Scott said: "We believe that it is no longer efficient or cost-effective to maintain two companies to operate the business each contains.

"This is in accordance with the plan referred to in our share offering last March.'' As previously reported, ACE has declared a cash dividend in an amount per share intended to cover any "related person insurance income'' (RPII) federal tax liability which would be payable by a US shareholder owning ACE stock on the merger date with respect to such share. This dividend will be paid to holders of record on the date of the merger.

The exact amount of the dividend will be determined by a formula after the merger. It will be paid within 60 days after the merger or, if the exact amount has still not been determined, soon after that.

Until the amount is determined, shares of ACE trading on the New York Stock Exchange will be traded with due bills attached.

In effect, the due bills will transfer the right to the dividend payment to purchasers of ACE stock until such time as the exact dividend is announced and the ACE stock can trade ex-dividend.

US taxpayers who own ACE stock on the merger date are being made aware that if they trade ACE stock prior to the ex-dividend date of the special RPII dividend, they will be transferring their right to the RPII dividend but they will not be able to transfer their RPII US federal tax liability.