Bermuda-based ACE Ltd. had net income of $112.8 million, or $2.01 per share for the first quarter ended December 31, a drop of about ten percent over the same period in the previous fiscal year.

Income excluding net realised gains was $85.3 million, a gain of $1.3 million over the same quarter in the previous fiscal year.

ACE chairman, president and chief executive officer Brian Duperreault expressed satisfaction with the results, saying the company had managed to maintain profits through a strategy of diversification and acquisitions.

"Results such as these in one of the softest markets on record are a clear indication of the success of the strategic decisions made over the course of the past three years,'' Mr. Duperreault stated. "Our move to diversify by product line, by geographic market and by strategic acquisition has created profitable opportunities.'' As a result of the strategy, he said, gross premiums written increased by 28 percent to $170 million compared with the first quarter of fiscal 1997. Net premiums written increased by 15 percent to $127 million.

Mr. Duperreault noted excess liability premiums written by subsidiary A.C.E.

Insurance Co. Ltd. had declined. However the company's overall risk profile continued to improve through a reduced number of high-risk accounts, higher attachment levels and decreased limits.

"While we experienced lower D&O (director and officer) premium levels, we wrote more new accounts than those which were non-renewed,'' he stated.

"...Satellite premiums written increased significantly because of a very active launch period and a high level of in-orbit coverage activity. Gross premiums written increased in both excess property and aviation primarily because of new business. There was strong activity in our financial lines business in spite of the soft market.'' ACE London at Lloyd's was able to make savings in the company's reinsurance programmes through the merger of 13 syndicates into nine. Capacity was increased to (pounds) 304 million, about 44 percent of the total syndicate capacity of (pounds)692 million under ACE management.

Gross premiums at Lloyd's increased by $36.6 million over the same quarter the previous fiscal year.

ACE subsidiary Tempest Reinsurance Co. Ltd. wrote no premiums during the quarter as the company's renewals fall mainly in January and July. Mr.

Duperreault noted the pressure on the company to reduce its prices in January.

"It is the firm belief of ACE's management that its companies must not succumb to market pressures in order to maintain market share,'' he stated.

"Tempest will continue to adhere to its strict underwriting discipline and walk away from business it believes to be unprofitable. Tempest will mitigate this anticipated action by continuing to create specialty property catastrophe reinsurance products to meet the needs of their clients.'' In recent months ACE has opened ACE Insurance Company Europe Ltd. in Dublin to develop its European book of business. The company also completed the purchase of Westchester Specialty Group on January 2. Westchester as a holding company has been renamed as ACE USA.

ACE also announced it had spent $76.5 million on the repurchase of 836,200 of its shares, and had negotiated $910 million line of credit facilities with a syndicate of banks, some of which will be used to meet obligations at Lloyd's and to finance the Westchester acquisition.