share for the three months to December 31.

Last year, ACE declared first quarter net income at $125.7 million or $2.14 per share for the comparative period.

But chairman, president and CEO, Brian Duperreault, said, "ACE continues to demonstrate top line growth in a difficult market as a result of our diversification strategy.

"Production is up due to strong contributions from our Lloyd's operations and from the satellite division.'' The company reported income, excluding realised gains for the quarter, of $85.3 million, compared with $84 million for the same period in the previous fiscal year.

Gross premiums written during the quarter increased by 28.5 percent from $132.5 million during the previous year's first quarter to $170.2 million. Net premiums written during the quarter increased 14.8 percent to $127 million, up from $110 million in the comparative period. Net premiums earned during the quarter were up 2.1 percent to $167.8 million.

Satellite gross premiums written more than doubled over the same period the year before, from $19.3 million to $42.4 million. And net premiums written rose from $13.7 million to $25.8 million. Net premiums earned rose from $13.4 million to $22.9 million.

Lloyd's syndicates had gross written premiums rise from $6.1 million to $42.7 million for the quarter. Net premiums written were up nearly tenfold from $3.7 million to $32.2 million. And net premiums earned climbed from $2.3 million to $19.8 million.

Declining volume was noted in ACE's D&O, excess liability, financial liability and property catastrophe reinsurance lines, the latter through Tempest Reinsurance Co. Ltd.

No premiums were recorded as having been written for Tempest Re in the first quarter and earned premium had declined more than 21 percent to $28.4 million.

It was explained that ACE's first quarter effectively parallels Tempest's fourth quarter. Net investment income for the ACE Group, excluding net realised gains, was down about $1.3 million to $58.4 million for the quarter.

During the three month period ACE had net realised gains of $27.5 million, as compared with $41.7 million in gains during the same period in the comparative period.

ACE said yesterday that its newly acquired ACE USA (previously Westchester Specialty Group Companies) has received an upgraded A (Excellent) rating from A.M. Best.

The Best ratings upgrade from A minus to A, and the removal of the company off of the "under review'' category, came after the completion of the acquisition of the US company by ACE. Best said the upgrade reflects the positive implications associated with ACE USA's role as a member of the ACE Group and the elimination of ownership and reserve uncertainties for Westchester.

Mr. Duperreault commented: "A.M. Best also stated that it views ACE USA as a strategic subsidiary of the ACE group of companies. Other positive developments outlined by A.M. Best include a rebalanced book of business, improving accident year results, strong capitalisation, disciplined underwriting approach and stronger broker relations.'' "A.M. Best stated that as a strategic subsidiary, ACE USA is better positioned to generate new business opportunities and enhance overall earnings. Accordingly, A.M. Best views the group's rating outlook as stable.''