Lloyd's and ACE UK mutually agreed to suspend trading in ACE managed syndicates' during capacity auctions held Tuesday and Wednesday.

The regularly scheduled auctions are for Lloyd's capital providers to buy and sell capacity.

The move comes as ACE begins a bold restructuring to prepare its UK operations for the turn of the century. The suspension will remain in effect until the ACE plan is more clearly delineated.

ACE UK executives tomorrow discuss with Lloyd's officials plans to combine all of the ACE UK underwriting syndicates under a single capital base by the year 2000.

ACE UK chief executive John Charman said: "The end result will be one hell of a business. It's going to be a very efficient, very cost effective, highly focused, very professional, multi-product line international business.

"Instead of splintered operating units, you'll have an insurance company look-alike, which allows groupings of highly qualified, professional individuals to operate collectively or individually in a very focused manner across multi-product or individual product lines, and also make sure that it is run not only efficiently, but very cost effectively.

"We're going to achieve a blended product, a single trading entity that has the best collection of the most able underwriters we can assemble in the product lines that we want to trade internationally.

"We'll be the first major group at Lloyd's to do that.'' He said of ACE UK's non-participation in the most recent capacity auction: "We felt it would be most appropriate to suspend trading with the radical restructuring imminent. It is perfectly normal to do so during these auctions under such circumstances.

"We at ACE London are working very hard to finalise details of the re-organisation, which is occurring in two stages. Right now, we are producing three trading or business units, as opposed to the previous nine, which will allow us to slip the three into one unit in the second stage in the year 2000.'' He said: "This will benefit capital providers and policyholders, having a significant and beneficial impact on future costs.

Mr. Charman said the new structure would leave ACE better equipped to deal with the extremely soft and competitive market conditions which he expected to continue.

He said: "We will be back in to see Lloyd's with our preliminary work by the end of this week and then sit down and decide what happens for the next auction two weeks away.

"We hope to be back up and trading, but we must deal with a lot of details first. Running a Lloyd's business is a very detailed process. There are also all kinds of value-added implications.

"Putting different Lloyd's businesses together is very complicated. There's an incredible amount of detail. But we will work closely with the regulators to have it all approved.

"And when they decide that sufficient information has been imparted, they will allow the syndicates to re-enter the auction process.'' He said it would not be right for trading in ACE UK to continue before full facts on its structure were made public.

ACE said on Monday it would create three operating units as the first stage of its aim to combine all underwriting operations over a single capital base in the year 2000.

ACE operates managing agencies with total capacity of 950 million or $1.55 billion, one of the largest agency groupings at Lloyd's.

It was just last week, when executives hit upon the two-stage plan of getting ACE UK syndicates consolidated for the turn of the century.

For the 1999 year of account, ACE intends to form three units, comprising its marine, non-marine and aviation syndicates based respectively on Syndicate 488/2888 (headed by John Charman), Syndicate 219 (Richard Finn) and Syndicate 960 (Peter Williams).