David Fox reports.

ACE Ltd. suffered a 90 percent decline in fourth quarter earnings to September 30, during an active period in the industry for losses and volatile investment markets.

But fuelled by more than a quarter of a billion dollars in increased premium, and solid investment returns, the Bermuda insurer still declared a record profit for the year of more than half a billion dollars.

Net income for the year to September 30 was $560.2 million ($2.96 per share), up from $502.7 million ($2.69 per share) from the fiscal year 1997. Fourth quarter net income was $13.5 million, or $0.07 per share, compared with $136.7 million, or $0.74 per share, for the same quarter last year.

Chairman, president and CEO Brian Duperreault commented: "In a quarter of significant loss activity in the insurance industry and major turmoil in the world's financial markets, ACE is as strong as ever.

"Our current position is a tribute to both our strategic diversification and the skill of our employees. Our results reflect the focus across the group on maintaining underwriting discipline and profitability.'' Mr. Duperreault described fiscal 1998 as a benchmark year for ACE.

He noted: "We made three key acquisitions and continued our diversification which greatly enhanced our global position: ACE USA provides us with a solid US platform; CAT further strengthens our position in the property catastrophe market; and Tarquin solidifies our position as a key participant in the Lloyd's market.'' The earnings include the results of Tarquin Ltd., acquired on July 9 and accounted for as a pooling-of-interests.

Gross premiums written for fiscal 1998 were $1.24 billion, up 29 percent from $959.3 million for the same period last year. And net premiums written increased 12 percent to $883.3, while net premiums earned improved 11 percent to $896.6 million.

Fourth quarter gross premiums written increased by 36 percent to $317.1 million, compared with last year. Net premiums written increased 2 percent to $177.0 million. Net premiums earned were up 13 percent to $221.5 million.

For the year, subsidiary Ace Insurance had increased writings in financial lines ($163.1 million) and satellite ($114.8 million), as premium in the original excess liability ($100.4 million) and D&O ($68.8 million) continued a trend of decline.

ACE attributed $160.2 million in premium from subsidiary ACE USA, $436.3 million from Lloyd's syndicates and $124.1 million from Tempest Re/CAT Ltd.

Losses and loss expenses for the quarter were $118.6 million (1997: $121.9 million). And for the year they were $516.9 million (1997: $486.1 million).

Net investment income for the year, excluding net realised gains of $188.4 million was $324.3 (up 28 percent).

Fourth quarter net investment income, excluding net realised losses of $54.2 million, was $89.3 million (up 37 percent).

Included in the results of the fourth quarter and the year are certain non-recurring and transaction related expenses amounting to $40.9 million and $46.7 million, respectively, net of related income taxes. Income excluding net realised losses and non-recurring expenses for the fiscal 1998 fourth quarter was $108.6 million, compared with $95.5 million for the same quarter in fiscal 1997. For the fiscal year, income excluding net realised gains and non-recurring expenses was $418.4 million compared with $381.1 million in fiscal 1997.

The ACE group of companies provides insurance and reinsurance for a diverse group of international clients. Operating subsidiaries are based in Bermuda, the United States, the United Kingdom (Lloyd's), and the Republic of Ireland.

At September 30, 1998, ACE Limited had approximately $8.8 billion in assets and $3.7 billion in shareholders' equity.

Brian Duperrault Graphic file name: DUPPER