Ace Ltd. and its subsidiaries have had their ratings affirmed by Fitch Ratings following the company's announcement that it will acquire all of the outstanding common stock of Rain and Hail Insurance Service Inc. (R&H) for about $1.1 billion in cash.

The deal is expected to be concluded by the end of 2010, pending necessary regulatory approvals.

The rating outlook is stable.

Fitch's affirmation reflects its belief that Ace's capitalisation will be materially unchanged by the acquisition, the integration risk derived from the transaction is manageable, and that R&H, the second largest crop insurer in the US, provides strategic benefits for Ace. The relationship between Ace and R&H dates back to 1980 and since 1999, Ace has owned roughly 20 percent of the company's outstanding common stock.

Fitch anticipates that Ace will primarily use internal capital to finance the proposed acquisition with cash on hand. The ratings agency said that Ace's acquisition of R&H will result in a meaningful increase in the size of the company's agriculture business.

The percentage of pro forma expected net premiums written from agriculture business would increase to 10 percent from four percent, resulting in an additional $900 million in additional net retained premium volume in 2011 from business with a five-year average combined ratio of a profitable 73 percent. Execution risk is mitigated in part by Ace's existing knowledge of the business stemming from its current partial ownership of R&H, and by Ace's track record of supplementing growth through diversifying acquisitions.

Additionally, Fitch expects that Ace will operate R&H as a stand-alone company, with continuity of management and brand, which Fitch believes further reduces integration risk.

• The Ace Group has announced an agreement with SeaPass Solutions Inc., to support the growth of Ace Commercial Risk Services^®, which provides specialty products and solutions for small businesses in North America.

Through the SeaPass Hub™ platform, a comparative commercial lines online quoting tool, Ace's distribution partners supporting the small business arena will have access to an automated system for transmitting and receiving rate, quote and bind data in real time across a single platform. This online distribution quoting resource will allow brokers, agents and wholesalers greater opportunity to increase their productivity, and offer greater efficiencies to better serve their clients.