Two major Island insurance companies have thrashed out a deal to take over and develop the eyesore Bermudiana Hotel site, it was revealed last night.

Ace Ltd. and Exel Ltd. have agreed to buy-out Winson Holdings Ltd. -- the owners of the derelict hotel -- from Argus Insurance.

However the deal hinges on getting planning permission for any future scheme and an exemption from Bermuda's 60 0 rule which says any business must be at least 60 percent Bermudian owned.

Last night Ace General Counsel Peter Mear said: "There are a lot of questions about whether or not it can be done, but we hope it can be and we will work hard to get it done.'' Exel's Senior Vice-President Gavin Arton added: "We have made a commitment to Bermuda and we thought it was an opportunity to put something back into the community as a demonstration of our commitment.'' The Bermudiana site was taken over by Argus, through Winson Holdings, after the Bermuda Financial Centre (BFCL) was unable to repay loans.

Yesterday's deal is an agreement in principle to buy-out Winson -- and will only go through if planning permission is granted and if the Finance Minister waives the 60 0 rule.

Neither Ace or Exel is Bermudian owned, but the Minister has the power to over-rule the 60 0 clause if it is in the public interest.

Exact plans for the development of the site have not yet been drawn up but a statement about the deal says there is a conceptual plan for executive offices for both Ace and Exel.

The statement from Argus says: "The agreement provides that Planning Department approval of a conceptual plan for executive offices for Ace and Exel and Government approval of the transaction must be obtained.

"It is hoped that these conditions can be satisfied within the timetable agreed by the parties.'' Bermudiana Hotel taken over Mr. Mear added: "It is very preliminary and we do not have a very well defined concept of how we would use the space.

"The agreement says that we might use it for executive offices. It does not commit us.'' BFCL has been trying to develop the Bermudiana site but a major stumbling block has been cash-backing. Between Exel and Ace that cash -- possibly up to $100 million -- would be available.

Also BFCL has already got planning permission for offices on the site, but it is not known how the take-over will affect those plans.

BFCL's scheme included a hotel, offices and luxury homes -- some 45 apartments.

Last night Mr. Arton said he could not comment on the BFCL plans. "It is far too soon to speculate on what might happen to BFCL,'' he said.

"From Exel's point of view it is a sincere offer with the contingencies that we would be allowed to own the property and solve a problem that has been festering for some time,'' added Mr. Arton.

Fraser Butterworth, BFCL's director was not available for comment last night.

In August Argus managing director John Sainsbury said the 60 0 rule was a stumbling block in attracting rich investors to develop the hotel site.

Last night Mr. Sainsbury said all the parties involved in the deal would be looking for an exemption to the 60 0 rule before the deal could be fully ratified.

"Our job, after inheriting the site, has been to sell it to a viable developer, for our good and for the good of Bermuda,'' said Mr. Sainsbury.

"We have been working to sell the site, but it needed to be to someone who could afford to make it a prestigious development. It could be a prestigious development and it would be good for Bermuda's image and economy.'' BUSINESS BUC