S&P Affirms ACE ‘A-‘ Counterparty Rating; ‘A+’ on Operating Companies

October 20, 2008

In a corrected version of an earlier release (the headline was incomplete), Standard & Poor’s Ratings Services has affirmed both its ‘A-‘ counterparty credit rating on ACE Ltd. and it’s ‘A+’ counterparty credit and financial strength ratings on ACE’s active operating insurance companies. The outlooks on all the companies are stable.

“The affirmations followed ACE’s recent announcement that it expects to report lower operating income and that its net realized and unrealized losses will total approximately $1.5 billion during the third quarter of 2008,” noted credit analyst Laline Carvalho. “This should result in a year-to-date decrease in book value per share.”

S&P said that although the third-quarter results would be lower than it had originally estimated, “we believe they are reasonable given the higher catastrophe losses incurred by the insurance and reinsurance sectors during the quarter–particularly because of Hurricanes Gustav and Ike–and significant volatility in the capital markets in recent months.”

The rating agency stressed that its ratings on “ACE are based on the group’s very strong competitive position as a global and diversified property/casualty group, and its strong financial flexibility, capitalization, and operating performance.

“Negative factors are ACE’s changing and increasing risk profile into new lines and geographic locations, high reinsurance utilization in certain lines, and high amounts of recoverables, runoff reserves, and intangibles–although for the companies collectively, these risks are decreasing.”

Source: Standard & Poor’s – www.standardandpoors.com

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