(Bloomberg) ? ACE Ltd., a Bermuda-based commercial insurer, said a California judge dismissed a lawsuit by competitors American International Group Inc. and Chubb Corp. challenging ACE?s efforts to limit losses from asbestos claims.

California Superior Court Judge James L. Warren ruled that AIG and Chubb couldn?t bring the case because they hadn?t suffered harm from ACE?s actions, ACE said in a statement yesterday. AIG, the world?s largest insurer, plans to appeal, spokesman Andrew Silver said.

The suit stemmed from Ace?s decision to keep its liabilities from asbestos in separate Pennsylvania-based units that no longer sell policies. AIG and Chubb have opposed the strategy for years on concerns that Ace may let the units become insolvent, triggering a bailout by Pennsylvania?s guarantee fund, which is replenished by all insurers.

AIG and Chubb, a Warren, New Jersey-based property and casualty insurer, filed the suit in California in 1999, invoking a law there that permitted anyone to file a consumer-protection suit on behalf of a harmed party.

Judge Warren said in the dismissal that California?s Proposition 64, passed in November 2004, requires that consumers file their own suits. The proposition applied retroactively, Warren said, and AIG and Chubb did not show they had had suffered harm.

AIG and Chubb argued that ACE violated its policyholders? rights by transferring claims from an active company to inactive units.

`We?re appealing and hopeful the ruling will be reversed,? said Silver of New York-based AIG. Chubb spokesman Mark Greenberg declined to comment.

AIG and Chubb are among insurers that also urged insurance regulators in February to block Ace?s plan to sell three of its asbestos units.

ACE inherited its liability from asbestos in 1999 when it bought Cigna Corp.?s Philadelphia-based property and casualty insurance business. In preparation for the sale, Cigna separated all policies covering asbestos and got Pennsylvania regulators to agree to limit its responsibility to pay asbestos claims.

AIG is run by Chairman Maurice ?Hank? Greenberg, the father of Evan Greenberg, ACE?s chief executive.