Bermuda-based insurer ACE Limited reported on Friday that it had set the size and price of its planned initial public offering of financial guaranty arm AGC Holdings, saying the issue could generate up to $980 million.

The company first announced its plans to sell off most of its financial guaranty business in December, saying it would likely go public on the New York Stock Exchange in the first half of 2004.

The decision to do the IPO was said to free up funds to expand its core business as a property and casualty insurer.

At the time a Standard & Poor?s analyst David Veno told Bloomberg News it could be a good move for ACE.

?It allows them to still play in the financial guaranty business while being able to free up capital at the holding company.?

ACE, in an amended filing with the Securities and Exchange Commission last week, said it plans to sell 49 million shares of its renamed financial guaranty business ? which had been known as ACE Guaranty then AGC Holdings but is now to be known as Assured Guaranty Ltd. ? at an estimated price of $18 to $20 per share. When ACE initially announced in December that it would spin off this part of its business through an IPO, it said it could shed up to 75 percent ownership but the latest filing said the company could retain 35 percent.

However, it was reported that ACE?s stake in Assured Guaranty could still drop to 25 percent if the group of 10 underwriters ? led by Bank of America Securities LLC, Goldman Sachs & Co. and Citigroup ? buy 7.35 million more shares from ACE in case there is heavy interest from investors.

Assured Guaranty itself is not to receive any proceeds from the sale of 65 percent of the company to the public.

After the offering, there will be 75 million shares outstanding in the company, giving it an initial market capitalisation of about $1.5 billion.

Last year, AGC posted gross premiums of $349.2 million and total revenue of $512.3 million, the offering document shows. That compared with $417.2 million in gross premiums and revenues of $302 million in 2002.