NEW YORK (Bloomberg) - Ace Ltd., the insurer that moved headquarters to Zurich from Bermuda, plans to reduce cash holdings and buy $1 billion to $1.5 billion of fixed-income securities as markets improve.

"We're adjusting the tactics again," CEO Evan Greenberg said last week on a conference call with analysts. "We'll be putting to work" part of the cash Ace accumulated in recent quarters to protect against market declines.

Property insurers, which invest premium before paying claims, reported losses and lower profits last year as the financial crisis pushed down the value of stocks and bonds. The industry reported a 12 percent decline in policyholder surplus amid $72.7 billion in investment declines, the Property Casualty Insurers Association of America said this month.

Ace plans to buy "high-grade" corporate bonds and debt issued by government agencies like Fannie Mae and Freddie Mac, chief investment officer Timothy Boroughs said on the call. The insurer is seeking a return of about five percent on the new investments, Mr. Boroughs said.

Ace advanced 57 cents, or 1.3 percent, to $45.72 at 10:18 a.m. in New York Stock Exchange composite trading. The company, which side-stepped the sub-prime investments that hobbled American International Group Inc. and XL Capital Ltd., has slipped about 21 percent in the last year.

Ace reported its first profit increase in three quarters yesterday after sales benefited from the $2.6 billion acquisition of Combined Insurance Company of America. Policy sales in the quarter rose 8.6 percent to $3.42 billion, while investment income, which includes dividends and bond coupons, advanced 2.7 percent to $502 million.

Investment income fell short of the $514 million estimate of Paul Newsome, an analyst with Sandler O'Neill & Partners in Chicago. Ace's first-quarter operating earnings per share of $1.99 missed Mr. Newsome's estimate by a penny, according to a research note by the analyst.