ACE Ltd. reported lower fourth-quarter earnings as the insurance holding company booked a charge of $302 million, or $1.06 a share, to strengthen its asbestos, environmental and other reserves.

The Bermuda-based company reported earnings of $282 million, or 94 cents a share, for the quarter ended Dec. 31, after payment of preferred dividends, compared with earnings of $444 million, or $1.53 a share, in the year-earlier period.

Income excluding net realized gains for the latest quarter was $166 million, or 54 cents a share, compared with $328 million, or $1.12 a share, in the year-ago period.

Combined ratio for the quarter was 104 percent. Excluding the charge, the combined ratio was 87.7 percent.

Net premiums written increased to $2.66 billion in the latest period.

The fourth-quarter charge is about $180 million less than the specific reserve range suggested by an outside consultant, company executives said in a conference call earlier this month.

During the call, the company said it expected 2005 operating cash flow should fall to $4 billion while the company expects a 2005 combined ratio of 89 percent to 91 percent. ACE also sees its financial services operating income down 25 percent to 30 percent this year while it expects property and casualty net premium growth of 9 percent to 11 percent.

The charge comprises $279 million relating to the Brandywine operation and $19 million relating to the ACE Westchester Specialty unit.

ACE's asbestos exposure is principally related to liabilities in the property-casualty business acquired from Cigna Corp. in 1999 and Westchester Specialty, acquired from Talegen in 1998. The liabilities now reside in its Brandywine Holdings unit.

ACE was among several insurance companies named but not charged in a suit brought by New York State Attorney General Eliot Spitzer against New York brokerage Marsh & McLennan Companies Inc. for bid-rigging and price-fixing.

ACE earlier announced that two of its employees were fired and three suspended in connection with the investigation.

ACE released the earnings after the markets closed. Company shares rose 13 cents to close at $44 Wednesday on the New York Stock Exchange. -- Associated Press