Bermuda property catastrophe reinsurer, CAT Ltd. for $711 million in cash, subject to regulatory approvals and certain post-closing adjustments.

The latest deal, brings the ACE group to assets of more than $7 billion, including the assets of ACE USA (the former Westchester Specialty).

CAT, with a net book value at December 31 of some $474 million, should be assimilated by early April into ACE's Tempest Re, creating a powerful new `cat' reinsurer that boasts a billion dollar balance sheet.

The combined Tempest operations will open new offices at the soon-to-be-completed Wessex House on Reid Street. No job losses are anticipated.

ACE chairman, president and CEO, Brian Duperreault, said the deal brings a strategic advantage to ACE in the highly competitive cat reinsurance market.

He said, "Tempest Re has established its underwriting expertise in the more traditional property cat product lines. CAT is an acknowledged leader in the application of proprietary modelling techniques to the non-traditional lines of business. Together, they comprise a strong and technically advanced team.

"Our continued success in what is admittedly a most challenging market is enhanced by the companies' common commitment to underwriting excellence, rigorous investment discipline and superior financial strength. CAT Ltd. is an excellent addition to the ACE group of companies.'' ACE will finance their latest purchase with a mix of some $390 million of short-term borrowing from an existing undrawn credit facility established in December 1997, and from cash on hand.

ACE expects to publicly offer by prospectus up to 16.5 million of its ordinary shares (excluding any over-allotment option shares) in a registered public offering that will help finance the acquisition and be used for other purposes.

The number of new ordinary shares to be issued approximates the total number of shares repurchased by ACE since the acquisition of Tempest Re in the summer of 1996.

CAT's 60 percent stake in new Bermuda reinsurer, Enterprise Re, will be distributed to CAT's current shareholders, prior to the acquisition.

The new Tempest Re management structure retains Donald Kramer as president and CEO and Elizabeth Murphy as CFO. George Rivaz will be chief operating officer and Russ Fletcher will be chief underwriting officer. Jan van der Schalk and Philip Munday will be chief underwriting officers, international.

CAT's CEO Paul Hasse and president Charles Kline will become co-CEOs of the newly created ACE Capital Products.

Mr. Kline said, "Our relationship with ACE affords access to additional capital, expertise and business development opportunities.

"We expect that there will be very little overlap in clients, programmes and specialist skills as a result of ACE's acquisition of CAT Ltd. The combined property catastrophe company's billion dollar balance sheet will permit the largest possible share of traditional programmes and maximum flexibility in the creation of customised programmes.'' The new ACE Capital Products will provide clients with innovative financial instruments designed to bridge asset management and risk transfer needs, and, will be well-positioned as the insurance, banking and finance markets converge.

Mr. Hasse said, "We believe the future of the insurance and reinsurance industry may very well lie in the creation of integrated insurance and investment products to address clients' total risk transfer and risk management needs.

"We look forward to helping ACE and Tempest lead the industry in product innovation and growth in this area and to providing specialised asset management capabilities to ACE clients and others on a worldwide basis.'' ACE ACQUIRES CAT -- ACE Ltd. continued its wave of acquisitions, proposing to buy out Bermuda property catastrophe reinsurer, CAT Ltd. for $711 million. ACE chairman, president and CEO, Brian Duperreault (centre), is all smiles as he meets with CAT Ltd.'s CEO Paul Hasse (left) and president Charles Kline.