ACE Limited yesterday announced that its fourth quarter net operating income will fall below expectations.

The company reported that this is due to an increase of approximately $80 million, after taxes, in property losses incurred in its European Commercial Property portfolio together with a $50 million charge taken to strengthen loss reserves principally in its International Casualty Operations.

Brian Duperreault, Chairman and Chief Executive Officer, said: "We experienced a pattern of increased frequency and severity within our European Commercial Property portfolio.

"In response to these adverse results we have tightened underwriting controls and significantly increased prices. We believe the changes made will permit us to realise our financial objectives for this unit in 2002. We also carefully reviewed the development of our international casualty portfolio and determined an increase in reserves was warranted. The balance of our business segments have performed as expected and we do not expect the issues affecting the fourth quarter to carry forward into the new year."

ACE reported that it expects to report its quarterly earnings by Wednesday, February 13, 2002.