ACE Limited will restate its financial results from 2000 to 2004, and for the first quarter of 2005 to correct its accounting treatment of eight finite risk transactions, a non-traditional form of insurance that regulators have been probing for its potential to mask losses.

Bermuda-based ACE, a global property and casualty insurer and reinsurer, said the net affect of the restatement was a rise in net income of $45 million from 2000 through 2005. Shareholders? equity, at March 31, rises by $1 million to $9.9 billion, as a result of the restatement.

The restatement corrects the accounting treatment for eight finite risk transactions ? three that ACE bought, three that the company sold and two that were between related ACE companies. The contracts were made in 2002 or earlier, and two are still in effect.

Seven of the contracts did not meet risk transfer requirements to qualify for reinsurance accounting, and will now be re-accounted for under deposit accounting.

Reinsurance accounting is more favourable but a certain level of risk must be contained in the insurance policy to qualify.

ACE said it will not buy finite risk insurance or reinsurance, and strict guidelines have been put in place around its sale of the product.

?We have found accounting problems on a number of transactions and we regret that,? said chief executive Evan Greenberg. ?We are fixing those problems. We have also put in place strict procedures to assure that this does not happen again.? Investigators have been probing the misuse of this kind of policy since late last year. The investigation has focused on a controversial finite risk contract that AIG had with Berkshire Hathaway unit General Re, to hide losses.

The regulatory probe, led by New York Attorney General Eliot Spitzer, has now widened to include other insurers.

Also investigating the use of finite risk misuse is the U.S. Securities and Exchange Commission, the Department of Justice and other state regulators.

Former AIG chairman and chief executive Maurice Greenberg resigned amid the investigation of AIG?s use of the controversial loss-mitigation product. Evan Greenberg is Maurice Greenberg?s son.

Like many other insurance companies, ACE has received subpoenas related to its purchase or sale of finite risk contracts.

ACE launched an internal investigation into its sale or purchase of finite risk products several months ago, Mr. Greenberg said, conducted by three outside law firms, under the guidance of the company?s audit committee. One hundred contracts were looked at, a process taking investigators more than 15,000 hours.

Mr. Greenberg said on the investment call that ACE did not expect to make any additional changes. ?We believe we have enough information to correct our financials, and that is what we are doing.?

The company has received more than 40 investigative requests from a cross-section of US regulators as part of a broad investigation, related to finite risk, and as part of an investigation into bid-rigging and price fixing allegations against brokers and insurers.

ACE said its restatement did not spell a close to the ongoing regulatory investigation into its use of finite risk. ACE general counsel Bob Cusumono said regulatory requests were received by ACE ?more or less continuously?.

ACE said it had discussed the restatement with insurance ratings agencies, who had not indicated any negative action was to be taken.

The company said no ?inappropriate conduct by current senior management? had been found, and said the use of the word ?current? should not imply that improprieties from past management had been uncovered.

The company declined to name the counterparties to the restated contracts, but said those involved were not exclusively insurance or reinsurance companies.

Ira Zuckerman, an analyst with Stanford Financial Group in Boca Raton, Florida, who took part in an investment call that ACE held yesterday, said if ACE, a relatively small player in the finite risk sector, examined 100 contracts in its investigation, imagine how many deals larger players will be sifting through.

He predicted it could be a year or more before the industry-wide finite risk investigation closes.

Mr. Zuckerman does not follow ACE, hold any of its shares and Stanford does no investment banking with the company.

ACE said a policy bought from Berkshire Hathaway unit National Indemnity (NICO), at the time of ACE?s 1999 acquisition of Cigna?s property and casualty business, as retroactive reinsurance coverage for Brandywine, a unit holding asbestos and environmental liabilities, did ?pass muster?.

ACE is due to release its second quarter earnings report on Monday, after the close of the stock market. An amended annual 2004 annual report will be filed by August 9, the company said.ACE, which trades on the New York Stock Exchange, closed down 34 cents to $46.26, on trading of 1.4 million shares. The was higher than the company?s three-month trading average which stands around 1 million shares, a day.