Bermuda insurance giant ACE Ltd.'s move into life and annuity with ACE Tempest Life Reinsurance has been given the thumbs up by a top US ratings agency.

Standard & Poor's yesterday assigned its single "A" plus (its top mark) counterparty credit and financial strength ratings to ACE Tempest Life Reinsurance Ltd. and said the outlook for the company is positive.

Standard & Poor's said that the outlook reflects the expectation that its ratings on ACE Tempest Life Re will shadow those on its affiliate, ACE Bermuda Insurance Ltd., because of the explicit support provided to ACE Tempest Life Re through not only a retrocession agreement but also the implied support of its parent, ACE Ltd.

The new company was licensed in October, 2000, and will focus on non-traditional solutions for life and annuity products in the US and Europe while looking to hold a niche position targeting asset-based reinsurance products using "a holistic underwriting approach" S&P said.

S& P said expectations are that ACE Tempest Life will leverage the existing relationships of its subsidiary, ACE Tempest Reinsurance Ltd., developing a core group of clients by marketing through both the direct and broker markets as well as non-traditional channels.

In addition, S&P said the new company will promote offshore capacity for alternative risk transfer and financial-oriented products, providing underwriting diversification against ACE Tempest Reinsurance Ltd.'s more traditional property catastrophe reinsurance writings.

But S&P pointed out that as a start-up reinsurer, ACE Tempest Life faces market-entrance hurdles and competition from larger US life reinsurers and established offshore Bermudian reinsurers specialising in the same types of products.

S&P said it believes the new company will provide diversification opportunities to ACE Ltd.

However, it added that any material earnings contribution to ACE Ltd. is expected to be minimal in the near term.

And because the ratings on ACE Tempest Life are entwined with those on ACE Bermuda Ltd., if the ratings on ACE Bermuda Ltd. are lowered, the ratings on ACE Tempest Life would also be adjusted to reflect similar notching.