Bermuda-based XL and ACE yesterday signed treaty reinsurance agreements with the Multilateral Investment Guarantee Agency (MIGA), the Washington DC insurance arm of the World Bank.

The agreements will substantially increase the availability of insurance coverage for foreign investments in developing countries.

They build on an earlier agreement signed in 1997 between MIGA and ACE.

The agreement with ACE was groundbreaking in the political risk insurance industry.

It was the first time a private insurer provided long-term -- up to 20 years -- reinsurance to a public insurer.

Under the new agreement, ACE and XL separately provide treaty reinsurance to MIGA.

The agreements provide major increases in MIGA's per project and country limits.

Under them, ACE and XL will each reinsure $50 million per project and $150 million per country.

As a result of the new deals, MIGA's limits per project and per country will increase to $200 million and $620 million, respectively.

Additional amounts of coverage can be mobilised through MIGA's Cooperative Underwriting Program and other forms of coinsurance and facultative reinsurance with private insurers.

Mr. Motomichi Ikawa, executive vice president of MIGA, expressed his enthusiasm with the new deal.

"The agreements with ACE and XL extend MIGA's close ties with the private insurance market place.

"The treaty testifies to the benefits of close and continued cooperation between insurers in extending insurance coverage to client investors. I look forward to working with XL, and to continuing MIGA's successful cooperation with ACE.'' Mr. Brian O'Hara, chairman and chief executive officer of XL Capital, of which XL Insurance Company is a subsidiary, welcomed the joint agreement with MIGA.

"We take great pride in establishing a close relationship with MIGA, which we believe is the most prestigious provider of political risk worldwide.

"Also we are pleased that this relationship continues the symmetry of developing our political risk capabilities with ACE.'' ACE's chairman and president Brian Duperreault underlined the "successful'' relationship with MIGA since ACE signed a treaty reinsurance agreement with the agency in 1997.

"I welcome this extension of our collaboration with MIGA and XL's participation in this initiative.'' MIGA, created in 1988, is the private insurance company of the World Bank.

It provides political risk insurance to investors, to promote the flow of foreign direct investment in developing countries.

MIGA's guarantee programme has issued US$4.6 billion in insurance covering about US$27 billion in foreign direct investment in 63 developing countries.

At December 31, 1998, ACE Limited has about $8.8 billion in assets and $3.9 billion in shareholders' equity. On January 12, 1999, ACE Limited agreed to acquire the international and domestic property and casualty businesses of CIGNA Corporation for $3.4 billion in cash.

As of November 30, 1998, XL Capital had assets of $10.1 billion and shareholders' equity of $4.8 billion.

On the dotted line: XL Capital president Brian O'Hara (right) signs the company on to a political risk treaty reinsurance agreement with the Multilateral Investment Guarantee Agency.