$13.2 million in net premiums written for the nine months to June 30.

But senior vice president and general counsel, Mr. Bradford Rich, believes that London firms will eventually take over the business.

The need for the cover originated with US legislation that required certain ships trading in US waters to have US Coast Guard-issued Certificates of Financial Responsibility (CoFRs), proving the vessels' owners had the resources to pay in the event of an oil spill.

Two companies, Shoreline and First Line, were formed in Bermuda to provide financial guarantees for the vessels, after the ships' traditional insurers, the Protection & Indemnity clubs, thought the writing of such policies would be risky. Mr. Rich sees that point of view eventually changing.

First Line backer Stockton Re had obtained reinsurance through ACE.

But Mr. Rich said: "Most of the premium that has been collected (by ACE) in First Line has been on an annual basis. Most of the fleets buy their coverage all at the same time.

"The nine month numbers may grow a little bit, but we don't expect there to be appreciably more than we have already seen.

"And I don't know how long that is going to last either. We wrote it because it made sense to write it, because the market needed a solution. It's clearly a coverage that we think eventually is going to be picked up by the P&I clubs in London.

"If they don't, obviously Stockton Re will continue to offer it and we will continue to reinsure them. We don't view this as part of the market where we expect to continue indefinitely. In fact, I would be surprised if that continues over a multi-year term.'' The firm, in a third quarter report this week, identified unpaid losses and loss expenses of $1.37 billion, comprising $798 million in case and loss expense reserves and $574.9 million in IBNR (incurred but not reported) loss reserves.

ACE does not expect any substantial growth in premiums from satellite insurance either.

For the nine months to June 30, net premiums written grew to $30.7 million, compared to $6.3 million for the same period last year.

The company, now in the throes of renewing satellite business, believes the market for the specialty business has matured.

The $26.8 million in net written premiums of D&O (directors and officers liability) for the three months to June 30, is down about 12 percent on the same period last year.

For the nine-month period to the end of June, a more marginal decrease is identified compared to the same period in 1994.

The highly competitive D&O business has continued to see new entrants into the market. Mr. Rich is satisfied there may be more capacity in the marketplace than needed.

"There are some players who are willing to write this kind of business for prices that we can't live with. With underwriting discipline, you have to say, `here is our price and we are willing to be reasonably competitive, but we are not going to be silly'.

"If the price that someone else is offering is a tenth of what we think it ought to get, we have to walk away. I think there is enough capacity in that market, that you are seeing some of that activity.

"The test for us is are we keeping most of our customers. We are the biggest underwriter of excess D&O in the world. While there is a lot of activity that is primarily below us, we want to keep our book together. We think that we have huge customer loyalty.

"Renewals continue to be strong. We are still well over 90 percent.'' ACE is pushing to develop financial lines and Mr. Rich pointed out the long term nature of the financial lines products.

He said: "It takes a real long time to do any of the financial lines products. We start discussions with a customer and it takes six months to a year to even work out a deal.

"They are individually tailored products that we do for purchasing companies.

Some of them may have a finite component where they'll pay a certain amount of premium, but the losses are capped in some way. Some of them may be funding mechanisms where they can't buy any coverage at all, but they want a tax advantaged way to accumulate resources to pay a loss that they know they are going to have.'' ACE recently entered the aviation product liability market, and during the three months to June 30, wrote $1.6 million in premiums. It is only early days in a market that is estimated to be between $400 million and $500 million in total.

Said Mr. Rich: "We are not projecting how far is up. Obviously, we are just getting started. We expect to have a significant position in it. But we are not going to be writing a majority of the business. We want to take a relatively conservative position. We think that there is still very substantial room for growth.'' But premium production in core business, excess liability is also off, although that development may be easily explained.

ACE recently put in place a programme for changing the coverage profile for their oil, chemical and pharmaceutical clients. Last December, the company changed the amount of coverage those companies could buy for "batch'' protection -- a reduction from $200 million to $100 million.

Some of the companies moved to push ACE's attachment point higher, substituting additional coverage from other companies below them. That had the effect of putting marginal downward pressure on the company's premium, as they were further isolated from the risks. But ACE was also reviewing the rates upward for this business because of the significant loss experience of the past. The effect of those three factors was a ten percent drop in excess liability premiums for the first nine months of the year.

ON THE RISE -- ACE Ltd.'s share price has risen steadily to about $30 after hovering around $24 in early February. ACE shares are traded on the New York Stock Exchange.