third quarter to June 30, bringing nine month profit to $202.8 million ($4.36 per share).

The figures represent a 46 percent drop over last year's third quarter and a 35 percent improvement over the 1995 nine month performance.

Brian Duperreault, ACE chairman, president and CEO said the quarter's results demonstrated the strength of the company's business and franchise.

He added, "The acquisition of Tempest Reinsurance Company Limited is a significant step in our diversification strategy. We are now focusing on further developing our broad-based structure.'' Net premiums written for the quarter were better than 56 percent higher than for the same period the year before at $165,131,000, as net premiums earned during the quarter rose 36 percent to $145.9 million.

The premium increase was primarily attributed to the new financial lines, satellite and other new lines of business. Financial lines recorded $38.6 million in net premiums written and $29.8 million in net premiums earned for its first third quarter.

Net premiums written for the nine month period, at $471.5 million, were 48 percent ahead of last year. Net premiums earned for the nine months were $408.3 million, 28 percent better than last year.

Net investment income for the third quarter, excluding net realised losses of $1.6 million, was up nine percent to $50.6 million. Net investment income for the nine month period, excluding net realised gains of $48.2 million, was up eight percent to $146.1 million.

As a result of the increase in market value of company stock, ACE has recorded expenses for stock appreciation rights representing approximately two cents per share for the quarter.

The ACE group of companies now specialises in catastrophe insurance for a diverse group of international clients. ACE's Bermuda subsidiaries are leading providers of high level excess and directors and officers liability insurance, and also provide satellite, aviation, excess property and financial lines coverage.

In addition ACE owns a majority interest in Methuen Group Limited, and provides corporate capital to Lloyd's syndicates managed by Methuen's managing agency.

ACE's acquisition of cat reinsurer, Tempest Re, was effective July 1. At June 30, total shareholders' equity approximated $1.6 billion and fully diluted net asset value per share was $34.18. Assets were more than $3.7 billion.

BRIAN DUPERREAULT -- Tempest Re acquisition is "significant step in diversification strategy.''