OREANDA-NEWS. Fitch Ratings expects to assign an 'A+' rating to the \$800 million senior unsecured 10-year note issuance planned by ACE INA Holdings Inc., a subsidiary of ACE Limited. Additionally, Fitch has affirmed the ratings of ACE Limited and its subsidiaries (ACE). The Rating Outlook is Stable. A complete list of ratings follows at the end of this release.

KEY RATING DRIVERS

The new notes will be fully and unconditionally guaranteed by ACE Limited and are therefore based on ACE Limited's 'AA-' Issuer Default Rating (IDR). Fitch expects that the net proceeds from this new senior debt issuance will refinance \$800 million of existing debt maturing in 2017 and 2018.

The rating actions reflect ACE's continued strong operating performance despite competitive market conditions, strong balance sheet position and financial flexibility with moderate leverage, and diverse sources of revenues and earnings with the advantages of global scale and a strong management team.

Fitch views the debt issuance favorably since the debt will likely be issued at a similar or better interest rate versus the existing debt, and the maturities will be extended, eliminating near-term refinancing risk.

Following the completion of ACE's financing plans, the company's pro forma Dec. 31, 2014 financial leverage ratio (total debt to capital excluding FAS 115 unrealized gains and losses) will increase to roughly 19.2% from 17.5% which remains consistent with Fitch's median sector credit factors for the current rating category.

Fitch notes that in 2013-2014, ACE prefunded \$1.15 billion of senior debt due in 2015, of which \$450 million matures in May 2015 and \$700 million in November 2015. Following the repayment of this debt, pro forma financial leverage will decrease to roughly 18.2% and 16.6%, respectively. Fitch views this as a reasonable amount of leverage for a company with ACE's strong balance sheet, cash flow and earnings profile.

Operating interest coverage (excluding realized investment gains) remains favorable at approximately 15x in both 2014 and 2013. ACE has ample resources available for debt servicing needs with roughly \$3 billion of cash and short-term investments at Dec. 31, 2014. Significant additional flexibility is provided by insurance subsidiaries that can pay nearly another \$3.8 billion of dividends to the holding company without prior regulatory approval in 2015.

ACE's operating performance consistently exceeds peers, characterized by low combined ratios with manageable catastrophe losses, consistent favorable loss reserve development and stable investment income from strong operating cash flow. The company has reported a combined ratio under 100% for 10+ consecutive years. For the five-year period 2010-2014, the average consolidated GAAP combined ratio was 91% and the operating return on equity was 12%.

ACE reported 2014 after-tax operating income of \$3.3 billion, up over 3% versus last year from continued underwriting income and premium growth. This result corresponds with an operating return on equity of 12%.

The underwriting combined ratio improved to 87.7% in 2014 versus 88% in 2013, benefiting from favorable pricing and strong current accident year underwriting results. Expense ratios have trended slightly higher due in part to increasing acquisitions costs in certain lines.

Shareholders' equity has more than doubled in the past six years to \$29.6 billion at year-end 2014. Until recently, ACE differed from peers by not repurchasing a material amount of shares. Since the inception of the November 2013 share repurchase authorization, ACE has repurchased roughly \$1.5 billion of shares through Dec. 31, 2014.

RATING SENSITIVITIES

Key rating triggers that may lead to an upgrade include:

--Generating a combined ratio consistently under 85%;
--Maintained growth in stockholders' equity that corresponds with premium and asset growth;
--A reduction in financial leverage to a run-rate level of 15% or lower;
--Operating earnings-based interest and preferred dividend coverage at or above 15x;
--Movement in ACE's retention ratio (net premium written to gross premium written) to increase over time to be more in line with highly-rated peers;
--Continuing a track record of successful acquisition execution.

Key rating triggers that may lead to a downgrade include:

--A sustained material deterioration in operating performance such that the combined ratio is consistently less profitable at over 95%;
--A significant reduction in stockholders' equity that is not recovered in the near term;
--Increases in financial leverage to a sustained level of over 25%.

Any future acquisitions and the associated integration risks and company profile changes could lead to pressure on the ratings, upward or downward, depending on the nature and size of the acquisition and corresponding integration risks.

Future rating action may also be constrained by sovereign rating considerations. A Fitch downgrade of Bermuda's long-term foreign currency IDR to more than four notches below ACE's Insurer Financial Strength (IFS) rating, may promote consideration of a downgrade in ACE's ratings.

Fitch notes that ACE's debt ratings currently benefit from narrower notching relative to the insurance company financial strength ratings as a result of Bermuda's moderate regulatory environment. This narrower notching may be revised in the future as Fitch evaluates the impact of Solvency II and other possible regulatory changes on Bermuda's insurance regime.

Fitch expects to assign the following rating:

ACE INA Holdings Inc.
--\$800 million senior notes due 2025 'A+'.

Fitch has affirmed the following ratings with a Stable Outlook:

ACE Limited
--IDR at 'AA-'.

ACE INA Holdings Inc.
--IDR at 'AA-';
--\$450 million senior notes due 2015 at 'A+';
--\$700 million senior notes due 2015 at 'A+';
--\$500 million senior notes due 2017 at 'A+';
--\$300 million senior notes due 2018 at 'A+';
--\$500 million senior notes due 2019 at 'A+';
--\$475 million senior notes due 2023 at 'A+';
--\$700 million senior notes due 2024 at 'A+';
--\$100 million senior debentures due 2029 at 'A+';
--\$300 million senior notes due 2036 at 'A+';
--\$475 million senior notes due 2043 at 'A+'.

ACE Capital Trust II
--\$300 million capital securities due 2030 at 'A-'.

ACE American Insurance Company
ACE Bermuda Insurance Limited
ACE Fire Underwriters Ins. Company
ACE INA Overseas Insurance Company Ltd.
ACE Insurance Company of the Midwest
ACE Property and Casualty Insurance Company
ACE Tempest Reinsurance Limited
Agri General Insurance Company
Atlantic Employers Insurance Company
Bankers Standard Fire & Marine Company
Bankers Standard Insurance Company
Illinois Union Insurance Company
Indemnity Insurance Company of North America
Insurance Company of North America
Pacific Employers Insurance Company
Westchester Fire Insurance Company
Westchester Surplus Lines Insurance Company
--IFS at 'AA'.

ACE Reinsurance (Switzerland) Limited
--IFS at 'AA-'.