Underwriting Agreement

Exhibit 10.1


ACE LIMITED
(a Cayman Islands company)


6,000,000 FELINE PRIDES
initially consisting of
6,000,000 Income PRIDES


UNDERWRITING AGREEMENT


Dated: April 6, 2000


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TABLE OF CONTENTS


Section 1. Representations and Warranties................................3


(a) Representations and Warranties by the Company..................3
(1) Compliance with Registration Requirements...............3
(2) Incorporated Documents..................................4
(3) Independent Accountants.................................5
(4) Financial Statements....................................5
(5) No Material Adverse Change in Business..................5
(6) Good Standing of the Company............................6
(7) Good Standing of Corporate Subsidiaries.................6
(8) Good Standing of Partnership Subsidiaries...............7
(9) Capitalization..........................................7
(10) Authorization of the Purchase Contract Agreement........7
(11) Authorization of the Pledge Agreement...................8
(12) Authorization of FELINE PRIDES..........................8
(13) Authorization of Preferred Shares.......................8
(14) Authorization of the Ordinary Shares....................8
(15) Authorization of this Agreement, the Pricing
Agreement and the Remarketing Agreement...............8
(16) Descriptions of the Securities and the Operative
Agreements............................................9
(17) Non-Taxation of Current Payments........................9
(18) Reserves...............................................10
(19) Absence of Defaults and Conflicts......................10
(20) Absence of Proceedings.................................11
(21) Accuracy of Exhibits...................................11
(22) Absence of Further Requirements........................11
(23) Possession of Licenses and Permits.....................11
(24) Insurance Laws.........................................12
(25) Governmental Authorization.............................12
(26) Commodity Exchange Act.................................12
(27) Investment Company Act.................................12


(b) Officers' Certificates..........................................13


Section 2. Sale and Delivery to Underwriters; Closing....................13


(a) Initial Securities.............................................13
(b) Option Securities..............................................13
(c) Pledge of Securities...........................................13
(d) Payment........................................................13
(e) Compensation...................................................14
(e) Denominations; Registration....................................14


Section 3. Covenants of the Company......................................14


(a) Compliance with Securities Regulations and Commission
Requests......................................................14
(b) Filing of Amendments..........................................15
(c) Delivery of Registration Statements...........................15
(d) Delivery of Prospectuses......................................15
(e) Continued Compliance with Securities Laws.....................15
(f) Blue Sky Qualifications.......................................16
(g) Earnings Statement............................................16
(h) Use of Proceeds...............................................16
(i) Restriction on Sale of Securities.............................16
(j) Reporting Requirements........................................17
(k) Documentary, Stamp or Similar Issue Taxes.....................17
(l) Reserve of Ordinary Shares....................................17


Section 4. Payment of Expenses..........................................17


(a) Expenses......................................................17
(b) Termination of Agreement......................................18


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Section 5 Conditions of Underwriters' Obligations......................18


(a) Effectiveness of Registration Statement.......................18
(b) Opinions of Counsel for the Company...........................18
(c) Opinion of Counsel for Purchase Contract Agent................19
(d) Opinion of Counsel for Underwriters...........................19
(e) Officers' Certificate.........................................19
(f) Accountant's Comfort Letters..................................20
(g) Bring-down Comfort Letters....................................20
(h) Ratings.......................................................21
(i) Conditions to Purchase of Option Securities...................21
(j) Additional Documents..........................................22
(k) Termination of Agreement......................................22


Section 6. Indemnification..............................................23


(a) Indemnification of Underwriters..............................23
(b) Indemnification of the Company, Directors and Officers........23
(c) Actions against Parties; Notification.........................24
(d) Settlement without Consent if Failure to Reimburse............24


Section 7. Contribution.................................................24


Section 8. Representations, Warranties and Agreements to Survive
Delivery....................................................26


Section 9. Termination...................................................26


(a) Underwriting Agreement........................................26
(b) Liabilities...................................................27


Section 10. Default by One or More of the Underwriters....................27


Section 11. Notices.......................................................27


Section 12. Parties.......................................................28


Section 13. Consent to Jurisdiction; Miscellaneous........................28


Section 14. Waiver of Immunities..........................................28


Section 15. Judgment Currency.............................................29


Section 16. GOVERNING LAW AND TIME........................................29


Section 17. Effect of Headings............................................29


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SCHEDULE A SCHEDULE B


EXHIBIT A Form of Opinion of Maples and Calder, the Company's Cayman
Islands Counsel, to be Delivered Pursuant to Section 5(b)


EXHIBIT B Form of Opinion of Conyers, Dill & Pearman, the Company's
Bermuda Counsel, to be Delivered Pursuant to Section 5(b)


EXHIBIT C Form of Opinion of Peter N. Mear, Esq., General Counsel of
the Company, to be Delivered Pursuant to Section 5(b)


EXHIBIT D Form of Opinion of Mayer, Brown & Platt, United States
Counsel for the Company, to be Delivered Pursuant to
Section 5(b)


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ACE LIMITED
(a Cayman Islands Company)


6,000,000 FELINE PRIDES


consisting of


6,000,000 Income PRIDES


UNDERWRITING AGREEMENT


April 6, 2000


MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED BANC OF AMERICA SECURITIES LLC DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
c/o Merrill Lynch & Co.,
Merrill Lynch Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower
New York, New York 10281-1209


Ladies and Gentlemen:


ACE Limited, a Cayman Islands company (the "Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Banc of America Securities LLC and Donaldson, Lufkin & Jenrette Securities Corporation (collectively, the "Underwriters," which term shall also include any underwriter substituted as provided in Section 10 hereof), with respect to the issue and sale by the Company and the purchase by the Underwriters, acting severally and not jointly, of 6,000,000 FELINE PRIDESSM or the "Initial Securities" which will initially consist of units (referred to as "Income PRIDESSM") with a Stated Amount of $50 comprised of (a) a stock purchase contract (the "Purchase Contract") under which the holder will purchase from the Company on May 16, 2003 a number of ordinary shares, $0.041666667 par value per share, of the Company (the "Ordinary Shares") equal to the Settlement Rate as set forth in the Purchase Contract Agreement (as defined below), and (b) beneficial ownership of one 8.25% Cumulative Redeemable Preferred Share, Series A, of the Company, having a liquidation preference of $50 (the "Preferred Shares") and with respect to the grant by the Company to the Underwriters, acting severally and not jointly, of an option to purchase up to an additional 900,000 FELINE PRIDES (the "Option Securities" and, together with the Initial Securities, being referred to herein as the "Securities"). In accordance with the terms of the Purchase Contract Agreement, to be dated as of April 12, 2000, between the Company and The Bank of New York, as purchase contract agent (the "Purchase Contract Agent"), the Preferred Shares will be pledged by the Purchase Contract Agent, on behalf of the holders of the Securities, to The Bank of New York, as collateral agent (the "Collateral Agent"), pursuant to the Pledge Agreement, to be dated as of April 12, 2000 (the "Pledge Agreement"), among the Company, the Purchase Contract Agent and the Collateral Agent, to secure such holders' obligation to purchase Ordinary Shares under the Purchase Contracts. Under the terms of the Purchase Contract Agreement and Pledge Agreement, holders of Income PRIDES are permitted to substitute certain treasury securities ("Treasury Securities") for the Preferred Shares as collateral in order to create "Growth PRIDESSM" ("Growth PRIDES"). Growth PRIDES will consist of a unit with a Stated Amount of $50 comprised of (a) a Purchase Contract and (b) a 1/20th undivided beneficial interest in a zero-coupon U.S. Treasury Security maturing on May 16, 2003. The rights and obligations of (i) a holder of Income PRIDES in respect of Preferred Shares, subject to the pledge thereof, and Purchase Contracts, (ii) a holder of Growth PRIDES in respect of a beneficial interest in the Treasury Securities, subject to the pledge thereof, and Purchase Contracts and (iii) a holder of separately trading Preferred Shares resulting from the creation of Growth PRIDES ("Separate Preferred Shares") will, in each case, be evidenced by Security Certificates (the "Security Certificates").


Pursuant to a remarketing agreement (the "Remarketing Agreement") to be dated as of April 12, 2000, among the Company, the Purchase Contract Agent and a nationally recognized investment banking firm chosen by the Company, certain Preferred Shares may be remarketed, subject to certain terms and conditions.


The Company and certain other entities affiliated therewith have filed with the Securities and Exchange Commission (the "Commission") a joint registration statement on Form S-3 (No. 333-78841) and pre-effective amendments nos. 1 and 2 thereto, for the registration of the Securities and certain other securities described therein under the Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof from time to time in accordance with Rule 415 of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations"). Such registration statement has been declared effective by the Commission. Such registration statement, in the form in which it became effective, is referred to herein as the "Registration Statement"; and the final prospectus and the final prospectus supplement relating to the offering of the Securities, in the form first furnished to the Underwriters by the Company for use in connection with the offering of the Securities, are collectively referred to herein as the "Prospectus"; provided, however, that all references to the "Registration Statement" and the "Prospectus" shall also be deemed to include all documents incorporated therein by reference pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), prior to the time the applicable final prospectus and the final prospectus supplement were first furnished to the Underwriters by the Company; provided, further, that if the Company files a registration statement with the Commission pursuant to Rule 462(b) of the 1933 Act Regulations (the "Rule 462(b) Registration Statement"), then, after such filing, all references to "Registration Statement" shall also be deemed to include the Rule 462 Registration Statement. A "preliminary prospectus" shall be deemed to refer to any prospectus relating to the offering of the Securities that omitted information to be included upon pricing in a form of prospectus filed with the Commission pursuant to Rule 424(b) of the 1933 Act Regulations and was used after the Registration Statement became effective and prior to the execution and delivery of this Underwriting Agreement. For purposes of this Underwriting Agreement, all references to the Registration Statement, Prospectus or preliminary prospectus or to any amendment or supplement to any of the foregoing shall be deemed to include any copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").


All references in this Underwriting Agreement to financial statements and schedules and other information which is "contained," "included" or "stated" (or other references of like import) in the Registration Statement, Prospectus or preliminary prospectus shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated by reference in the Registration Statement, Prospectus or preliminary prospectus, as the case may be, prior to the execution of this Underwriting Agreement; and all references in this Underwriting Agreement to amendments or supplements to the Registration Statement, Prospectus or preliminary prospectus shall be deemed to mean and include the filing of any document under the 1934 Act which is incorporated by reference in the Registration Statement, Prospectus or preliminary prospectus, as the case may be, after the execution of this Underwriting Agreement.


The Remarketing Agreement, the Purchase Contract Agreement, the Pledge Agreement and this Agreement are referred to collectively as the "Operative Agreements."


The Company understands that the Underwriters propose to make a public offering of the Securities as soon as the Underwriters deem advisable after this Agreement has been executed and delivered.


Section 1. Representations and Warranties.


(a) Representations and Warranties by the Company. The Company represents and warrants to the Underwriters as of the date hereof, as of the Closing Time and, if applicable, as of each Date of Delivery (as defined below) (in each case, a "Representation Date"), as follows:


(1) Compliance with Registration Requirements. The Company meets
the requirements for use of Form S-3 under the 1933 Act. The
Registration Statement (including any Rule 462(b) Registration
Statement) has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement (or such
Rule 462(b) Registration Statement) has been issued under the 1933 Act
and no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the Company, are contemplated by the
Commission, and any request on the part of the Commission for
additional information with respect to the Registration Statement (or
any document incorporated therein by reference pursuant to the 1934
Act) has been complied with.


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At the respective times the Registration Statement (including any
Rule 462(b) Registration Statement) and any post-effective amendments
thereto (including the filing of the Company's Annual Report on Form 10-K
for the year ended December 31, 1999 with the Commission (the "Annual
Report on Form 10-K")) became effective and at each Representation Date,
the Registration Statement (including any Rule 462(b) Registration
Statement) and any amendments thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations and did not and will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. At the date of the Prospectus, at the Closing Time and
at each Date of Delivery, if any, neither the Prospectus nor any
amendments and supplements thereto included or will include an
untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. Notwithstanding the foregoing, the
representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement (or
any amendment thereto) or the Prospectus made in reliance upon and
in conformity with information furnished to the Company in writing
by any Underwriter expressly for use in the Registration Statement
(or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto).


Each preliminary prospectus and prospectus filed as part
of the Registration Statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the
1933 Act, complied when so filed in all material respects with the
1933 Act Regulations and each preliminary prospectus and the
Prospectus delivered to the Underwriters for use in connection
with the offering of the Securities will, at the time of such
delivery, be identical to any electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.


(2) Incorporated Documents. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with
the requirements of the 1934 Act and the rules and regulations of
the Commission thereunder (the "1934 Act Regulations") and, when
read together with the other information in the Prospectus, at the
date of the Prospectus, at the Closing Time and at each Date of
Delivery, if any, did not and will not include an untrue statement
of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.


(3) Independent Accountants. The accountants who certified or shall
certify the financial statements and any supporting schedules thereto of
the Company included in the Registration Statement and the Prospectus are
independent public accountants with respect to the Company and its
subsidiaries as required by the 1933 Act and the 1933 Act Regulations.


(4) Financial Statements. The financial statements of the Company
included in the Registration Statement and the Prospectus,
together with the related schedules and notes, as well as those
financial statements, schedules and notes of any other entity
included therein, present fairly the financial position of the
Company and its consolidated subsidiaries, or such other entity,
as the case may be, at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and
its consolidated subsidiaries, or such other entity, as the case
may be, for the periods specified. Such financial statements have
been prepared in conformity with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved, except as indicated therein or in
the notes thereto. The supporting schedules, if any, included in
the Registration Statement and the Prospectus present fairly in
accordance with GAAP the information required to be stated
therein. The selected financial data and the summary financial
information, if any, included in the Prospectus present fairly the
information shown therein and have been compiled on a basis
consistent with that of the related audited financial statements
included in the Registration Statement and the Prospectus. The pro


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forma financial statements of the Company and its subsidiaries and
the related notes thereto included in the Registration Statement
and the Prospectus present fairly the information shown therein,
have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have
been properly compiled on the basis described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.


(5) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein (i) neither the
Company nor any of its subsidiaries has sustained any material
loss or material interference with its business from any action,
notice, order or decree from an insurance regulatory authority and
(ii) there has been (A) no material adverse change in case
reserves or losses or loss expense of the Company and its
consolidated subsidiaries and (B) no material adverse change, nor
any development or event involving a prospective material adverse
change, in the financial condition, business, or results of
operations of the Company and its subsidiaries considered as one
enterprise, in either case whether or not arising in the ordinary
course of business (a "Material Adverse Change").


(6) Good Standing of the Company. The Company has been duly
organized and is subsisting and in good standing under the laws of the
Cayman Islands, with corporate power and authority to own, lease
and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under, or as contemplated under, the Operative
Agreements to which it is a party. The Company is duly qualified
to transact business as a foreign corporation and is in good
standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification, except where the failure to so qualify or be in
good standing would not reasonably be expected to result in a
Material Adverse Change.


(7) Good Standing of Corporate Subsidiaries. Each subsidiary of the
Company, other than such subsidiaries as would not, individually
or in the aggregate, constitute a "significant subsidiary" as such
term is defined in Rule 1-02 of Regulation S-X promulgated under
the 1933 Act (each, a "Significant Subsidiary") which is a
corporation has been duly incorporated or organized and is an
existing corporation in good standing (with respect to
jurisdictions which recognize such concept) under the laws of the
jurisdiction of its incorporation, with corporate power and
authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus; and each such
Significant Subsidiary of the Company is duly qualified to
transact business as a foreign corporation and is in good standing
(with respect to jurisdictions which recognize such concept) in
all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such
qualification, except where the failure to so qualify or be in
good standing would not reasonably be expected to result in a
Material Adverse Change; all of the issued and outstanding capital
stock of each such Significant Subsidiary of the Company has been
duly authorized and validly issued and is fully paid and
nonassessable; and all of the issued and outstanding capital stock
of each such Significant Subsidiary is owned by the Company,
directly or through subsidiaries, except for de minimis
shareholdings as required to comply with applicable law, and such
capital stock is owned free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity (except for
restrictions on transferability of the shares of insurance
subsidiaries under applicable law).


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(8) Good Standing of Partnership Subsidiaries. Each Significant
Subsidiary of the Company which is a partnership has been duly
formed and is an existing partnership in good standing (with
respect to jurisdictions which recognize such concept) under the
laws of the jurisdiction of its formation, with power and
authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus; and each such
Significant Subsidiary of the Company is duly qualified to
transact business and is in good standing (with respect to
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