<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 14, 1998
REGISTRATION NO. 333-60985
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
FORM S-3/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
ACE LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CAYMAN ISLANDS [NOT APPLICABLE]
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
THE ACE BUILDING CT CORPORATION SYSTEM
30 WOODBOURNE AVENUE 1633 BROADWAY
HAMILTON HM 08, BERMUDA NEW YORK, NEW YORK 10019
(441) 295-5200 (212) 664-1666
(ADDRESS, INCLUDING ZIP CODE, AND (NAME, ADDRESS, INCLUDING ZIP CODE,
TELEPHONE NUMBER, INCLUDING AREA CODE, AND TELEPHONE NUMBER, INCLUDING AREA
OF REGISTRANT'S PRINCIPAL EXECUTIVE CODE, OF AGENT FOR SERVICE)
OFFICES)
COPIES TO:
PETER N. MEAR EDWARD S. BEST
GENERAL COUNSEL AND SECRETARY MAYER, BROWN & PLATT
ACE LIMITED 190 SOUTH LASALLE STREET
THE ACE BUILDING CHICAGO, ILLINOIS 60603
30 WOODBOURNE AVENUE (312) 782-0600
HAMILTON HM 08 BERMUDA
(441) 295-5200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED AUGUST 14, 1998
PROSPECTUS
14,328,010 SHARES
ACE LIMITED
ORDINARY SHARES
(PAR VALUE 0.041666667)
This Prospectus relates to 14,328,010 Ordinary Shares (the "Shares"), par
value $0.041666667 per share, of ACE Limited, a Cayman Islands company (the
"Company"), which may be offered from time to time by certain shareholders of
the Company (the "Selling Shareholders"). The Shares covered by this Prospectus
were issued to the Selling Shareholders in connection with the acquisition on
July 9, 1998, by the Company of Tarquin Limited ("Tarquin"). The Company will
not receive any of the proceeds from the sale of the Shares by the Selling
Shareholders.
The Selling Shareholders directly, or through agents, dealers or underwriters
designated from time to time, may sell the Shares offered hereby from time to
time on terms to be determined at the time of sale. To the extent required, the
number of Shares to be sold, purchase price, public offering price, the names
of the Selling Shareholders, the names of any such agent, dealer or
underwriter, and any applicable commission or discount with respect to a
particular offering will be set forth in an accompanying Prospectus Supplement.
The aggregate proceeds to the Selling Shareholders from the sale of the Common
Stock offered hereby will be the purchase price thereof less the aggregate
agents' commissions and underwriters' discounts, if any, and other expenses of
distribution not borne by the Company. The Company has agreed to pay certain
expenses of the offering contemplated hereby. See "Plan of Distribution."
The Selling Shareholders and any dealers, agents or underwriters that
participate with any Selling Shareholder in the distribution of Shares may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), and any commission received by them and any
profit from the resale of Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution" for a description of information regarding indemnification
arrangements.
The Shares are listed on New York Stock Exchange (the "NYSE") under the
symbol "ACL." On August 6, 1998, the last reported sales price of the Shares on
the NYSE was $35 1/16 per share.
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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Prospectus dated August , 1998
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MADE HEREBY MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
ORDINARY SHARES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH SECURITIES AND THE IMPOSITION OF A PENALTY BID, IN
CONNECTION WITH THE OFFERING MADE HEREBY. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
No action has been or will be taken in any jurisdiction by the Company or
any Selling Shareholder that would permit a public offering of the Shares or
possession or distribution of this Prospectus or any accompanying Prospectus
Supplement in any jurisdiction where action for that purpose is required,
other than in the United States. Persons into whose possession this Prospectus
or any accompanying Prospectus Supplement comes are required by the Company
and the Selling Shareholders to inform themselves about and to observe any
restrictions as to the offering of the Shares and the distribution of this
Prospectus and any accompanying Prospectus Supplement.
No dealer, salesperson, or other person has been authorized to give any
information or to make any representation not contained in this Prospectus
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or any underwriter. This
Prospectus does not constitute an offer to sell or a solicitation of an offer
to buy any of the securities offered hereby in any jurisdiction to any person
to whom it is unlawful to make such offer in such jurisdiction. Neither the
delivery of this Prospectus nor any sale made hereunder or thereunder shall,
under any circumstances, create any implication that the information herein is
correct as of any time subsequent to the date hereof or that there has been no
change in the affairs of the Company since such date.
----------------
FOR NORTH CAROLINA INVESTORS: THE OFFERED SECURITIES HAVE NOT BEEN APPROVED
BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE
COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF THIS
DOCUMENT. THE BUYER IN NORTH CAROLINA UNDERSTANDS THAT NEITHER THE COMPANY NOR
ITS SUBSIDIARIES ARE LICENSED IN NORTH CAROLINA PURSUANT TO CHAPTER 58 OF THE
NORTH CAROLINA GENERAL STATUTES, NOR COULD THEY MEET THE BASIC ADMISSIONS
REQUIREMENTS IMPOSED BY SUCH CHAPTER AT THE PRESENT TIME.
----------------
NO OFFERED SECURITIES MAY BE OFFERED OR SOLD IN THE CAYMAN ISLANDS. PERSONS
RESIDENT IN BERMUDA FOR BERMUDA EXCHANGE CONTROL PURPOSES MAY REQUIRE THE
PRIOR APPROVAL OF THE BERMUDA MONETARY AUTHORITY IN ORDER TO ACQUIRE ANY
OFFERED SECURITIES.
----------------
In this Prospectus, references to "$" are to United States currency, and the
terms "United States" and "U.S" mean the United States of America, its states,
its territories, its possessions and all areas subject to its jurisdiction.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at Seven World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates, or at the Commission's worldwide
web site at http://www.sec.gov. The Company's Ordinary Shares are listed on
the NYSE and any reports, proxy statements and other information concerning
the Company may also be inspected and copied at the offices of the NYSE, 20
Broad Street, New York, New York 10005.
2
<PAGE>
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits, the "Registration Statement")
under the Securities Act, with respect to the Shares offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement,
certain items of which are contained in exhibits to the Registration Statement
as permitted by the rules and regulations of the Commission. Statements made
in this Prospectus as to the contents of any contract, agreement or other
document referred to are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
1-11778) are incorporated herein by reference: (i) Annual Report on Form 10-K
for the fiscal year ended September 30, 1997; (ii) Quarterly Report on Form
10-Q for the quarter ended December 31, 1997; (iii) Quarterly Report on Form
10-Q for the quarter ended March 31, 1998; (iv) Current Report on Form 8-K, as
amended (Date of earliest event reported: January 2, 1998); (v) Current Report
on Form 8-K (Date of earliest event reported: March 25, 1998); (vi) Current
Report on Form 8-K (Date of earliest event reported: April 1, 1998); (vii)
Current Report on Form 8-K (Date of earliest event reported: June 16, 1998);
(viii) Current Report on Form 8-K (Date of earliest event reported: July 6,
1998); (ix) Current Report on Form 8-K (Date of earliest event reported: July
9, 1998); and (x) the description of the Ordinary Shares included in the
Registration Statement on Form 8-A dated March 2, 1993, as amended by
Amendment No. 1 thereto dated March 11, 1993, filed under Section 12 of the
Exchange Act.
All documents and reports filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, subsequent to the date of this
Prospectus and prior to the termination of the offering of the Shares made
hereby, shall be deemed to be incorporated herein by reference and shall be
deemed a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein will be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is, or is deemed to be, incorporated by
reference herein modifies or supersedes any such statement. Any such statement
so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the request of such
person, a copy of any of the foregoing documents incorporated herein by
reference (other than the exhibits to such documents unless such exhibits are
specifically incorporated by reference into such documents). Requests should
be directed to Investor Relations, ACE Limited, The
ACE Building, 30 Woodbourne Avenue, Hamilton HM 08, Bermuda (telephone (441)
295-5200, facsimile (441) 295-5221).
ENFORCEMENT OF CIVIL LIABILITIES UNDER
UNITED STATES FEDERAL SECURITIES LAWS
The Company is a Cayman Islands company and certain of its officers and
directors are residents of various jurisdictions outside of the United States.
All or a substantial portion of the assets of the Company and such officers
and directors, at any one time, are or may be located in jurisdictions outside
of the United States. Therefore, it ordinarily could be difficult for
investors to effect service of process within the United States on any of the
parties who reside outside the United States or to recover against them on
judgments of United States courts predicated upon civil liability under the
United States federal securities laws. Notwithstanding the foregoing, the
Company has appointed CT Corporation System, 1633 Broadway, New York, New York
10019, as its agent to receive service of process with respect to actions
against it arising out of or in connection with the United States federal
securities laws or out of violations of such laws in any federal or state
court in the United States, in any case relating to the transactions covered
by this Prospectus. The Company has been advised by Maples and Calder, its
Cayman Islands counsel, that there is doubt as to whether the courts of the
Cayman Islands would enforce (i) judgments of United States courts obtained in
actions against such persons or the Company predicated solely upon United
States federal securities laws and (ii) original actions brought in the Cayman
Islands against such persons or the Company predicated solely upon United
States federal securities
3
<PAGE>
laws. There is no treaty in effect between the United States and the Cayman
Islands providing for such enforcement, and there are grounds upon which
Cayman Islands courts may not enforce judgments of United States courts.
Certain remedies available under the United States federal securities laws
would not be allowed in Cayman Islands courts as contrary to that
jurisdiction's public policy.
THE COMPANY
ACE Limited is a holding company incorporated with limited liability under
the Cayman Islands Companies Law (1995 Revision) and maintains its principal
business office in Bermuda. The Company, through its Bermuda-based operating
subsidiaries, A.C.E. Insurance Company, Ltd., Corporate Officers & Directors
Assurance Ltd., Tempest Reinsurance Company Limited and CAT Limited, provides
property and casualty insurance and reinsurance for a diverse group of
international clients. Through its U.S.-based subsidiary, ACE USA, Inc., the
Company provides property and casualty insurance to a broad range of clients
in the United States. The Company also provides funds at Lloyd's of London to
support underwriting by syndicates managed by Methuen Underwriting Limited,
Charman Underwriting Agencies Ltd., ACE London Aviation Limited and ACE London
Underwriting Limited, its indirect wholly owned subsidiaries. Also, ACE
Insurance Company Europe Limited, a part of the International Financial
Services Centre in Dublin, Ireland, has a license to write all 18 classes of
non-life insurance in all member states of the European Union.
Through a joint venture, Sovereign Risk Insurance Ltd., the Company provides
political risk insurance coverage. Through another joint venture, ACE Capital
Re Limited, the Company writes both traditional and custom-designed programs
covering financial guaranty, mortgage guaranty and a broad range of financial
risks.
The Company's principal executive offices are located at The ACE Building,
30 Woodbourne Avenue, Hamilton HM 08 Bermuda, and its telephone number is
(441) 295-5200.
THE TARQUIN ACQUISITION
On July 9, 1998, the Company acquired (the "Tarquin Acquisition") Tarquin, a
UK-based holding company which owns Lloyd's managing agency Charman
Underwriting Agencies Ltd. ("CUA"), and Tarquin Underwriting Limited ("TUL"),
its corporate capital provider. As a result of the Tarquin Acquisition, the
Company is the largest managing agency group in the Lloyd's market in terms of
capacity under a single management, managing approximately 9.3 percent of the
total underwriting capacity at Lloyd's.
The Charman syndicates 488 and 2488 are leading international underwriters
of short-tail marine, aviation, political risk and specialty property-casualty
insurance and reinsurance. The acquisition complements the Company's existing
Lloyd's businesses and enhances the Company's already leading position in both
aviation and marine underwriting.
In connection with the Tarquin Acquisition, the Company issued 14,328,010
Ordinary Shares to the Selling Shareholders of Tarquin, which shares are being
offered hereby. It is anticipated that the transaction will be accounted for
on a "pooling of interests" basis. The combined entities are expected to incur
approximately $60 million of non-recurring and transaction-related expenses.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by the
Selling Shareholders, nor will any such proceeds be available for use by the
Company or otherwise for the Company's benefit. The Company has agreed to pay
all expenses related to the registration of the Shares. See "Selling
Shareholders" and "Plan of Distribution."
THE OFFERING
All of the 14,328,010 Ordinary Shares offered hereby are being sold by the
Selling Shareholders. The offered Shares were issued to the Selling
Shareholders pursuant to the Share Purchase Agreement (the "Agreement") dated
June 15, 1998, in which the Company acquired the outstanding share capital of
Tarquin. See "The Tarquin Acquisition."
4
<PAGE>
SELLING SHAREHOLDERS
All of the Ordinary Shares offered hereby will be sold for the account of
the Selling Shareholders. Information regarding the Selling Shareholders is
set forth in the following table. Each Selling Shareholder who is an
individual was formerly employed by, or otherwise affiliated with, Tarquin,
and is now employed by the Company. The information assumes that the Selling
Shareholders sell all of the Ordinary Shares offered hereby. The Selling
Shareholders may purchase and sell Ordinary Shares not covered by this
Prospectus from time to time.
<TABLE>
<CAPTION>
SHARES OWNED
PRIOR TO THE SHARES BEING
NAME OF SELLING SHAREHOLDER OFFERING OFFERED HEREBY
- --------------------------- ------------ --------------
<S> <C> <C>
J R Charman(1)(2).................................. 809,649 809,649
J J Lloyd(1)(3).................................... 246,145 246,145
S J Hayes.......................................... 101,957 101,957
J J B Skinner(1)................................... 7,569 7,569
R D H Brindle...................................... 507,544 507,544
D G Penney......................................... 202,583 202,583
G A Arnott......................................... 341,857 341,857
J W Gressier....................................... 48,737 48,737
A P Ryan........................................... 101,957 101,957
M King............................................. 9,462 9,462
C Langley.......................................... 9,524 9,524
G L Luben.......................................... 36,354 36,354
I N Holland........................................ 7,498 7,498
J A Battle......................................... 27,745 27,745
T W H Wood......................................... 28,487 28,487
R D Mills.......................................... 6,597 6,597
R A Strachan....................................... 50,977 50,977
R D Paton.......................................... 946 946
D J Rouse.......................................... 946 946
P N McCracken...................................... 3,784 3,784
H Frake............................................ 5,677 5,677
F J Donaldson...................................... 1,892 1,892
R M Bullen......................................... 3,784 3,784
T M Taylor......................................... 5,096 5,096
K S Jones.......................................... 473 473
C C Rann........................................... 946 946
D J Rayner......................................... 946 946
I Constable........................................ 1,892 1,892
Charman Trustees Limited........................... 24,619 24,619(4)
EBCAM Nominees (Jersey) Ltd. re JRC Children's
Settlement ....................................... 749,686 749,686
EBCAM Nominees (Jersey) Ltd. re the Dragon Trust... 1,686,352 1,686,352
Insurance Partners Charman (Bermuda) L.P........... 5,274,332 5,274,332
Insurance Partners Offshore (Bermuda) L.P.......... 2,678,281 2,678,281
Phemus Corporation................................. 1,343,666 1,343,666
</TABLE>
- --------
(1) Former Director of Tarquin Limited.
(2) Chief Executive Officer and Director of ACE London Services Limited.
(3) Finance Director of ACE London Services Limited.
(4) J R Charman is a director of Charman Trustees Limited and may be deemed to
be the beneficial owner of the securities offered hereby.
5
<PAGE>
TAXATION OF SHAREHOLDERS OF THE COMPANY
The following summary of the taxation of shareholders of the Company is
based upon current law. Legislative, judicial or administrative changes may be
forthcoming that could affect this summary.
Statements made below as to Cayman Islands law are based on the opinion of
Maples and Calder, Cayman Islands counsel to the Company. Statements made
below as to Bermuda law are based on the opinion of Conyers, Dill & Pearman,
Bermuda counsel to the Company. Statements made below as to United States law
are based upon the opinion of Mayer, Brown & Platt, United States counsel to
the Company.
CAYMAN ISLANDS TAXATION
Dividends paid by the Company are not subject to Cayman Islands withholding
tax.
BERMUDA TAXATION
Currently, there is no Bermuda withholding tax on dividends paid by the
Company.
UNITED STATES TAXATION OF U.S. AND NON-U.S. SHAREHOLDERS
Summary
The following summary is qualified in its entirety by the more detailed
discussions set forth below:
. In any fiscal year in which the gross related person insurance income
("RPII") of any foreign insurance
company subsidiary of the Company is 20 percent or more of such insurance
company subsidiary's gross insurance income for such fiscal year, U.S.
persons who own Ordinary Shares on the last day of such subsidiary's
fiscal year may be required to include their pro rata share of such
insurance company subsidiary's RPII, as described below, in their income
for their taxable year which includes the last day of the subsidiary's
fiscal year and report such amount on the U.S. income tax or information
returns that they would normally file for that taxable year. They also
would be required to attach to their returns Internal Revenue Service
("IRS") Form 5471, which shows the calculation of RPII and certain other
information about the Company. Although no assurances can be given, the
Company believes that RPII will be less than 20 percent of gross insurance
income for the current and future fiscal years.
. IF RPII reporting is required for a particular fiscal year, the Company
will send to each shareholder who owned Ordinary Shares on the last day
of such year a Form 5471 completed with all Company information
(including the amount of RPII) and instructions for completing the
shareholder information. Tax-exempt organizations may be required to
report their share of RPII for any taxable year in which RPII reporting
is required on the information return that such tax-exempt organizations
would normally file for the year that includes the last day of such tax
year and attach to that return Form 5471.
. Gain from the sale or exchange of Ordinary Shares that would otherwise be
capital gain will not be treated as ordinary income pursuant to Code
section 1248 of the U.S. Internal Revenue Code (the "Code"). It is
possible, however, that the IRS might interpret regulations proposed by
the U.S. Treasury Department, or that the Treasury Department might amend
such regulations, to apply section 1248 and the requirement to file Form
5471 to dispositions of Ordinary Shares. If the IRS or Treasury
Department were to take such action, the Company would notify
shareholders that Section 1248 will apply to dispositions of Ordinary
Shares. Under current law, U.S. persons (including tax-exempt
organizations) who own less than 10 percent of the Ordinary Shares and
sell or exchange Ordinary Shares will not be required to file Form 5471
with respect to such dispositions.
RPII
The following discussion generally is applicable only if the RPII of any of
the Company's foreign insurance company subsidiaries, determined on a gross
basis, is 20 percent or more of that insurance company subsidiary's gross
insurance income for the taxable year. For the Company's most recent fiscal
year ended September 30, 1997, the Company believes gross RPII of each of its
foreign insurance company subsidiaries was below 20 percent for the year.
Although no assurances can be given, the Company anticipates that gross RPII
of each of its foreign insurance company subsidiaries will be less than 20
percent of each such subsidiary's gross insurance income for subsequent years
and will endeavor to take such steps as it determines to be reasonable to
cause its gross RPII to remain below such level.
6
<PAGE>
Classification of the Company as a Controlled Foreign Corporation
Under section 951(a) of the Code, each "United States shareholder" of a
"controlled foreign corporation" ("CFC") must include in its gross income for
United States federal income tax purposes its pro rata share of the CFC's
"subpart F income," even if the subpart F income is not distributed. Under
Code section 951(b), any U.S. corporation, citizen, resident or other U.S.
person who owns, directly or indirectly through foreign persons, or is
considered to own (by application of the rules of constructive ownership set
forth in Code section 958(b), generally applying to family members,
partnerships, estates, trusts or controlled corporations) 10 percent or more
of the total combined voting power of all classes of stock of the foreign
corporation will be considered to be a "United States shareholder." In
general, a foreign corporation is treated as a CFC only if such "United States
shareholders" collectively own more than 50 percent (more than 25 percent for
certain insurance companies) of the total combined voting power or total value
of the corporation's stock for an uninterrupted period of 30 days or more
during any tax year. The Company believes that because of the wide dispersion
of its share ownership and because under its Articles of Association no single
shareholder is permitted to hold as much as 10 percent of its total combined
voting power, it is not a CFC under the foregoing general rules.
RPII Companies
Different definitions of "United States shareholders" and "controlled
foreign corporation" are applicable in the case of a foreign corporation which
earns RPII. RPII is defined in Code section 953(c)(2) as any "insurance
income" attributable to policies of insurance or reinsurance with respect to
which the person (directly or indirectly) insured is a "United States
shareholder" or a "related person" to such a shareholder. The proposed
regulations provide that, in general, "insurance income is income (including
premium and investment income) attributable to the issuing or reinsuring of
any insurance or annuity contract in connection with risks located in a
country . . . other than the country under the laws of which the controlled
foreign corporation is created or organized and which would be taxed under
[the portions of the Code relating to insurance companies] if the income were
the income of a domestic insurance company."
Generally, the term "related person" for this purpose means someone who
controls or is controlled by the U.S. shareholder or someone who is controlled
by the same person or persons which control the U.S. shareholder. Control is
measured by either more than 50 percent in value or more than 50 percent in
voting power of stock applying constructive ownership principles similar to
the rules of section 958 of the Code. A corporation's pension plan is
ordinarily not a "related person" with respect to the corporation unless the
pension plan owns, directly or indirectly through the application of
constructive ownership rules similar to those contained in section 958, more
than 50 percent measured by vote or value, of the stock of the corporation.
For purposes of inclusion of the Company's insurance company subsidiaries'
RPII in the income of United States shareholders, unless an exception applies,
the term "United States shareholder" includes all U.S. persons who
beneficially own any amount (rather than 10 percent or more) of the Company's
stock. An insurance company subsidiary of the Company will be treated as a CFC
if such U.S. persons are treated as owning 25 percent or more of the stock of
the insurance company subsidiary.
In determining the "United States shareholders" of the Company's foreign
insurance company subsidiaries, stock of the Company's foreign insurance
company subsidiaries held indirectly by U.S. persons through the Company or
any other non-U.S. entity is treated as held by United States shareholders.
RPII Exceptions
The special RPII rules do not apply if (A) direct and indirect insureds and
persons related to such insureds, whether or not U.S. persons, are treated as
owning less than 20 percent of the voting power and less than 20 percent of
the value of the stock of the Company's insurance company subsidiaries (which
exception is not anticipated to apply to the Company and its subsidiaries),
(B) the RPII of each of the Company's foreign insurance company subsidiaries,
determined on a gross basis, is less than 20 percent of each such subsidiary's
7
<PAGE>
gross insurance income for the taxable year, (C) a foreign insurance company
subsidiary of the Company elects to be taxed on its RPII as if the RPII were
effectively connected with the conduct of a United States trade or business,
or (D) a foreign insurance company subsidiary of the Company elects to be
treated as a United States corporation. Where none of these exceptions
applies, each United States person owning or treated as owning stock in the
Company (and therefore, indirectly, in a foreign insurance company subsidiary
of the Company) on the last day of an insurance company subsidiary's fiscal
year will be required to include in its gross income for United States federal
income tax purposes its share of the RPII for the entire taxable year,
determined as if all such RPII were distributed proportionately only to such
United States shareholders at that date, but limited by the insurance company
subsidiaries' current-year earnings and profits and by the U.S. shareholder's
share, if any, of prior-year deficits in earnings and profits.
Computation of RPII
In order to determine how much RPII the Company has earned in each fiscal
year, the Company obtains and relies upon information from its insureds to
determine whether any of the insureds or persons related to such insureds own
shares of the Company and are U.S. persons. The Company currently sends, and
intends to continue to send, a letter after each fiscal year to each person
who was an insured during the year asking the insured to represent whether it
was a U.S. shareholder of the Company or related to a U.S. shareholder during
the year. For any year in which gross RPII is 20 percent or more of a foreign
insurance company subsidiary's gross insurance income for the year, the
Company may also seek information from its shareholders as to whether
beneficial owners of Ordinary Shares at the end of the year are United States
persons so that the RPII may be determined and apportioned among such persons.
The Company will inform all shareholders of RPII per share and U.S.
shareholders are obligated to file a return reporting such amounts. To the
extent the Company is unable to determine whether a beneficial owner of shares
is a U.S. person the Company may assume that such owner is not a U.S. person
for the purpose of allocating RPII, thereby increasing the per share RPII
amount for all U.S. shareholders.
If, as anticipated, RPII of each of the Company's foreign insurance company
subsidiaries is less than 20 percent of gross insurance income for the current
and subsequent fiscal years, U.S. shareholders will not be required to include
RPII in their taxable income for such years. The Company's estimate of its
insurance company subsidiaries' gross insurance income constituting RPII is
based on information provided to the Company by insureds of those insurance
company subsidiaries concerning whether the insureds are "United States
shareholders" or "related persons" thereto. The amount of RPII includible in
the income of a U.S. shareholder is based upon the net RPII income for the
year after deducting related expenses such as losses, loss reserves and
operating expenses.
Apportionment of RPII to U.S. Shareholders
Every U.S. person who owns Ordinary Shares on the last day of any fiscal
year of a foreign insurance company subsidiary in which such insurance company
subsidiary's gross insurance income constituting RPII for that year equals or
exceeds 20 percent of that insurance company subsidiary's gross insurance
income should expect that for such year it will be required to include in
gross income its share of that insurance company subsidiary's RPII for the
entire year, whether or not distributed, even though it may not have owned the
shares for the entire year. A U.S. person who owns Ordinary Shares during such
fiscal year but not on the last day of the fiscal year, which would normally
be September 30, is not required to include in gross income any part of the
Company's insurance company subsidiaries' RPII.
The tax consequences of RPII will not be applicable in any future fiscal
year in which the gross insurance income attributable to U.S. shareholders is
less than 20 percent of the gross insurance income of any of the Company's
insurance subsidiaries. See "Taxation of Shareholders of the Company--United
States Taxation of U.S. and Non-U.S. Shareholders--RPII." The Company expects
that the gross insurance income of its foreign insurance company subsidiaries
attributable to U.S. shareholders for its current and subsequent fiscal years
will be below 20 percent of the gross insurance income of each such insurance
company subsidiary.
8
<PAGE>
Information Reporting
Each U.S. person who is a shareholder of the Company on the last day of a
fiscal year of a foreign insurance company subsidiary in which such foreign
insurance company subsidiary's gross RPII constitutes 20 percent or more of
that foreign insurance company subsidiary's gross insurance income must attach
to the income tax or information return it would normally file for the period
which includes that date a Form 5471 with respect to the Company. This filing
requirement applies if the Company is a CFC for any thirty-day period during
its fiscal year whether or not any net RPII income is required to be reported.
The foreign insurance company subsidiaries of the Company will not be
considered to be CFC's for this purpose and, therefore, Form 5471 will not be
required, for any fiscal year in which each such foreign insurance company
subsidiary's gross RPII constitutes less than 20 percent of its gross
insurance income. U.S. persons who at any time own 10 percent or more of the
shares of the Company may be required in certain circumstances to file Form
5471 regardless of the amount of RPII received by the insurance company
subsidiaries. For any year in which any of the Company's foreign insurance
company subsidiaries' gross RPII constitutes 20 percent or more of their
respective gross insurance incomes, the Company intends to mail to all
shareholders of record, and will make available at the transfer agent with
respect to the Ordinary Shares, Form 5471 (completed with Company information)
for attachment to the returns of shareholders. The amounts of the RPII
inclusions may be subject to adjustment based upon subsequent IRS examination.
A tax-exempt organization will be required to attach Form 5471 to its
information return in the circumstances described above. Failure to file Form
5471 may result in penalties.
Tax-Exempt Shareholders
U.S. tax-exempt shareholders to which RPII is allocated are required to
treat such RPII as unrelated business taxable income within the meaning of
Code section 512, except to the extent that RPII is due to insurance or
reinsurance of that tax-exempt shareholder or its affiliates.
Basis Adjustments
A U.S. shareholder's tax basis in its Ordinary Shares will be increased by
the amount of any RPII that the shareholder includes in income. The
shareholder may exclude from income the amount of any distributions by the
Company to the extent of the RPII included in income for the year in which the
distribution was paid or for any prior year. The U.S. shareholder's tax basis
in its Ordinary Shares will be reduced by the amount of such distributions
that are excluded from income. In general, a U.S. shareholder will not be able
to exclude from income distributions with respect to RPII that a prior
shareholder included in income.
Dispositions of Ordinary Shares
Code section 1248 provides that if a U.S. person owns 10 percent or more of
the voting shares of a corporation that is a CFC, any gain from the sale or
exchange of the shares may be treated as ordinary income to the extent of the
CFC's earnings and profits during the period that the shareholder held the
shares (with certain adjustments). Code section 953(c)(7) generally provides
that section 1248 also will apply to the sale or exchange of shares in a
foreign corporation that earns RPII if the foreign corporation would be taxed
as an insurance company if it were a domestic corporation, regardless of
whether the shareholder is a 10 percent shareholder or whether RPII
constitutes 20 percent or more of the corporation's gross insurance income.
Existing Treasury Department regulations do not address whether Code section
1248 would apply when the foreign corporation (such as the Company) is not a
CFC but the foreign corporation has a subsidiary that is a CFC or that would
be taxed as an insurance company if it were a domestic corporation.
The Company believes, based on the advice of counsel, that Code section 1248
will not apply to dispositions of Ordinary Shares because the Company does not
have any 10 percent shareholders and the Company is not directly engaged in
the insurance business. There can be no assurance, however, that the IRS will
interpret proposed regulations under Code section 953 in this manner or that
the Treasury Department will not amend the proposed regulations under Code
section 953 or other regulations to provide that Code section 1248 will apply
to dispositions of shares in a corporation such as the Company which is
engaged in the insurance business directly or indirectly through its
subsidiaries. If the IRS or Treasury Department were to take such action, the
Company would notify shareholders that Code section 1248 will apply to
dispositions of Ordinary Shares.
9
<PAGE>
A shareholder of the Company who at no time owns 10 percent or more of the
Ordinary Shares is not required to file IRS Form 5471 with respect to a
disposition of Ordinary Shares. A 10 percent U.S. shareholder of the Company
may in certain circumstances be required to report a disposition of Ordinary
Shares by attaching Form 5471 to the U.S. income tax or information return
that it would normally file for the taxable year in which the disposition
occurs.
Foreign Tax Credit
Because U.S. shareholders own a majority of the Company's shares and because
a substantial part of the Company's foreign insurance company subsidiaries'
business includes the insurance of U.S. risks, only a portion of the RPII and
dividends paid by the Company (including any gain from the sale of Ordinary
Shares that is treated as a dividend under Section 1248 of the Code) will be
treated as foreign source income for purposes of computing a shareholder's
U.S. foreign tax credit limitation. It is likely that substantially all of the
RPII and dividends that are foreign source income will constitute either
"passive" or "financial services" income for foreign tax credit limitation
purposes. Thus, it may not be possible for certain U.S. shareholders to
utilize excess foreign tax credits to reduce U.S. tax on such income.
Uncertainty as to Application of RPII
The RPII provisions of the Code have never been interpreted by the courts.
Regulations interpreting the RPII provisions of the Code exist only in
proposed form, having been proposed on April 16, 1991. It is not certain
whether these regulations will be adopted in their proposed form or what
changes or clarifications might ultimately be made thereto or whether any such
changes, as well as any interpretation or application of RPII by the IRS, the
courts or otherwise, might have retroactive effect. The description of RPII
herein is therefore qualified. Accordingly, the meaning of the RPII provisions
and the application thereof to the Company and its subsidiaries is uncertain.
These provisions include the grant of authority to the U.S. Treasury
Department to prescribe "such regulations as may be necessary to carry out the
purpose of this subsection including . . . regulations preventing the
avoidance of this subsection through cross insurance arrangements or
otherwise." In addition, there can be no assurance that the amounts of the
RPII inclusions will not be subject to adjustment based upon subsequent IRS
examination. Each U.S. person who is considering an investment in Ordinary
Shares should consult his tax advisor as to the effects of these
uncertainties.
Passive Foreign Investment Companies
Sections 1291 through 1298 of the Code contain special rules applicable with
respect to foreign corporations that are "passive foreign investment
companies" ("PFIC's"). In general, a foreign corporation will be a PFIC if 75
percent or more of its income constitutes "passive income" or 50 percent or
more of its assets produce passive income. If the Company were to be
characterized as a PFIC, its United States shareholders would be subject to a
penalty tax at the time of their sale of (or receipt of an "excess
distribution" with respect to) its shares and a portion of the gain may be
recharacterized as ordinary income. In general, a shareholder receives an
"excess distribution" if the amount of the distribution is more than 125
percent of the average distribution with respect to the stock during the three
preceding taxable years (or shorter period during which the taxpayer held the
stock). In general, the penalty tax is equivalent to an interest charge on
taxes that are deemed due during the period the United States shareholder
owned the shares, computed by assuming that the excess distribution or gain
(in the case of a sale) with respect to the shares was taxed in equal portions
throughout the holder's period of ownership at the highest marginal tax rate
for ordinary income. The interest charge is equal to the applicable rate
imposed on underpayments of U.S. Federal income tax for such period.
The PFIC statutory provisions contain an express exception for income
"derived in the active conduct of an insurance business by a corporation which
is predominantly engaged in an insurance business . . . ." This exception is
intended to ensure that income derived by a bona fide insurance company is not
treated as passive income, except to the extent such income is attributable to
financial reserves in excess of the reasonable needs of
10
<PAGE>
the insurance business. In the Company's view, the Company and its wholly-
owned direct and indirect subsidiaries are predominantly engaged in an
insurance business and do not have financial reserves in excess of the
reasonable needs of their insurance business. The PFIC statutory provisions
contain a look-through rule that states that, for purposes of determining
whether a foreign corporation is a PFIC, such foreign corporation shall be
treated as if it received "directly its proportionate share of the income . .
." and as if it "held its proportionate share of the assets . . ." of any
other corporation in which it owns at least 25 percent of the stock. Under the
look-through rule the Company would be deemed to own the assets and to have
received the income of its insurance subsidiaries directly for purposes of
determining whether the Company qualifies for the aforementioned insurance
exception.
However, no regulations interpreting the substantive PFIC provisions have
yet been issued. Therefore, substantial uncertainty exists with respect to
their application or their possible retroactivity. Each U.S. person who is
considering an investment in Ordinary Shares should consult his tax advisor as
to the effects of these rules.
Other
Dividends paid by the Company to U.S. corporate shareholders will not be
eligible for the dividends received deduction provided by section 243 of the
Code.
Except as discussed below with respect to backup withholding, dividends paid
by the Company will not be subject to a U.S. withholding tax.
Nonresident alien individuals will not be subject to U.S. estate tax with
respect to Ordinary Shares of the Company.
Information reporting to the IRS by paying agents and custodians located in
the U.S. will be required with respect to payments of dividends (if any) on
the Ordinary Shares to U.S. persons or to paying agents or custodians located
in the United States. In addition, a holder of Ordinary Shares may be subject
to backup withholding at the rate of 31 percent with respect to dividends paid
by such persons, unless such holder (a) is a corporation or comes within
certain other exempt categories and, when required, demonstrates this fact; or
(b) provides a taxpayer identification number, certifies as to no loss of
exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. The backup withholding tax is
not an additional tax and may be credited against a holder's regular Federal
income tax liability.
Subject to certain exceptions, persons that are not U.S. persons will be
subject to United States Federal income tax on dividend distributions with
respect to, and gain realized from the sale or exchange of, Ordinary Shares
only if such dividends or gains are effectively connected with the conduct of
a trade or business within the United States.
The foregoing discussion (including and subject to the matters and
qualifications set forth in such summary) of certain tax considerations (i)
under "Taxation of Shareholders of the Company--Bermuda Taxation" is based
upon the advice of Conyers Dill & Pearman, Hamilton, Bermuda, (ii) under
"Taxation of Shareholders of the Company--Cayman Islands Taxation" is based
upon the advice of Maples and Calder, George Town, Cayman Islands, British
West Indies, and (iii) under "Taxation of Shareholders of the Company--United
States Taxation of U.S. and Non-U.S. Shareholders" is based upon the advice of
Mayer, Brown & Platt, Chicago, Illinois (the advice of such firms does not
include any factual accounting matters, determinations or conclusions such as
RPII amounts and computations and amounts of components thereof (for example,
amounts or computations of income or expense items or reserves entering into
RPII computations) or facts relating to the Company's business or activities,
all of which have been supplied by the Company). The summary is based upon
current law and is for general information only. The tax treatment of a holder
of Ordinary Shares, or of a person treated as a holder of Ordinary Shares for
United States Federal income, state, local or non-U.S. tax purposes, may vary
depending on the holder's particular tax situation. Legislative, judicial or
administrative changes or interpretations may be forthcoming that could be
retroactive and could affect the tax consequences to holders of Ordinary
Shares. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES TO THEM OF
OWNING THE ORDINARY SHARES.
11
<PAGE>
PLAN OF DISTRIBUTION
Any sale of the Shares by the Selling Shareholders will be for their own
account. The Company will receive none of the proceeds from the sale of the
Shares.
The Company is registering the Shares offered by the Selling Shareholders
hereunder pursuant to the Agreement. Pursuant to the Agreement, the Company
has agreed to pay all the expenses connected with this registration. However,
the Selling Shareholders will be responsible for any selling commission with
respect to any sale of the Shares, any taxes with respect to any disposition,
sale or transfer of the Shares, and for any legal, accounting and other
expenses incurred by the Selling Shareholders in connection with any offering
of Shares hereunder. Any Selling Shareholder may agree to indemnify any agent,
dealer or broker-dealer that participates in transactions involving sales of
Shares against certain liabilities, including liabilities arising under the
Securities Act. The Company and the Selling Shareholders have agreed to
indemnify each other and certain other persons against certain liabilities in
connection with the offering of the Shares including liabilities arising under
the Securities Act.
The Selling Shareholders may sell the Shares being offered hereby directly
to other purchasers, or to or through underwriters, dealers or agents. To the
extent required, a Prospectus Supplement with respect to the Shares will set
forth the terms of the offering of the Shares, including the name(s) of any
underwriters, dealers or agents, the name(s) of the Selling Shareholders, the
number of Shares to be sold, the price of the offered Shares, any underwriting
discounts or other items constituting underwriters' compensation and any
discounts or concessions allowed or reallowed or paid to dealers.
The Shares offered hereby may be sold from time to time directly by the
Selling Shareholders or, alternatively, through underwriters, broker-dealers
or agents. Such Shares may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of sale, at varying prices
determined at the time of sale or at negotiated prices. Such sales may be
effected in transactions (which may involve crosses or block transactions) (i)
on any national securities exchange or quotation service on which the Shares
may be listed or quoted at the time of sale, (ii) in the over-the-counter
market, (iii) in transactions otherwise than on such exchanges or services or
in the over-the-counter market or (iv) through the writing of options. In
connection with sales of the Shares offered hereby or otherwise, the Selling
Shareholders may enter into hedging transactions with broker-dealers, which
may in turn engage in short sales of such Shares in the course of hedging the
positions they assume. The Selling Shareholders may also sell the Shares
offered hereby short and deliver such Shares to close out such short
positions, or loan or pledge such Shares to broker-dealers that in turn may
sell such securities. The Shares offered hereby also may be sold pursuant to
Rule 144 under the Securities Act.
Any Selling Shareholder and any such underwriters, brokers, dealers or
agents, upon effecting the sale of the Shares, may be deemed "underwriters" as
that term is defined by the Securities Act.
To the extent required, the underwriter or underwriters with respect to a
particular underwritten offering of Shares (if any) will be named in the
Prospectus Supplement relating to such offering, and if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth
on the cover of such Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters to purchase the
Shares in an underwritten offering will be subject to certain conditions
precedent and the underwriters will be obligated to purchase all the Shares if
any is purchased. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from time
to time. If a dealer is utilized in the sale of any Shares in respect of which
this Prospectus is delivered, the Selling Shareholders may sell such Shares to
the dealer, as principal. The dealer may then resell such Shares to the public
at varying prices to be determined by such dealer at the time of resale. To
the extent required, the name of the dealer and the terms of the transaction
will be set forth in the Prospectus Supplement relating thereto.
In connection with the sale of the Shares offered hereby, underwriters or
agents may receive compensation from the Selling Shareholders or from
purchasers of such shares for whom they may act as agents in the form of
discounts, concessions, or commissions. Underwriters, agents, and dealers
participating in the distribution of the Shares may be deemed to be
underwriters, and any such compensation received by them and any profit on the
resale of shares by them may be deemed to be underwriting discounts or
commissions under the Securities Act.
12
<PAGE>
The Shares are listed on the NYSE. Any underwriters to whom Shares are sold
by the Selling Shareholders for public offering and sale may make a market in
such Shares, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any Shares.
In connection with the offering made hereby, persons participating in the
offering, such as any underwriters, may purchase and sell Shares in the open
market. These transactions may include over-allotment and stabilizing
transactions and purchases to cover syndicate short positions created in
connection with the offering. Stabilizing transactions consist of certain bids
or purchases for the purpose of preventing or retarding a decline in the
market price of the Shares, and syndicate short positions involve the sale by
underwriters of a greater number of Ordinary Shares than they are required to
purchase from the Selling Shareholders in the offering. Underwriters also may
impose a penalty bid, whereby selling concessions allowed to syndicate members
or other broker-dealers in respect of the Shares sold in the offering for
their account may be reclaimed by the syndicate if such Shares are repurchased
by the syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Shares, which
may be higher than the price that might prevail in the open market, and these
activities, if commenced, may be discontinued at any time. These transactions
may be effected on the NYSE, in the over-the-counter market or otherwise.
LEGAL MATTERS
Certain legal matters with respect to Cayman Islands law and with respect to
the validity of the Shares offered hereby will be passed upon for the Company
by Maples and Calder, George Town, Grand Cayman, Cayman Islands, British West
Indies. Certain legal matters with respect to Bermuda law will be passed upon
for the Company by Conyers Dill & Pearman, Hamilton, Bermuda. Certain legal
matters with respect to United States law will be passed upon for the Company
by Mayer, Brown & Platt, Chicago, Illinois.
EXPERTS
The consolidated financial statements as of September 30, 1997 and 1996 and
for each of the fiscal years in the three-year period ended September 30,
1997, incorporated in this Prospectus by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1997 have been so
incorporated herein in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with the
distribution of the securities registered hereby:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $147,937
NYSE listing fee................................................ 50,150
Accounting fees and expenses.................................... 20,000
Legal fees and expenses......................................... 15,000
Printing fees................................................... 15,000
Miscellaneous................................................... 20,000
--------
Total....................................................... $268,087
========
</TABLE>
All of the above fees, costs and expenses will be paid by the Company and,
other than the SEC registration fee, all fees and expenses are estimates.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 100 of the Company's Articles of Association contains provisions
with respect to indemnification of the Company's officers and directors. Such
provision provides that the Company shall indemnify, in accordance with and to
the full extent now or hereafter permitted by law, any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (including, without limitation, an action by or in the right
of the Company), by reason of his acting as a director, officer, employee or
agent of, or his acting in any other capacity for or on behalf of, the
Company, against any liability or expense actually and reasonably incurred by
such person in respect thereof. The Company may also advance the expenses of
defending any such act, suit or proceeding in accordance with and to the full
extent now or hereafter permitted by law. Such indemnification and advancement
of expenses are not exclusive of any other right to indemnification or
advancement of expenses provided by law or otherwise.
The Companies Law (1995 Revision) of the Cayman Islands does not set out any
specific restrictions on the ability of a company to indemnify officers or
directors. However, the application of basic principles and certain
Commonwealth case law which is likely to be persuasive in the Cayman Islands
would indicate that indemnification is generally permissible except in the
event that there had been fraud or wilful default on the part of the officer
or director or reckless disregard of his duties and obligations to the
company.
Directors and officers of the Company are also provided with indemnification
against certain liabilities pursuant to a directors and officers liability
insurance policy. Coverage is afforded for any loss that the insureds become
legally obligated to pay by reason of any claim or claims first made against
the insureds or any of them during the policy period from any wrongful acts
that are actually or allegedly caused, committed or attempted by the insureds
prior to the end of the policy period. Wrongful acts are defined as any actual
or alleged error, misstatement, misleading statement or act, omission, neglect
or breach of duty by the insureds while acting in their individual or
collective capacities as directors or officers of the Company, or any other
matter claimed against them by reason of their being directors or officers of
the Company. Certain of the Company's directors are provided, by their
employer, with indemnification against certain liabilities incurred as
directors of the Company.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
See Exhibit Index included herewith which is incorporated herein by
reference.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the provisions set forth or described in Item 15 of
this Registration Statement, or otherwise, the registrant has been informed
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by a registrant of expenses
incurred or paid by a director, officer or controlling person of such
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933 and
will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement including any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, ACE LIMITED
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN HAMILTON, BERMUDA, ON AUGUST 14, 1998.
ACE Limited
/s/ Christopher Z. Marshall
By:__________________________________
Name: Christopher Z. Marshall
Title: Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON AUGUST 14, 1998.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
* Chairman, President and Chief Executive
___________________________________________ Officer
Brian Duperreault
/s/ Christopher Z. Marshall Chief Financial Officer (Principal
___________________________________________ Financial and Accounting Officer)
Christopher Z. Marshall
* Vice Chairman; Director
___________________________________________
Donald Kramer
* Director
___________________________________________
Michael G. Atieh
* Director
___________________________________________
Bruce L. Crockett
* Director
___________________________________________
Jeffrey W. Greenberg
* Director
___________________________________________
Meryl D. Hartzband
* Director
___________________________________________
Robert M. Hernandez
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
* Director
___________________________________________
Peter Menikoff
* Director
___________________________________________
Thomas J. Neff
* Director
___________________________________________
Glen M. Renfrew
* Director
___________________________________________
Walter A. Scott
* Director
___________________________________________
Dermot F. Smurfit
* Director
___________________________________________
Robert W. Staley
* Director
___________________________________________
Gary M. Stuart
* Director
___________________________________________
Sidney F. Wentz
</TABLE>
/s/ Christopher Z. Marshall
*By:_________________________________
Christopher Z. Marshall
Attorney-in-Fact
II-4
<PAGE>
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the undersigned as the duly
authorized representative of the registrant in the United States.
/s/ Brian Duperreault
_____________________________________
Brian Duperreault
Date: August 6, 1998
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------
<C> <S>
2.1 Share Purchase Agreement, dated as of June 15, 1998 by and among
the Company, Tarquin Limited, Charman Group Limited and the
Selling Shareholders (including the registration rights provisions
thereof included in Schedule 2 thereto) (incorporated by reference
to Exhibit 2.1 to the Current Report on Form 8-K (Date of earliest
event reported: July 9, 1998)).
4.1 Memorandum of Association of the Company (incorporated by
reference to Exhibit 3.1 to the Registration Statement on Form S-1
of the Company (No. 33-57206))
4.2 Amended and Restated Articles of Association of the Company
(incorporated by reference to Exhibit 3.2 to the Registration
Statement on Form S-1 of the Company (No. 33-57206))
4.3 Special resolution of the shareholders of the Company, effective
March 2, 1998, amending Article 6 of the Company's Memorandum of
Association and Article 4(a) of the Company's Amended and Restated
Articles of Association (incorporated by reference to Exhibit 4.3
to the Registration Statement on Form S-3 of the Company (No. 333-
49257))
4.4 Special resolution of the shareholders of the Company, effective
March 2, 1998, amending Article 33 of the Company's Amended and
Restated Articles of Association (incorporated by reference to
Exhibit 4.4 to the Registration Statement on Form S-3 of the
Company (No. 333-49257))
4.5 Specimen certificate representing Ordinary Shares (incorporated by
reference to Exhibit 4.3 to the Registration Statement on Form S-1
of the Company (No. 33-57206))
5.1 Opinion of Maples and Calder as to the legality of the Ordinary
Shares*
8.1 Opinion of Maples & Calder as to certain Cayman Islands tax
matters*
8.2 Opinion of Mayer, Brown & Platt as to certain U.S. tax matters*
8.3 Opinion of Conyers, Dill & Pearman as to certain Bermuda tax
matters*
23.1 Consent of PricewaterhouseCoopers L.L.P.*
23.2 Consents of Maples and Calder (included in its opinions filed as
Exhibits 5.1 and 8.1)
23.3 Consent of Mayer, Brown & Platt (included in its opinion filed as
Exhibit 8.2)
23.4 Consent of Conyers, Dill & Pearman (included in its opinion filed
as Exhibit 8.3)
24.1 Powers of Attorney*
99.1 Appointment of CT Corporation System as U.S. agent for service of
process (incorporated by reference to Exhibit 99.1 to Registration
Statement on Form S-1 (No. 33-72118))
99.2 Confirmation of appointment of CT Corporation System as U.S. agent
for service of process (incorporated by reference to Exhibit 99.2
to the Registration Statement on Form S-3 of the Company (No. 333-
49257))
</TABLE>
*Previously filed
II-6
