Two of the oldest participants in the Bermuda casualty insurancemarket reported markedly different second-quarter results--with thesenior player, ACE, poised to benefit from the recent problemsconfronting longtime competitor XL, ACE's top executive indicatedlast week.

During a conference call announcing a 15 percent jump in netincome for the second quarter, Evan Greenberg, chairman and CEO ofACE Ltd.--now a Zurich-based holding company--said his insuranceoperating subsidiaries are prepared to take advantage ofopportunities created by concerns about XL's financialwherewithal.

Asked by an investment analyst whether XL's woes were having apositive or negative impact on ACE's business, Mr. Greenbergremarked: "It hasn't affected our business negatively."

He added that "brokers have a job to do and clients have a jobto do. They need to buy the right coverage, and they need to buy itfrom a company they believe will stand behind [its]obligations."

Brokers and clients, he added, "are going to use all availableinformation, and if a company has a weakness, it's their job tonotice that and to make their judgments."

"If any company has a problem--and in the soft market thatalways happens--then you've got to know we are going to takeadvantage of every opportunity that becomes available," hesaid.

Earlier in the week, XL Capital reported a second-quarter netincome decline of 57 percent, as well as a $2 billion plan tocommute reinsurance agreements with its former subsidiary bondinsurer, Security Capital Assurance. (See related story on thispage.)

Concerns about the significant amount of capital XL has to raiseto complete the deal, and the possible impact on XL's competitiveposition, prompted reviews for possible downgrade from ratingagencies.

As to specific opportunities opening up for ACE, Brian Dowd, CEOof ACE's North American insurance operations, said the company hasseen an uptick in submission and binding activity for longer-tailedprofessional liability lines.

"We've seen people become a little more discriminate" about thecompany they place their professional liability with, he said.

John Keogh, CEO of ACE Overseas General, said he saw movement inthe same areas outside the United States, with clients and brokersexercising more discretion, in particular, about "who leads theprogram."

Mr. Greenberg noted that ACE's underwriting results in thesecond quarter benefited from good accident-year outcomes, positiveprior-period development, and a relatively light level ofcatastrophe losses--even though the quarter included a moderatelevel of flood losses impacting ACE's crop portfolio.

ACE's overall combined ratio for the quarter was 87.8, only aslight uptick from 87.6 for second-quarter 2007, despite thesoftening insurance market.

Mr. Greenberg also noted that second-quarter 2008 marked thefirst quarter in which the $2.4 billion acquisition of CombinedInsurance, announced last December, figured into the numbers. Hesaid the acquired accident and health insurer contributed torevenues and earnings, noting that net written premium grew 17percent in the quarter.

Overall net premiums were $3.6 billion in second-quarter 2008,compared to $3 billion for second-quarter 2007. Net income was $746million ($2.20 per share), compared to $649 million ($1.93 pershare) for second-quarter 2007.

For the first six months, net income was $1.1 billion, or $3.31per share.

During the conference call, Mr. Greenberg was asked repeatedlyabout ACE's appetite to do more acquisitions--specifically whetherreinsurers were among ACE's targets.

"I'm not sure what a reinsurance acquisition does for ACE," hesaid, noting that the current reinsurance operation has the abilityto rapidly expand organically when market conditions are right.

"We do see everything," he said, referring to companies beingshopped. He added, however, that "we do have a strategy about wherewe want to take the company, and an acquisition has to fit thatstrategy."

Responding to a more specific question about whether ACE islooking to buy a life reinsurer, he said, "We do look ateverything, but I don't mind telling you [that] in our game plan wehave far more interest in life insurance than lifereinsurance."