8-KMaterial AgreementsFinancial Events

Chubb Ltd 8-K Report, Material Agreement (Nov 29, 2004)

Filed November 29, 2004For Securities:CB

Summary

This 8-K filing from ACE Limited (the registrant, formerly Chubb Ltd.) on November 29, 2004, announces the entry into a new syndicated letter of credit agreement (the "replacement LC Agreement") effective November 26, 2004. This agreement replaces an existing one and allows for the issuance of up to £380,000,000 in unsecured letters of credit. These letters of credit are crucial for meeting the Funds at Lloyd’s requirements for Syndicate 2488 for the 2005 and 2006 underwriting years, with an expiry no earlier than December 31, 2009. The new agreement maintains substantially similar terms to the previous one, with an updated net worth covenant to align with current revolving credit facilities. Key financial covenants include maintaining a minimum consolidated net worth of $6.0 billion (with adjustments for net income and equity issuances) and a maximum debt-to-total capitalization ratio of 0.35:1. The filing also notes that the new agreement includes standard covenants and provisions for termination and acceleration upon events of default, similar to its predecessor.

Key Highlights

  • 1ACE Limited entered into a new syndicated letter of credit agreement, effective November 26, 2004, replacing a prior agreement.
  • 2The new agreement permits the issuance of up to £380,000,000 of unsecured letters of credit.
  • 3These letters of credit will be used to satisfy Syndicate 2488's Funds at Lloyd’s requirements for the 2005 and 2006 underwriting years.
  • 4The letters of credit issued under the new agreement will expire no earlier than December 31, 2009.
  • 5Key financial covenants include maintaining a minimum consolidated net worth of $6.0 billion and a maximum debt-to-total capitalization ratio of 0.35:1.
  • 6The terms and conditions are substantially similar to the previous agreement, with an updated net worth covenant.
  • 7The agreement includes standard covenants and provisions for default and acceleration.

Frequently Asked Questions

The primary purpose of the new syndicated letter of credit agreement is to secure up to £380,000,000 in unsecured letters of credit. These are essential for ACE Limited to meet the Funds at Lloyd's requirements for its Syndicate 2488 for the 2005 and 2006 underwriting years.

The new agreement is substantially similar to the existing agreement, with the main change being an updated net worth covenant designed to conform to the company's current revolving credit facilities. The aggregate amount and general purpose remain the same.

ACE Limited must maintain a minimum consolidated net worth of not less than $6.0 billion (with adjustments for net income and equity issuances) and adhere to a maximum debt-to-total capitalization ratio of not greater than 0.35 to 1. Certain trust preferred securities and mezzanine equity may be included in the debt calculation if they exceed 15% of total capitalization.

The letters of credit issued under the replacement LC Agreement will expire no earlier than December 31, 2009.