ACE LIMITED
ELECTIVE DEFERRED COMPENSATION PLAN

                             TABLE OF CONTENTS

SECTION 1.................................................................... 1
         General  ............................................................1
                  1.1.  Purpose ..............................................1
                  1.2.  Effective Date........................................1
                  1.3.  Related Companies and Employers.......................1
                  1.4.  Operation and Administration..........................1
                  1.5.  Plan Year.............................................1
                  1.6.  Gender and Number.....................................1
                  1.7.  Notices ..............................................2
                  1.8.  Form and Time of Elections............................2
                  1.9.  Other Costs and Benefits..............................2
                  1.10.  Evidence.............................................2
                  1.11.  Action by Employers..................................2
SECTION 2.....................................................................2
       Participation..........................................................2
                  2.1.  Participant...........................................2
                  2.2.  Deferral Election.....................................3
                  2.3.  Eligible Compensation.................................3
                  2.4.  Plan Not Contract of Employment.......................3

SECTION 3.....................................................................3
         Plan Accounting......................................................3
                  3.1.  Accounts..............................................3
                  3.2.  Adjustment of Accounts................................3
                  3.3.  Crediting Under Deferral Election.....................4
                  3.4.  Investment Return Dates...............................4
                  3.5.  Participant Selection of Investment Return Rate.......4
                  3.6.  Statement of Accounts.................................4

SECTION 4.....................................................................5
         Distributions........................................................5
                  4.1.  General ..............................................5
                  4.2.  Distribution Election.................................5
                  4.3.  Beneficiary...........................................5
                  4.4.  Distributions to Disabled Persons.....................5
                  4.5.  Benefits May Not be Assigned..........................5
                  4.6.  Offset  ..............................................6
                  4.7.  Unforeseeable Emergency...............................6



                                    -i-

SECTION 5....................................................................6
         Source of Benefit Payments..........................................6
                  5.1.  Liability for Benefit Payments.......................6
                  5.2.  No Guarantee.........................................7

SECTION 6....................................................................7
         Committee...........................................................7
                  6.1.  Powers of Committee..................................7
                  6.2.  Delegation by Committee..............................7
                  6.3.  Information to be Furnished to Committee.............8
                  6.4.  Liability and Indemnification of Committee...........8

SECTION 7....................................................................8
         Amendment and Termination...........................................8

ACE LIMITED
ELECTIVE DEFERRED COMPENSATION PLAN

SECTION 1

General

1.1. Purpose. The ACE Limited Elective Deferred Compensation Plan (the "Plan") has been established by ACE Limited (the "Company") so that it, and each of the Related Companies which, with the consent of the Company, adopts the Plan may provide its eligible employees with an opportunity to build additional financial security, thereby aiding such companies in attracting and retaining employees of exceptional ability.

1.2. Effective Date. The "Effective Date" of the Plan is January 1, 1998.

1.3. Related Companies and Employers. For purposes of the Plan, the term "Related Company" means any company during any period in which it is a "subsidiary corporation,"as that term in defined in section 424(f) of the United States Internal Revenue Code of 1986, as amended (the "Code") with respect to the Company. The Company and each Related Company which adopts the Plan for the benefit of its eligible employees are referred to below collectively as the "Employers" and individually as an "Employer." A Related Company may adopt the Plan by action of its Board of Directors; provided that a Related Company will be considered to have adopted the Plan for its Eligible Employees (without the need for action by its Board of Directors) if an executive officer of the Related Company announces such adoption to the Eligible Employees.

1.4. Operation and Administration. The authority to control and manage the operation and administration of the Plan shall be vested in the Compensation Committee (the "Committee") of the Board of Directors of the Company (the "Board"). In controlling and managing the operation and administration of the Plan, the Committee shall have the rights, powers and duties set forth in Section 6. Capitalized terms in the Plan shall be defined as set forth in the Plan.

1.5. Plan Year. The term "Plan Year" means the fiscal year of the Company.

1.6. Gender and Number. Where the context admits, words in any gender shall include any other gender, words in the singular shall include the plural and the plural shall include the singular.

1.7. Notices. Any notice or document required to be filed with the Plan Administrator or the Committee under the Plan will be properly filed if delivered or mailed to the Plan Administrator, in care of the Company, at its principal executive offices. The Plan Administrator may, by advance written notice to affected persons, revise such notice procedure from time to time. Any notice required under the Plan may be waived by the person entitled to notice.

1.8. Form and Time of Elections. Unless otherwise specified herein, each election required or permitted to be made by any Participant or other person entitled to benefits under the Plan, and any permitted modification or revocation thereof, shall be in writing filed at such times, in such form, and subject to such restrictions and limitations as the Plan Administrator shall require. In addition to any other deferral elections made under this Plan, an election to defer the receipt of an award under the ACE Limited Annual Performance Incentive Plan will be made under this Plan.

1.9. Other Costs and Benefits. The Plan is intended to defer, but not to eliminate, payment of compensation to a Participant. Accordingly, if any compensation or benefits that would otherwise be provided to a Participant in the absence of the Plan are reduced or eliminated by reason of deferral under the Plan, the Company shall equitably compensate the Participant for such reduction or elimination. However, no reimbursement will be made for increased taxes resulting from benefits under the Plan (whether resulting from a change in individual income tax rates or otherwise).

1.10. Evidence. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.

1.11. Action by Employers. Any action required or permitted to be taken by any Employer shall be by resolution of its board of directors, or by a duly authorized officer of the Employer.

SECTION 2

Participation

2.1. Participant. Subject to the terms of the Plan, an individual shall be eligible to make deferrals under the Plan during any period he or she is an Eligible Employee. For purposes of the Plan, the term "Eligible Employee" for any period shall mean any individual during any period he or she is a Bermuda-based employee of an Employer;

provided that the Committee may designate any other employee of an Employer or member of a group of employees of an Employer as an Eligible Employee.

2.2. Deferral Election. An Eligible Employee shall participate in the Plan by electing to defer payment of all or a portion of his or her Eligible Compensation pursuant to the terms of a "Deferral Election." An individual's Deferral Election shall be filed with the Plan Administrator prior to the period to which it relates. Except as otherwise provided by the Committee, a Participant may not revoke any Deferral Elections. The Committee may revoke a Participant's Deferral Election as of the date on which the Participant ceases to be an Eligible Employee (provided that this sentence shall not be construed to permit the Committee to revoke a Distribution Election by reason of the Participant ceasing to be an Eligible Employee).

2.3. Eligible Compensation. For purposes of the Plan, a Participant's "Eligible Compensation" from any Employer for any Plan Year means (i) salary otherwise payable to him by the Employer, (ii) amounts payable under the ACE Limited Annual Performance Incentive Plan and (iii) amounts which are designated by the Committee as compensation eligible for deferral in accordance with the Plan.

2.4. Plan Not Contract of Employment. The Plan does not constitute a contract of employment, and participation in the Plan will not give any employee the right to be retained in the employ of any Employer nor any right or claim to any benefit under the Plan, unless such right or claim has specifically accrued under the terms of the Plan.

SECTION 3

Plan Accounting

3.1. Accounts. The Plan Administrator shall establish an Account for each Participant who has filed a Deferral Election. If a Participant's Eligible Compensation subject to a Deferral Election would otherwise be payable from more than one Employer, a separate Account shall be established for the Participant with respect to the Eligible Compensation from each such Employer. The amount held in an Account established on behalf of a Participant will be expressed in United States dollars.

3.2. Adjustment of Accounts. Each Account shall be adjusted in accordance with this Section 3 in a uniform manner as of such periodic "Accounting Dates" as may be determined by the Committee from time to time. As of each Accounting Date, the balance of each Account shall be adjusted as follows:

(a) first, charge to the Account balance the amount of any distributions under the Plan with respect to that Account that have not previously been charged;

(b) then, adjust the Account balance for the applicable Investment Return Rate(s); and

(c) then, credit to the Account balance the amount to be credited to that Account in accordance with subsection 3.3 that have not previously been credited.

3.3. Crediting Under Deferral Election. The balance of a Participant's Account for any period shall be credited, in accordance with the provisions of paragraph 3.2(c), with the amount by which his or her Eligible Compensation for that period is reduced pursuant to a Deferral Election. Such crediting shall occur as of the date on which such Eligible Compensation would otherwise have been paid to the Participant by the Employer were it not for the reduction made pursuant to the Deferral Election or, if such date is not an Accounting Date, as of the first Accounting Date occurring thereafter.

3.4. Investment Return Rates. The "Investment Return Rate(s)" with respect to the Account(s), or portions of the Account(s), of any Participant for any period shall be the Investment Return Rate(s) elected by the individual in accordance with subsection 3.5 from among such investment alternatives (if any) for that period which, in the discretion of the Committee, are offered from time to time under this paragraph 3.4.

3.5. Participant Selection of Investment Return Rate. The Investment Return Rate alternatives under the Plan, and a Participant's ability to choose among Investment Return Rate alternatives, shall be determined in accordance with rules established by the Committee from time; provided, however, that the Company may not modify the Investment Return Rate with respect to periods prior to the adoption of such modification.

3.6. Statement of Accounts. As soon as practicable after the end of each Plan Year, and at such other times as determined by the Committee or the Chief Executive Officer of the Company, the Company shall provide each Participant having one or more Accounts under the Plan with a statement of the transactions in his or her Accounts during that year and his or her Account balances as of the end of the year.

SECTION 4

Distributions

4.1. General. Subject to this Section 4, the balance of a Participant's Account(s) with respect to any year shall be distributed in accordance with the Participant's Distribution Election. In no event shall the amount distributed with respect to any Participant's Account as of any date exceed the amount of the Account balance as of that date.

4.2. Distribution Election. A Participant's Distribution Election shall specify the manner (including the time and form of distribution) in which the Participant's Account(s) shall be distributed, subject to such restrictions and limitations as may be imposed by the Committee.

4.3. Beneficiary. Subject to the terms of the Plan, any benefits payable to a Participant under the Plan that have not been paid at the time of the Participant's death shall be paid at the time and in the form determined in accordance with the foregoing provisions of the Plan, to the beneficiary designated by the Participant in writing filed with the Plan Administrator in such form and at such time as the Plan Administrator shall require. A beneficiary designation form will be effective only when the signed form is filed with the Plan Administrator while the Participant is alive and will cancel all beneficiary designation forms filed earlier. If a deceased Participant failed to designate a beneficiary, or if the designated beneficiary of a deceased Participant dies before him or before complete payment of the Participant's benefits, the amounts shall be paid to the legal representative or representatives of the estate of the last to die of the Participant and his or her designated beneficiary.

4.4. Distributions to Disabled Persons. Notwithstanding the provisions of this Section 4, if, in the Plan Administrator's opinion, a Participant or beneficiary is under a legal disability or is in any way incapacitated so as to be unable to manage his or her financial affairs, the Plan Administrator may direct that payment be made to a relative or friend of such person for his or her benefit until claim is made by a conservator or other person legally charged with the care of his or her person or his or her estate, and such payment shall be in lieu of any such payment to such Participant or beneficiary. Thereafter, any benefits under the Plan to which such Participant or beneficiary is entitled shall be paid to such conservator or other person legally charged with the care of his or her person or his or her estate.

4.5. Benefits May Not be Assigned. Neither the Participant nor any other person shall have any voluntary or involuntary right to commute, sell, assign, pledge,

anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt of the amounts, if any, payable hereunder, or any part hereof, which are expressly declared to be unassignable and non-transferable. No part of the amounts payable shall be, prior to actual payment, subject to seizure or sequestration for payment of any debts, judgements, alimony or separate maintenance owed by the Participant or any other person, or be transferred by operation of law in the event of the Participant's or any other person's bankruptcy or insolvency.

4.6. Offset. Notwithstanding the provisions of subsection 4.5, if, at the time payments are to be made under the Plan, the Participant or beneficiary or both are indebted or obligated to any Employer or Related Company, then the payments remaining to be made to the Participant or the beneficiary or both may, at the discretion of the Plan Administrator, be reduced by the amount of such indebtedness, or obligation, provided, however, that an election by the Plan Administrator not to reduce any such payment shall not constitute a waiver of the claim for such indebtedness or obligation.

4.7. Unforeseeable Emergency. Prior to the date otherwise scheduled for distribution of his or her benefits under the Plan, upon a showing of an unforeseeable emergency, a Participant may elect to accelerate payment of an amount not exceeding the lesser of (a) the amount necessary to meet the emergency or (b) the sum of his or her Account balance(s) under the Plan. For purposes of the Plan, the term "unforeseeable emergency" shall mean an unanticipated emergency that is caused by an event beyond the control of the Participant (or the control of the beneficiary, if the amount is payable to a beneficiary) and that would result in severe financial hardship to the individual if early withdrawal were not permitted. The determination of "unforeseeable emergency" shall be made by the Plan Administrator, based on such information as the Plan Administrator shall deem to be necessary.

SECTION 5

Source of Benefit Payments

5.1. Liability for Benefit Payments. Subject to the provisions of this Section 5, an Employer shall be liable for payment of benefits under the Plan with respect to any Participant to the extent that such benefits are attributable to the deferral of compensation otherwise payable by that Employer to the Participant. Any disputes relating to liability of Employers for benefit payments shall be resolved by the Committee.

5.2. No Guarantee. Neither a Participant nor any other person shall, by reason of the Plan, acquire any right in or title to any assets, funds or property of the Employers whatsoever, including, without limitation, any specific funds, assets, or other property which the Employers, in their sole discretion, may set aside in anticipation of a liability under the Plan. A Participant shall have only a contractual right to the amounts, if any, payable under the Plan, unsecured by any assets of the Employers. Nothing contained in the Plan shall constitute a guarantee by any of the Employers that the assets of the Employers shall be sufficient to pay any benefits to any person.

SECTION 6

Committee

6.1. Powers of Committee. Responsibility for the day-to-day administration of the Plan shall be vested in the Plan Administrator, which shall be the Committee. The authority to control and manage all other aspects of the operation and administration of the Plan shall also be vested in the Committee. The Committee is authorized to interpret the Plan, to establish, amend, and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements made pursuant to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan. Except as otherwise specifically provided by the Plan, any determinations to be made by the Committee under the Plan shall be decided by the Committee in its sole discretion. Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding on all persons.

6.2. Delegation by Committee. The Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time. Until the Committee takes action to the contrary:

(a) The Chief Executive Officer of the Company shall be delegated the power and responsibility to take all actions assigned to or permitted to be taken by the Committee under Section 2, Section 3, and Section
4 (other than the powers and responsibility of the Plan Administrator).

(b) The powers and responsibilities of the Plan Administrator shall be delegated to the Chief Administration Officer (or his or her delegate) of the Company, subject to such direction as may be provided to the Chief Administration Officer or his or

her delegate from time to time by the Committee and the Chief Executive Officer of the Company.

6.3. Information to be Furnished to Committee. The Employers and Related Companies shall furnish the Committee with such data and information as may be required for it to discharge its duties. The records of the Employers and Related Companies as to an employee's or Participant's employment, termination of employment, leave of absence, reemployment and Eligible Compensation shall be conclusive on all persons unless determined to be incorrect. Participants and other persons entitled to benefits under the Plan must furnish the Committee such evidence, data or information as the Committee considers desirable to carry out the Plan.

6.4. Liability and Indemnification of Committee. No member or authorized delegate of the Committee shall be liable to any person for any action taken or omitted in connection with the administration of the Plan unless attributable to his or her own fraud or willful misconduct; nor shall the Employers be liable to any person for any such action unless attributable to fraud or willful misconduct on the part of a director or employee of the Employers. The Committee, the individual members thereof, and persons acting as the authorized delegates of the Committee under the Plan, shall be indemnified by the Employers against any and all liabilities, losses, costs and expenses (including legal fees and expenses) of whatsoever kind and nature which may be imposed on, incurred by or asserted against the Committee or its members or authorized delegates by reason of the performance of a Committee function if the Committee or its members or authorized delegates did not act dishonestly or in willful violation of the law or regulation under which such liability, loss, cost or expense arises. This indemnification shall not duplicate but may supplement any coverage available under any applicable insurance.

SECTION 7

Amendment and Termination

The Committee may, at any time, amend or terminate the Plan (including the rules for administration of the Plan), subject to the following:

(a) Subject to the following provisions of this Section 7, no amendment or termination may materially adversely affect the rights of any Participant or beneficiary under the Plan.

(b) The Committee may revoke the right to defer Eligible Compensation under the Plan.

(c) The Plan may not be amended to delay the date on which benefits are otherwise payable under the Plan without the consent of each affected Participant. The Committee may amend the Plan to accelerate the date on which Plan benefits are otherwise payable under the Plan and eliminate all future deferrals under the Plan, thereby terminating the Plan.

(d) The Committee may amend the Plan to modify or eliminate any Investment Return Rate alternative, except that any such amendment may not modify the Investment Return Rate with respect to periods prior to the adoption of the amendment.

(e) Notwithstanding any other provision of the Plan to the contrary, neither the Committee nor the Board may delegate its rights and responsibilities under this Section 7; provided, however, that, the Board of Directors may, from time to time, substitute itself, or another committee of the Board, for the Compensation Committee under this Section 7.

IN WITNESS WHEREOF, ACE Limited has caused this Plan to be executed by its duly authorized officer this ______, day of _________, 1997.

ACE Limited

By:___________________

ACE Limited

Rules of the
Approved UK Stock Option Programme

Approved by the Inland Revenue on 24 November 1997
(Reference No: X19095/RC)

Lovell White Durrant
65 Holborn Viaduct
London EC1A 2DY
Ref: A4/JCMcM/LLW

CONTENTS

Clause
                                                                                Page No.

1.       Establishment and purpose of the Programme                              1

2.       Definitions                                                             1

3.       Grant of Options                                                        5

4.       Limitations on Grant of Options                                         5

5.       Exercise of Options                                                     6

6.       Time for Exercise of Options                                            6

7.       Replacement of Options on a takeover or other change in Control of
           the Company                                                           7

8.       Variations in the Share Capital of the Company                          8

9.       Administration of the Programme                                         8

10.      Amendment of the Programme                                              8

11.      Additional Provisions                                                   8

12.      Termination                                                             9

ACE Limited

Approved UK Stock Incentive Programme (An approved Company share option plan pursuant to the provisions of Schedule 9 to the Income and Corporation Taxes Act 1988)

1. Establishment and Purpose of the Programme

1.1 On 12 November 1997 the Committee adopted, subject to the approval of the Inland Revenue, the Programme as an addendum to the ACE Limited 1995 Long-Term Incentive Plan (the "Plan") to enable Eligible Employees of the Company and its Subsidiaries to participate in the Plan and obtain the benefit of approval by the Board of Inland Revenue pursuant to Schedule 9 to the Income and Corporation Taxes Act 1988 ("Schedule 9").

1.2 On 24 November 1997 the Inland Revenue gave formal approval to the Programme. The rules of the Programme (the "Programme Rules") comply with the requirements of Schedule 9.

1.3 The rules of the Plan (the "Plan Rules") shall apply to the Programme unless the Programme Rules expressly or by implication provide to the contrary, but so that nothing in either the Plan or the Programme Rules shall operate to prejudice the approval by the Board of Inland Revenue of the Programme PROVIDED ALWAYS THAT in the event of a conflict between the Plan Rules and the Programme Rules whereby the status of the Plan is or will be prejudiced the Plan Rules shall prevail.

1.4 For the avoidance of doubt rule 2.5 of the Plan shall not apply to the Programme and the Company may only grant options pursuant the Programme. Stock Appreciation Rights, Limited Stock Appreciation Rights, Restricted Stock or a Stock Purchase Program may not be granted pursuant the Programme Rules.

1.5 The Committee may designate whether or not an Option is to be considered an incentive stock option as defined in Section 422(b) of the US Internal Code 1986, as amended ("Incentive Stock Option").

1.6 The Programme shall be governed and construed in accordance with the laws of England.

2. Definitions

2.1 In the Programme the following words and expressions have the meanings set opposite them:

"ACE Group"                      the Company and all of the
                                 Subsidiaries and, in relation to
                                 a New Option granted pursuant to
                                 clause 7 the Acquiring Company
                                 and the Controlling Company and
                                 their Subsidiaries as defined in
                                 Section 736 of the Companies Act
                                 1985, and "member of the ACE
                                 Group" shall be construed
                                 accordingly;

"Act"                            the Securities Exchange Act 1934,
                                 as amended;

"Acquiring                       a company which for the purposes of
 Company"                        clause 7 comes within the
                                 definition of "the acquiring
                                 company" in paragraph 15(1) of
                                 Schedule 9;


"Affiliate"                      a person or entity that directly or
                                 indirectly controls, is controlled
                                 by or is under common control with
                                 another person or entity;
"Any Other                       any scheme other than the Programme
Approved Scheme"                 established by the Company
                                 or by any Associated Company and
                                 approved in accordance with
                                 Schedule 9 but excluding for the
                                 purposes of this definition any
                                 savings-related share option
                                 scheme or profit sharing scheme
                                 so established;

"Approval Date"                  the date on which the
                                 Company receives written
                                 notification from the Board of
                                 Inland Revenue that the Programme
                                 has received Revenue Approval;

"Associated                      any company which is an associated
 Company"                        company of the Company
                                 within the meaning of section
                                 416(1) of the Taxes Act;

"Board"                          the board of directors for the
                                 time being of the Company;

"Change in Control"              shall for the purposes of clause
                                 6.7 mean the occurrence of one of
                                 the following events:

                                 (i)       the acquisition by any
                                           Person of beneficial
                                           ownership (within the
                                           meaning of Rule 13d-3
                                           promulgated under the
                                           Act) of fifty percent
                                           (50%) or more of the
                                           Voting Stock;

                                 (ii)      the majority of the
                                           Board consists of
                                           individuals other than
                                           Incumbent Directors;

                                 (iii)     the Company adopts any
                                           plan of liquidation
                                           providing for the
                                           distribution of all or
                                           substantially all of
                                           its assets;

                                   (iv)       all or substantially
                                              all the assets or
                                              business of the
                                              Company is disposed of
                                              pursuant to a merger,
                                              consolidation or other
                                              transaction (unless
                                              the shareholders of
                                              the Company
                                              immediately prior to
                                              such merger,
                                              consolidation or other
                                              transaction
                                              beneficially own,
                                              directly or
                                              indirectly, in
                                              substantially the same
                                              proportion as they
                                              owned Voting Stock of
                                              the Company, all of
                                              the Voting Stock or
                                              other ownership
                                              interests of the
                                              entity or entities, if
                                              any, that succeed to
                                              the business of the
                                              Company);

                                   (v)        the Company combines
                                              with another company
                                              and is the surviving
                                              corporation but,
                                              immediately after the
                                              combination, the
                                              shareholders of the
                                              Company immediately
                                              prior to the
                                              combination hold,
                                              directly or
                                              indirectly, 50% or
                                              less of the Voting
                                              Stock of the combined
                                              company (there being
                                              excluded from the
                                              number of shares held
                                              by such shareholders,
                                              but not from the
                                              Voting Stock of the
                                              combined company, any
                                              shares received by
                                              Affiliates of such
                                              other company in
                                              exchange for stock of
                                              such other company);

  "Committee"                      the Compensation Committee of the
                                   Board or such other committee
                                   as the Board shall designate to
                                   administer the Plan;

  "Company"                        ACE Limited, a Corporation
                                   incorporated in the Cayman Islands;

  "Control"                        for the purposes of clause 7, the
                                   control of a company within the
                                   meaning given to that expression by
                                   section 840 of the Taxes Act;

  "Controlling                     a company, other than the Company
   Company"                        and an Acquiring Company,
                                   which falls within sub-paragraphs
                                   10(b) or 10(c) of Schedule 9;

                                              - 4 -

  "Disability"                     a Participant shall be considered
                                   to have a "Disability" during the
                                   period in which he is unable by
                                   reason of a medically
                                   determinable physical or mental
                                   impairment to engage in any
                                   substantial gainful activity,
                                   which condition, in the opinion
                                   of a physician selected by the
                                   Committee, is expected to have a
                                   duration of not less than 120
                                   days;

  "Eligible                        Employee" any person whose terms
                                   of employment require him to
                                   devote substantially the whole of
                                   his time to working for any
                                   member or members of the ACE
                                   Group, except for;

                                   (i)       any director of a
                                             member or members of
                                             the ACE Group who is
                                             contracted to work for
                                             less than 25 hours a
                                             week (excluding meal
                                             breaks) in that
                                             capacity; and

                                   (ii)      any person who is
                                             prohibited from partici-
                                             pating in the Programme
                                             by the provisions of
                                             paragraph 8 of Schedule 9;

"Exercise Price"                   the price per Share
                                   payable on the exercise of an
                                   Option as determined by the
                                   Committee but in no event less
                                   than the greater of:

                                   (i)       the nominal value of a
                                             Share (if the Shares are
                                             to be subscribed); and

                                   (ii)      the Fair Market Value of a
                                             Share on the day on which
                                             the Option is granted;

  "Fair Market Value"             the value of a Share on any day being:

                                   (i)        if and for so long as
                                              the Company's Shares
                                              are admitted to the
                                              official list of the
                                              New York Stock
                                              Exchange, the closing
                                              market composite price
                                              for Shares as reported
                                              on the New York Stock
                                              Exchange - Composite
                                              Transactions on that
                                              date or if the New
                                              York Stock Exchange is
                                              closed on that date,
                                              the last preceding
                                              date on which the New
                                              York Stock Exchange
                                              was open for trading
                                              and on which the
                                              Shares were traded
                                              PROVIDED THAT such
                                              date shall not be a
                                              date which is more
                                              than 30 days before
                                              the date of grant of
                                              an Option; or

                                              - 5 -

                                   (ii)      in all other cases, the
                                             market value determined
                                             in accordance with Part
                                             VIII of the taxation of
                                             Chargeable Gains Act
                                             1992 and if and for so
                                             long as the Programme
                                             has Revenue Approval
                                             agreed in advance with
                                             the Shares Valuation
                                             Division of the Inland
                                             Revenue;

  "Incumbent Directors"            the individuals
                                   constituting the Board as of the
                                   date the Plan was adopted and any
                                   subsequent directors whose
                                   election or nomination for
                                   election by the Company's
                                   stockholders was approved by a
                                   vote of three quarters (3/4) of
                                   the individuals who are then
                                   Incumbent Directors;

  "Normal Retirement               the voluntary termination of
   Age"                            employment at a time when the
                                   Participant has attained normal
                                   retirement age under the ACE
                                   Limited Employee Retirement Plan
                                   or any other retirement benefits
                                   scheme maintained by a company in
                                   the ACE Group or such other age
                                   as shall be determined by the
                                   Committee in its sole discretion;

  "Option"                         subject to clause 7, a right to
                                   acquire Shares pursuant to the
                                   provisions of the Programme;

  "Option Period"                  subject to clause 6, the period
                                   ending no later than ten years
                                   from the date of an Option
                                   during which an Option shall be
                                   exercisable in accordance with
                                   the provisions of the Programme
                                   as determined by the Committee
                                   at the date of grant of the
                                   Option provided that the Option
                                   may not be exercisable before
                                   the Participant has completed
                                   one year's service with the
                                   Group;

"Participant"                      an Eligible Employee who has been
                                   granted an Option or where
                                   applicable, the personal represent-
                                   ative(s) of any such person;

  "Person"                         person for the purposes of the
                                   definition of "Change in Control"
                                   has the same meaning as set forth
                                   in Sections 3(a)(9) and 13(d) of
                                   the Act;

  "Plan"                           the ACE Limited 1995 Long-Term
                                   Incentive Plan approved by the
                                   stockholders of the Company in
                                   general meeting on 9 February
                                   1996 and as subsequently amended;

                            - 6 -

  "Programme"                      the Programme adopted on 12 November
                                   1997 as from time to
                                   time amended in accordance with the
                                   provisions hereof;

  "Related Company"                any company which is a subsidiary
                                   corporation as defined in
                                   Section 424(f) of the Internal
                                   Revenue Code of 1986;

  "Revenue Approval"               approval of the Programme by the
                                   Board of Inland Revenue under
                                   Schedule 9;

  "Schedule 9"                     Schedule 9 to the Taxes Act;

  "Shares"                         subject to clause 7.3(a), Stock
                                   which satisfies the requirements of
                                   paragraphs 10 to 14 inclusive of
                                   Schedule 9;

  "Stock"                          shares of the common stock of the
                                   Company;


  Subsidiaries"                    those companies over which for
                                   the time being the Company has
                                   Control and which are
                                   subsidiaries of the Company
                                   within the meaning of Section 736
                                   of the Companies Act 1985;

  "Taxes Act"                      the Income and Corporation Taxes Act
                                   1988;

  "Voting                          Stock" capital stock if any class
                                   or classes having general voting
                                   power under ordinary
                                   circumstances in the absence of
                                   contingencies to elect the
                                   directors of a company.

2.2 Any reference herein to a statutory provision shall include a reference to that provision as amended or re-enacted from time to time. Where the context permits the singular shall include the plural and vice versa and the masculine gender shall include the feminine.

3. Grant of Options

3.1 Subject to the limits contained in clause 4, at any time after the Approval Date, the Committee may, in its absolute discretion grant an Option to an Eligible Employee in accordance with the Programme. The Committee shall give notice in writing to the Eligible Employee to specify:

(a) the number of Shares in respect of which the Option is granted,

(b) the date on which it is granted,

(c) the Exercise Price,

(d) the objective performance target(s), if any, imposed by the Committee, the terms of which must, at any time when the Programme has Revenue Approval, be approved by the Board of Inland Revenue; and

(e) the Option Period.

3.2 The grant of an Option shall be made on the basis that participation in the Programme shall be deemed to constitute an agreement to be bound by the Programme Rules and shall be evidenced by an instrument in such form as the Committee may from time to time prescribe. The instrument shall be issued as soon as practicable after the date of grant.

3.3 An Option shall be personal to the Participant and may not be transferred except as designated by the Participant by will or by the laws of descent, or, subject to the provisions of clause 6.2, exercised by any other person. In no event shall an Incentive Stock Option be transferable to the extent that such transferability would violate the requirements of the Inland Revenue Code 1986 Section 422. Any attempt to so transfer or sell an Option shall cause the Option to lapse forthwith.

4. Limitations on Grant of Options

4.1 No Option shall be granted pursuant to clause 3 if such grant would exceed the limits imposed on the grant of rights under the Plan pursuant to section 6 of the Plan with respect to the number of Shares which may be made the subject of Options and other rights under the Plan.

4.2 No Option shall be granted to an Eligible Employee pursuant to the Programme if as a result the total Option Price of the Shares issuable on the exercise of such Option when aggregated with the total market price at the relevant date of grant of shares still capable of being issued on the exercise of options previously granted to him under the Programme and Any Other Approved Scheme would exceed (pound)30,000 (or its equivalent in any other currency, taking as the rate of exchange the spot rate for the currency in question on the date of grant of the Option as quoted by any of the Company's bankers from time to time).

5. Exercise of Options

5.1 Subject to clause 6, an Option shall only be exercised by a Participant within the Option Period by his giving to the Secretary of the Company at its corporate headquarters, written notice, which shall be in such form as may be prescribed by the Committee and shall be signed by the Participant. An Option may be exercised in whole or in part. Such notice shall specify the number of Shares in respect of which the Option is being exercised and shall be accompanied by payment in full of the total Exercise Price for the said Shares and the instrument evidencing the grant of the relevant Option for cancellation or amendment.

5.2 Payment for the Option exercised shall be in cash, or cheque, bank draft or money order to the order of the Company, for an amount in United States dollars equal to the total Exercise Price for the number of Shares in respect of which an Option is exercised.

5.3 The Committee shall transfer the appropriate number of Shares to the Participant at their Exercise Price as soon as possible but in any event not later than one month after the date of exercise of the Option and shall deliver where appropriate to the Participant a definitive share certificate in respect thereof. Any Shares issued pursuant to this clause 5.3 shall rank pari passu in all respects and form a uniform class with Shares already in issue. While an Option is unexercised, a Participant shall have no voting rights or any other rights of stockholders with respect to the Shares which are subject to his Option. Furthermore, no cash dividends shall accrue or be payable with respect to any such Shares. Shares subject to unexercised Options shall have no subscription rights.

6. Time for Exercise of Options

6.1 Subject to clauses 6.2 to 6.4 inclusive, an Option may only be exercised during its Option Period. An Option which is not so exercised shall lapse PROVIDED THAT, at the time of exercise of his Option a Participant is not prohibited from doing so by the provisions of paragraph 8 of Schedule 9.

6.2 If a Participant dies his Option may be exercised in full by his personal representative(s) at any time before the expiry of its Option Period and within but not later than 12 months of his death. Any such Option which is not so exercised shall lapse.

6.3 If a Participant ceases to be employed by the Company or a Related Company by reason of Disability, he may exercise his Option in full at any time before the expiry of its Option Period and within 12 months after the date of cessation of his employment. Any such Option which is not so exercised shall lapse.

6.4 If a Participant ceases to be employed by the Company or a Related Company by reason of retirement on or after Normal Retirement Age or earlier retirement with consent of his employer, he may exercise his option to the extent exercisable by him at the time of such cessation at any time before the expiry of its Option Period or his death if earlier.

6.5 If a Participant ceases to be employed by the Company or a Related Company otherwise than by reason of the events specified in clauses 6.2 to 6.4, he may exercise his option to the extent exercisable by him at the time of such cessation at any time before the expiry of its Option Period and within three months after the date of cessation of his employment. Any such Option which is not so exercised shall lapse.

6.6 For the purposes of this paragraph where a Participant's employment is terminated without notice or on terms in lieu of notice it shall be deemed to cease on the date on which the termination takes effect and where the said employment is terminated with notice it shall cease on the date when the notice period expires.

6.7 If a Change in Control of the Company shall occur a Participant may exercise his Option in full at any time before the expiry of its Option Period PROVIDED THAT this clause 6.7 shall not apply where a Participant by agreement with an Acquiring Company, releases his Option in consideration of the grant to him of a New Option pursuant to clause 7 before the expiry of the appropriate period referred to in clause 7.4.

7. Replacement of Options on a takeover or other change in Control of the Company

7.1 Clause 7.2 below shall apply where an Acquiring Company obtains Control of the Company as a result of making:

(a) a general offer to acquire the whole of the issued share capital of the Company (other than that which is already owned by it and/or by any of its subsidiaries) made on a condition such that if it is satisfied the Acquiring Company will have Control of the Company; or

(b) a general offer to acquire all the Shares (or such Shares as are not already owned by the Acquiring Company and/or by any of its subsidiaries).

7.2 A Participant may at any time within the appropriate period as defined in clause 7.4, by agreement with the Acquiring Company, release any of his Options (the "Old Option" for the purposes of this clause) in consideration of the grant to him of a new option (the "New Option" for the purposes of this clause) PROVIDED THAT any New Option satisfies the conditions set out in clause 7.3.

7.3 The New Option must:

(a) be over shares in the Acquiring Company or a Controlling Company which shares satisfy the conditions specified in paragraphs 10 to 14 inclusive of Schedule 9 (references to the term "Shares" in this Programme shall thereafter be construed accordingly);

(b) be a right to acquire such number of shares which on acquisition of the New Option have an aggregate market value (determined in accordance with Part VIII of the Taxation of Chargeable Gains Act 1992) equal to the aggregate market value of the Shares the subject of the Old Option immediately before its release;

(c) have an exercise price per share such that the aggregate price payable on complete exercise of the New Option equals the aggregate price which would have been payable on complete exercise of the Old Option at the time of its release.

7.4 The appropriate period referred to in clause 7.2 is the period of six months commencing on the date when the Acquiring Company making the offer has obtained Control of the Company and any condition subject to which the offer is made is satisfied.

7.5 The New Option shall be exercisable in the same manner as the Old Option and in accordance with the provisions of the Programme as it had effect in relation to the Old Option immediately before its release (references to the term "Option" in the Programme thereafter being construed accordingly), and the New Option shall, for all purposes of the Programme other than clause 7.6, be treated as having been granted on the date when the corresponding Old Option was granted.

7.6 With effect from the grant of a New Option hereunder clause 5, this clause 7, and clauses 8, 9 and 11 shall, in relation to the New Option, be construed as if references to the Company were references to the Acquiring Company, or as the case may be, the Controlling Company.

8. Variations in the Share Capital of the Company

8.1 If at any time after the date of grant of an Option and before it ceases to be exercisable, there is a variation or reorganisation of Stock or other capital of the Company, including, without limitation, any subdivision or consolidation of shares or stock or other capital readjustment, stock split, payment of stock dividend, combination of shares or recapitalisation or other increase or reduction of the number of shares or stock outstanding, without receiving compensation therefor in money, services or property or otherwise with respect to its common stock, the number of Shares available under the Programme shall be adjusted and the number then subject to Options and the Exercise Price therefor shall be proportionately and appropriately adjusted all as the Committee shall deem appropriate PROVIDED THAT:

(a) the aggregate Exercise Price payable on the exercise of an Option previously granted hereunder shall not be increased;

(b) the Option Price shall not be reduced below the nominal value of a Share thereby;

(c) all such adjustments shall be subject to prior approval by the Board of Inland Revenue.

8.2 All Participants shall be notified in writing of any such adjustments as soon as practicable thereafter and the Committee shall be entitled to call in the instruments evidencing the grant of the Options affected by such adjustments for endorsement or replacement, as may appear appropriate.

9.       Administration of the Programme

9.1      The Programme shall be administered by the Committee.

9.2      Subject as herein otherwise expressly provided the Committee's
         decision on any matter concerning the Programme shall be final and
         binding.

10.      Amendment of the Programme

10.1     Subject to clause 10.2, the Board or the Committee shall at any
         time be entitled to amend by resolution all or any of the
         provisions of the Programme provided that no amendment may
         adversely affect the rights of any participant already acquire by
         him under the Programme.

10.2     No amendment to the Programme shall be effective unless and until
         approved by the Board of Inland Revenue and subject to clause 1.3
         nothing shall be done to the Programme which would prejudice the
         obtaining of Revenue Approval or cause it to be withdrawn.

11.      Additional Provisions

11.1     Every Option shall be subject to the condition that no Shares
         shall be issued to a Participant following the exercise of an
         Option if such issuance would be contrary to any enactment or
         regulation for the time being in force of the United States or of
         any other country having jurisdiction in relation thereto. The
         Company shall not be bound to take any action to obtain the
         consent of any governmental authority to such issue or to take any
         action to ensure that any such issuance shall be in accordance
         with any such enactment or regulation if such action could in the
         opinion of the Committee be unduly onerous.

11.2     Every Option shall be subject to the requirement that if at any
         time the Board shall determine, in its discretion, that the
         listing, registration or qualification of the Shares subject to an
         Option upon any securities exchange or under any state or federal
         law, or that the consent or approval

         of any governmental authority, is necessary or desirable as a
         condition of, or in connection with, the issuance or purchase of
         shares under an Option such Option may not be exercised in whole
         or in part, unless such listing, registration, qualification,
         consent or approval shall have been effected or obtained free of
         any conditions not acceptable to the Board. Any Option may be
         exercised only in accordance with the provisions of all applicable
         law.

11.3     The rights and obligations of a Participant under his terms of
         employment with any member of the ACE Group shall not be affected
         by his participation in the Programme and the Programme shall not
         afford to a Participant any right to continued employment or any
         additional right to compensation in consequence of the termination
         of his employment for any reason whatsoever.

12.      Termination

         the Committee may at any time resolve to cease making further
         grants of Options under the Programme but in such event the
         subsisting rights of Participants shall not thereby be affected.