TAXATION OF ACE AND ITS SHAREHOLDERS
The following summary of (i) the taxation of ACE and its subsidiaries and
(ii) the taxation of ACE shareholders is based upon current law. Legislative,
judicial or administrative changes may be forthcoming that could be retroactive
and could affect this summary. The tax treatment of any particular shareholder
may vary depending on such shareholder's particular tax situation or status. The
following summary is for general information only and does not purport to be a
complete analysis or listing of all tax considerations that might be applicable
to ACE and its subsidiaries or a holder of ACE Ordinary Shares, including
persons who may be
subject to special tax rules (e.g. tax exempt entities or dealers in securities)
or shareholders who are not U.S. persons. A U.S. person who holds ACE Ordinary
Shares as capital assets will be referred to herein as a "U.S. ACE Shareholder."
Each prospective shareholder is urged to consult his or its own tax advisors as
to the particular tax consequences to such shareholder of owning ACE Ordinary
Shares.
Taxation of ACE and its Subsidiaries
Bermuda. CODA and ACE Insurance have received from the Minister of Finance
of Bermuda an assurance under The Exempted Undertakings Tax Protection Act, 1966
of Bermuda, to the effect that in the event of there being enacted in Bermuda
any legislation imposing tax computed on profits or income, or computed on any
capital asset, gain or appreciation, or any tax in the nature of estate duty or
inheritance tax, then the imposition of any such tax shall not be applicable to
CODA or ACE Insurance or to any of their operations or the shares, debentures or
other obligations of CODA or ACE Insurance until March 28, 2016. This assurance
does not prevent the application of any such tax or duty to such persons as are
ordinarily resident in Bermuda, nor does it prevent the application of any tax
payable in accordance with the provisions of the Land Tax Act 1967 of Bermuda or
otherwise payable in relation to the property leased to CODA or ACE Insurance.
ACE, as a permit company under the Companies Act 1981 of Bermuda (the "Bermuda
Act"), has received similar assurances which are effective until March 28, 2016.
CODA and ACE Insurance, under current rates, pay annual Bermuda government and
business fees in the aggregate of BD$4,515 and BD$7,875, respectively. ACE is
required to pay certain annual Bermuda government fees. Under current rates,
ACE pays a fixed annual fee of BD$1,680. In addition, all entities employing
individuals in Bermuda are required to pay a payroll tax to the Bermuda
Government. For the fiscal year ended September 30, 1996, ACE paid
approximately $776,000 in payroll tax. Currently there is no Bermuda
withholding tax on dividends paid by CODA or ACE Insurance.
Cayman Islands. Under current Cayman Islands law, ACE is not obligated to
pay any taxes in the Cayman Islands on its income or gains. ACE has received an
undertaking from the Governor-in-Council of the Cayman Islands pursuant to the
provisions of the Tax Concessions Law, as amended, that until the year 2005 (i)
no subsequently enacted law imposing any tax on profits, income, gains or
appreciations shall apply to ACE and (ii) no such tax and no tax in the nature
of an estate duty or an inheritance tax shall be payable on any shares,
debentures or other obligations of ACE. The Cayman Islands currently imposes
stamp duties on certain categories of documents; however, the current operations
of ACE do not involve the payment of stamp duties in any material amount. The
Cayman Islands currently imposes an annual corporate fee upon all exempted
companies; at current rates ACE pays fees of approximately $1,750 per annum.
United Kingdom. Methuen is subject to United Kingdom corporation tax and
value added tax. ACE's corporate subsidiary which has acquired a 51% interest
in Methuen and ACE's corporate subsidiary that is a Lloyd's corporate member
participating in the Methuen syndicates are also subject to United Kingdom
corporation tax and value added tax. Although ACE has a representative office
in London, ACE has been advised that it is not deemed to be doing insurance
business in the United Kingdom and therefore is subject only to minimal tax in
the United Kingdom.
United States. Except as provided below with respect to ACE's corporate
subsidiary that is a Lloyd's corporate member, ACE and its subsidiaries do not
conduct business within the United States and thus are not subject to net income
tax imposed by the United States. However, because definitive identification of
activities which constitute being engaged in a trade or business in the United
States is not provided by the Code, regulations or court decisions, there can be
no assurance that the IRS will not contend successfully that ACE or one or more
of its subsidiaries is engaged in a trade or business in the United States. A
foreign corporation deemed to be so engaged would be subject to U.S. income tax,
as well as the branch profits tax, on its income which is treated as effectively
connected with the conduct of that trade or business unless the corporation is
entitled to relief under the permanent establishment provision of the Bermuda
Treaty, as discussed below. Such income tax, if imposed, would be based on
effectively connected income computed in a manner generally analogous to that
applied to the income of a domestic corporation, except that a foreign
corporation can anticipate an allowance of deductions and credits only if it
files a U.S. income tax return. Under regulations, the foreign corporation
would be entitled to deductions and credits only if the return is filed timely
under rules set forth
therein. ACE and its subsidiaries have in the past and expect to continue filing
protective tax returns to ensure that it and its subsidiaries would be entitled
to deductions and credits if they are considered to be engaged in a U.S. trade
or business. The highest federal tax rates currently are 35% for a corporation's
effectively connected income and 30% for the branch profits tax. The branch
profits tax is imposed on effectively connected net income after subtracting the
regular corporate tax and making certain other adjustments and on interest paid
or deemed paid from the U.S. branch to persons outside the United States.
Pursuant to a Closing Agreement between Lloyd's and the IRS, ACE's corporate
subsidiary that is a Lloyd's corporate member is treated as engaged in business
in the United States and subject to net income tax in the United States on its
U.S. source income.
Under the Bermuda Treaty, CODA and ACE Insurance are subject to U.S. income
tax on any income found to be effectively connected with a U.S. trade or
business only if that trade or business is conducted through a permanent
establishment in the United States. No regulations interpreting the Bermuda
Treaty have been issued. While there can be no assurances, ACE does not believe
CODA or ACE Insurance has a permanent establishment in the United States.
Neither CODA nor ACE Insurance would be entitled to the benefits of the Bermuda
Treaty if (i) less than 50% of such subsidiary's stock were beneficially owned,
directly or indirectly, by Bermuda residents or U.S. citizens or residents, or
(ii) such subsidiary's income were used in substantial part to make
disproportionate distributions to, or to meet certain liabilities of, persons
who are not Bermuda residents or U.S. citizens or residents. While there can be
no assurances, ACE believes that no exception to Bermuda Treaty benefits will
apply after the Amalgamation.
Foreign corporations not engaged in a trade or business in the United
States are nonetheless subject to U.S. income tax on certain "fixed or
determinable annual or periodic gains, profits and income" derived from sources
within the United States as enumerated in Section 881(a) of the Code (such as
dividends and certain interest on investments). The amount of such taxes paid by
ACE has not exceeded $1.7 million in any fiscal year.
Effect of the Amalgamation. ACE believes that the Amalgamation will not
cause ACE or its existing subsidiaries to be subject to tax in the Cayman
Islands, Bermuda or the United States (except to the very limited extent noted
above that they are currently subject to tax in those jurisdictions), and it is
expected that the ACE Reinsurance Subsidiary will be taxed in a manner similar
to ACE's other subsidiaries. Accordingly, the foregoing description of the tax
treatment of ACE and its operating subsidiaries by Bermuda, the Cayman Islands,
the United Kingdom and the United States should remain unchanged after the
Effective Time and should, where applicable, apply equally to the ACE
Reinsurance Subsidiary.
Taxation of ACE Shareholders
Cayman Islands. Dividends paid by ACE are not subject to Cayman Islands
withholding tax.
Bermuda. Under current Bermuda law, there is no Bermuda income tax,
withholding tax, capital gains tax, capital transfer tax, estate duty or
inheritance tax payable by the respective shareholders of ACE with respect to an
investment in ACE Ordinary Shares.
United States--Taxation of dividends. Subject to the discussion below
relating to the potential application of the "controlled foreign corporation"
and "passive foreign investment company" rules, cash distributions made with
respect to ACE Ordinary Shares will constitute dividends for U.S. federal income
tax purposes to the extent paid out of current or accumulated E&P of ACE. U.S.
ACE Shareholders generally will be subject to U.S. federal income tax on the
receipt of such dividends. Generally, such dividends will not be eligible for
the corporate dividends received deduction. To the extent that a distribution
exceeds E&P, it will be treated first as a return of the U.S. ACE Shareholder's
basis to the extent thereof, and then as gain from the sale of a capital asset.
United States--Classification as a controlled foreign corporation. Under
Section 951(a) of the Code, each "U.S. 10% shareholder" (as defined below) that,
on the last day of foreign corporation's taxable year, owns, directly or
indirectly through a foreign entity, shares of a foreign corporation that is a
"controlled foreign
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corporation" ("CFC") for an uninterrupted period of 30 days or more during any
taxable year must include in its gross income for U.S. federal income tax
purposes its pro rata share of the CFC's "subpart F income" for such year, even
if the subpart F income is not distributed. In addition, the U.S. 10%
shareholders of a CFC may be deemed to receive taxable distributions to the
extent the CFC increases the amount of its earnings that are invested in certain
specified types of U.S. property or if the CFC holds "excess passive assets," as
defined in Section 956A of the Code. "Subpart F income" includes, inter alia,
(i) "foreign personal holding company income", such as interest, dividends, and
other types of passive investment income and (ii) "insurance income," which is
defined to include any income (including underwriting and investment income)
that is attributable to the issuing (or reinsuring) of any insurance or annuity
contract in connection with property in, liability arising out of activity in,
or in connection with the lives or health of residents of, a country other than
the country under the laws of which the CFC is created or organized, and which
(subject to certain modifications) would be taxed under the insurance company
provision of the Code if such income were the income of a domestic insurance
company ("Subpart F Insurance Income"). However, Subpart F income does not
include any income from sources within the U.S. which is effectively connected
with the conduct of a trade or business within the U.S. and not exempted or
subject to a reduced rate of tax by applicable treaty. Therefore, all of ACE's
income, and all income of ACE's operating subsidiaries that is not attributable
to a permanent establishment in the U.S., is expected to be Subpart F income.
Under Section 951(b) of the Code, any U.S. Person who owns, directly or
indirectly through foreign entities, 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 10% controlled
corporations) 10% or more of the total combined voting power of all classes of
stock of a foreign corporation will be considered to be a "U.S. 10%
shareholder." In general, a foreign corporation is treated as a CFC only if its
U.S. 10% shareholders collectively own more than 50% of the total combined
voting power or total value of the corporation's stock on any day (the "50%
Test"). However, for purposes only of taking into account Subpart F Insurance
Income, a foreign corporation will be treated as a CFC if (i) more than 25% of
the total combined voting power or total value of its stock is owned by U.S. 10%
shareholders and (ii) the gross amount of premiums or other consideration in
respect of risks outside its country of incorporation exceeds 75% of the gross
amount of all premiums or other consideration in respect of all risks (the "25%
Test"). It is anticipated that the gross premiums of each of the insurance
subsidiaries of ACE in respect of Subpart F Insurance Income will exceed 75% of
its gross premiums in respect of all risks so that the 25% Test, rather than the
50% Test, will be applicable with respect to its Subpart F Insurance Income.
However, the 50% test will continue to apply to ACE itself.
After the Amalgamation, all the capital stock of ACE Insurance, CODA, and
the ACE Reinsurance Subsidiary will be owned directly or indirectly by ACE. In
determining the U.S. 10% shareholders of ACE Insurance, CODA, or the ACE
Reinsurance Subsidiary, U.S. Persons who are shareholders of ACE are considered
as owning proportionately the stock of ACE Insurance, CODA, and the ACE
Reinsurance Subsidiary. After the Amalgamation, U.S. Persons who own, directly,
indirectly or by attribution under the rules of Section 958(b) of the Code, more
than 10% in value of the stock of ACE will not own more than 25% of the total
combined voting power or value of the stock of ACE. As a result, none of ACE
Insurance, CODA, or the ACE Reinsurance Subsidiary, will be a CFC under the 25%
Test. However, depending on the future ownership of ACE stock, any U.S. Person
who subsequently acquires 10% or more of the stock of ACE may be required to
include their share of the Subpart F income of ACE and its subsidiaries in their
U.S. taxable income. It is not expected that ACE itself would ever be a CFC
under the 50% test, so U.S. persons are not expected to have to include any of
ACE's Subpart F income in their U.S. taxable income.
United States--RPII companies. A different definition of "controlled
foreign corporation" is applicable in the case of a foreign corporation which
earns related person insurance income ("RPII"). RPII is defined in Code Section
953(c)(2) as any "insurance income" (as defined above) attributable to policies
of insurance or reinsurance with respect to which the person (directly or
indirectly) insured is a "U.S. shareholder" of the foreign corporation or a
"related person" to such a shareholder. For purposes only of taking into account
RPII, and subject to the exceptions described below, an insurance subsidiary of
ACE will be treated as a CFC it its
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"RPII shareholders" (as defined below) collectively own, directly, indirectly,
or by attribution under Code Section 958(b), 25% or more of the total combined
voting power or value of such subsidiary's stock on any day during a fiscal
year. If an insurance subsidiary of ACE is a CFC under the special RPII rules
for an uninterrupted period of at least 30 days during any fiscal year, a U.S.
Person who owns, directly or indirectly through foreign entities, shares of
shares of such subsidiary on the last day of such fiscal year must include in
its gross income for U.S. federal income tax purposes its allocable share of
RPII for the entire taxable year, subject to certain modifications. For purposes
of inclusion of RPII from an insurance subsidiary of ACE in the income of U.S.
Persons who own ACE Ordinary Shares, unless an exception applies, the term "RPII
shareholder" includes all U.S. Persons who own, directly or indirectly through
foreign entities, any amount (rather than 10% or more) of the ACE Ordinary
Shares. Generally, the term "related person" for purposes of the RPII rules
means someone who controls or is controlled by the RPII shareholder or someone
who is controlled by the same person or persons which control the RPII
shareholder. Control is measured by either more than 50% in value or more than
50% in voting power of stock, with respect to corporations, or more than 50% of
the beneficial interests, with respect to partnerships, trusts, or estates,
applying constructive ownership principles similar to the rules of Section 958
of the Code. The term "related persons" also includes, with respect to insurance
policies covering liability arising from services performed as a director,
officer or employee of a corporation or a partner or employee of a partnership,
the person performing such services and the entity for which the services are
performed.
The above 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% of the voting power and less than 20% of the value of the
stock of ACE's insurance company subsidiaries, or (B) the RPII of each of ACE's
insurance subsidiaries, determined on a gross basis, is less than 20% of each
such subsidiary's gross insurance income for the taxable year. ACE believes that
the RPII income of each of ACE Insurance and CODA has been, and should be for
the foreseeable future, less than 20% of such subsidiary's gross insurance
income for the taxable year and, based in part on information provided by
Tempest, it is expected that the ACE Reinsurance Subsidiary's RPII income will
constitute less than 20% of its gross insurance income for future taxable years.
As a consequence, the special RPII rules should not apply, and U.S. Persons
owning ACE Ordinary Shares should not be required to include in gross income any
RPII income under the special RPII rules. The IRS may assert, however, that
ACE's reinsurance subsidiaries indirectly reinsure shareholders of ACE. ACE does
not expect any of its subsidiaries to enter into reinsurance arrangements where
the ultimate risk insured is that of a holder of ACE Ordinary Shares that is a
U.S. person or person related to such a U.S. person at a level which would cause
any subsidiary to have RPII income of 20% or more of its gross insurance income.
However, unless final Treasury Regulations under Code Section 953 provide that
this rule would apply only if the reinsured entity is fronting for another
party, it may be difficult for ACE to obtain and, if requested of ACE or a
shareholder by the IRS, provide shareholders with enough information to document
and be certain that each of ACE's subsidiaries providing significant reinsurance
have satisfied the 20% test. ACE believes that it is unlikely that enough of the
underlying reinsured parties will own sufficient ACE Ordinary Shares to cause
the RPII income of any of ACE's subsidiaries to be 20% or more of their gross
insurance income and ACE will endeavor to avoid failing the 20% test. However,
the ultimate application of the RPII rules and the proof that will be required
to establish compliance thereunder is uncertain and each prospective investor
should consult their own tax advisor with respect to this issue.
United States--Passive foreign investment companies. Code Sections 1291
through 1297 contain special rules applicable to foreign corporations that are
"passive foreign investment companies" ("PFIC's"). In general, a foreign
corporation will be a PFIC if 75% or more of its gross income constitutes
"passive income" (the "75% Income Test") or 50% or more of its assets produce,
or are held for the production of, passive income (the "50% Asset Test"). If ACE
were to be characterized as a PFIC, its U.S. shareholders would have to make an
election (a "QEF Election") to be taxable currently on their pro-rata shares of
earnings of ACE whether or not such earnings were distributed or they would be
subject to a special tax and an interest charge at the time of the sale of, or
receipt of an "excess distribution" with respect to, their shares, and a portion
of any gain may be recharacterized as ordinary income, which for an individual
would be taxed at the highest marginal rate of 39.6%.
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In general, a shareholder receives an "excess distribution" if the amount of the
distribution is more than 125% 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 special tax and interest charges
are based on the value of the tax deferral of the taxes that are deemed due
during the period the U.S. 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. The interest charge is computed using the
applicable rate imposed on underpayments of U.S. federal income tax for such
period. In general, if a U.S. Person owns stock in a foreign corporation during
any taxable year in which such corporation is a PFIC and such shareholder does
not make a QEF Election, the stock will be treated as stock in a PFIC for all
subsequent years.
For the above purposes, "passive income" is defined to include income of a
kind that would be characterized as foreign personal holding company income
under Code Section 954(c), and generally includes interest, dividends, annuities
and other investment income. The PFIC statutory provisions contain and 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. Thus, to the extent such
income is attributable to financial reserves in excess of the reasonable needs
of the insurance business, it may be treated as passive income for purposes of
the PFIC rules. The PFIC statutory provisions also 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% of the value of the stock.
In ACE's view each of its direct and indirect insurance subsidiaries
(including the ACE Reinsurance Subsidiary, after the Effective Time) is
predominantly engaged in an insurance business and does not have financial
reserves in excess of the reasonable needs of its insurance business. Under the
look-through rule, ACE would be deemed to own its proportionate share of the
assets and to have received its proportionate share of the income of ACE
Insurance, CODA, and the ACE Reinsurance Subsidiary for purposes of the 75%
Income and 50% Assets Test. 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 holds ACE Ordinary Shares should consult his tax advisor as to the
possible effects of these rules.
Information Reporting. Every U.S. Person who "controls" a foreign
corporation by owning directly or by attribution more than 50% of the total
value of shares of all classes of stock of such corporation, for an
uninterrupted period of 30 days or more during a fiscal year of that
corporation, must file IRS Form 5471 with its U.S. income tax return. However,
the IRS has the authority to, and does require, any U.S. Person treated as a
U.S. 10% shareholder or RPII shareholder of a CFC that owns shares directly or
indirectly through a foreign entity to file a Form 5471. In addition, U.S.
Persons who own more than 5% in value of the outstanding stock of ACE or its
subsidiaries at any time during a taxable year are required in certain
circumstances to file Form 5471 even if neither corporation is a CFC. A tax-
exempt organization that is treated as a U.S. 10% shareholder or a RPII
shareholder for any purpose under subpart F will be required to file a Form 5471
in the circumstances described above. Failure to file Form 5471 may result in
penalties.
Dispositions of ACE Ordinary Shares. Subject to the discussion elsewhere
relating to the potential application of the CFC and PFIC rules, gain or loss
realized by a U.S. ACE Shareholder on the sale, exchange or other disposition of
ACE Ordinary Shares will be includible in gross income as capital gain or loss
in an amount equal to the difference between such holder's basis in the ACE
Ordinary Shares and the amount realized on the sale, exchange or other
disposition. If a U.S. ACE Shareholder's holding period for the ACE Ordinary
Shares is more than one year, any gain will be subject to the U.S. federal
income tax at a current maximum marginal rate of 28% for individuals and 35% for
corporations.
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 by a U.S.
shareholder in a foreign corporation that earns RPII and is characterized as a
CFC under the RPII rules 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% shareholder or whether RPII constitutes 20% or more of the
corporation's gross insurance income.
ACE believes, based on the advice of counsel, that Code Section 1248 will
not apply to dispositions of ACE Ordinary Shares, so long as ACE is not a CFC,
because ACE 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 Section 953 or other regulations to provide that
Section 1248 will apply to dispositions of shares in a corporation such as ACE
which is engaged in the insurance business directly on indirectly through its
subsidiaries. If the IRS or Treasury Department were to take such action ACE
would notify shareholders that Code Section 1248 will apply to dispositions of
Common Shares.
Foreign Tax Credit. Because it is anticipated that U.S. Persons will own a
majority of ACE's shares after the Amalgamation and because a substantial part
of the insurance business of ACE's subsidiaries includes the insurance of U.S.
risks only a portion of the RPII and Subpart F inclusions (if any) and dividends
paid by ACE (including any gain from the sale of ACE Ordinary Shares that is
treated as a dividend under Code Section 1248) will be treated as foreign source
income for purposes of computing a shareholder's U.S. foreign tax credit
limitation. Except in the case of U.S. 10% shareholders it is likely that all
of the RPII and Subpart F inclusions (if any) 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.
Other. Dividends paid by ACE to U.S. corporate shareholders will not be
eligible for the dividends received deduction provided by Code Section 243.
Except as discussed below with respect to backup withholding, dividends
paid by ACE will not be subject to a U.S. withholding, tax.
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
ACE Ordinary Shares to U.S. Persons or to paying agents or custodians located in
the U.S. In addition, a holder of ACE Ordinary Shares may be subject to backup
withholding at the rate of 31% 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.
Sales of ACE Ordinary Shares through brokers by certain U.S. Persons also
may be subject to backup withholding. Sales by corporations, certain tax-exempt
entities, individual retirement plans, REITs, certain financial institutions,
and other "exempt recipients" as defined in applicable Treasury regulations
currently are not subject to backup withholding. Holders of ACE Ordinary Shares
should consult their own tax advisors regarding the possible applicability of
the backup withholding rules to sales of their ACE Ordinary Shares.
The foregoing discussion (including and subject to the matters and
qualifications set forth in such summary) is based on current law and is for
general information only. The tax treatment of a holder of ACE Ordinary Shares
for U.S. 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 ACE 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 ACE ORDINARY SHARES.
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