Exhibit 10.1


                              PROMISSORY NOTE

$350,000.00                                                    January 9, 2001

         FOR VALUE RECEIVED, the undersigned, Dominic J. Frederico, an
individual (the "Employee"), promises to pay to the order of ACE Limited, a
Cayman Islands company (the "Company"), in accordance with the payment
schedule below, the principal sum of $350,000.00 and any accrued interest
on this Note.

         This Note evidences obligations in connection with a loan made by
the Company to the Employee as part of the inducement to the Employee to
assume additional responsibilities with, and to remain in the employ of,
the Company.

         The unpaid principal amount of this Note from time to time
outstanding shall bear interest at a rate per annum (based upon a 365/366
day year) equal to the applicable Federal rate as of the January 9, 2001,
as determined for purposes of section 1274(d) of the Internal Revenue Code
of 1986, as amended, compounded annually. After the Maturity Date, any
unpaid principal amount and accrued interest on the unpaid principal amount
of this Note shall be payable on demand.

         As of January 9, 2002 an amount equal to $50,000.00 of the
principal amount due under this Note, together with the amount of interest
that has accrued with respect to the entire unpaid principal and interest
amount since January 9, 2001, shall be payable by the Employee to the
Company. As of January 9 of each of 2003, 2004, and 2005, an amount equal
to $100,000.00 of the principal amount due under this Note, together with
the amount of interest that has accrued with respect to the entire unpaid
principal and interest amount on this Note since the preceding January 9,
shall be payable by Employee to the Company. If the Employee's employment
with the Company is terminated for any reason other than (i) by reason of
death or disability, or (ii) by reason of termination by the Company
without Cause; then any remaining principal and interest shall become due
and payable on the date of such termination of employment (which date of
termination shall be the "Maturity Date"). For purposes of this Note, the
term "Cause" shall have the same meaning set forth in the Employment
Agreement dated as of January 9, 1995 between the Company and the Employee.
Disability shall mean being adjudged by the Compensation Committee of the
Company to be disabled within the meaning of the Company's long-term
disability plan.

         This Note is secured by a mortgage on the Employee's principal
residence.

         Subject to the other terms and conditions hereof, the Employee may
voluntarily prepay all or any portion of the unpaid principal amount of
this Note from time to time outstanding and any accrued interest thereon,
without premium or penalty.

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         All payments of principal of and interest on this Note shall be
payable in lawful currency of the United States of America at Hamilton,
Bermuda or such other place as the Company shall designate to the Employee
in writing, in cash or by check. If payment hereunder falls due on a day
which is either a Saturday, Sunday or any other day on which banks in
Hamilton, Bermuda are not generally open for business to the public (i.e.,
not a "Business Day"), then such due date shall be extended to the
immediately succeeding Business Day, and additional interest shall accrue
and be payable for the period of any such extension.

         The Employee agrees that if any of the following events of default
(each an "Event of Default") shall occur and be continuing:

         (i)      default in the performance or observance of any other
                  agreements of the Employee contained herein, or

         (ii)     the institution of any bankruptcy, insolvency,
                  receivership or similar proceeding relating to the
                  Employee or his assets, and if such case or proceeding is
                  not commenced by the Employee, it is consented to or
                  acquiesced in by the Employee or remains for 60 days
                  undismissed;

then the Company may declare this Note and all unpaid principal and
interest on this Note and all accrued costs, expenses and other amounts
under this Note to be due and payable, whereupon all unpaid principal and
interest on this Note and all such costs, expenses and other amounts shall
immediately become due and payable following such declaration.

         The Employee hereby represents and warrants to the Company as of
the date hereof (i) that this Note is the legally valid and binding
obligation of the Employee, enforceable against the Employee in accordance
with its terms, and (ii) that the execution, delivery and performance by
the Employee of this Note does not conflict with or contravene (a) any law,
rule or regulation binding upon the Employee or affecting any of the
Employee's assets, (b) any provision of any contract, instrument or
agreement binding upon the Employee or affecting any of the Employee's
assets, or (c) any writ, order, judgment, decree or decision of any court
or governmental instrumentality binding upon the Employee or affecting any
of the Employee's assets.

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<PAGE>

         All notices, certificates and other communications hereunder shall
be in writing and may be either delivered personally, by internationally
recognized express courier for overnight delivery, or by facsimile (with
request for assurance of receipt in a manner appropriate with respect to
communications of that type, provided that a confirmation copy is
concurrently sent by a internationally recognized express courier for
overnight delivery) or mailed, postage prepaid, by certified or registered
mail, return receipt requested, addressed as follows:

         If to the Company:                 ACE Limited
                                            The ACE Building
                                            30 Woodbourne Avenue
                                            Hamilton HM 08, Bermuda
                                            Attention: General Counsel
                                            Facsimile: (441) 296-0087

         If to the Employee:                Dominic J. Frederico
                                            ACE Limited
                                            The ACE Building
                                            30 Woodbourne Avenue
                                            Hamilton HM 08, Bermuda
                                            Facsimile: (441) 296-0087

         All Notices hereunder shall be in writing (including, without
limitation, facsimile transmission) and shall be sent to the Employee or
the Company, as appropriate, at such party's address shown above, or at
such other address as such party may, by written notice received by the
other party hereto, have designated as its or his address for such purpose.
Notices sent by facsimile transmission shall be deemed to have been given
when sent; notices sent by mail shall be deemed to have been given five
days after the date mailed by registered or certified mail, postage
prepaid; and notices sent by hand delivery shall be deemed to have been
given when received.

         This Note has been made and delivered at Hamilton, Bermuda and
shall be construed in accordance with and governed by the internal laws of
the State of New York. Wherever possible, each provision of this Note shall
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Note shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the least
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Note.

         IN WITNESS WHEREOF, the Employee has caused this Note to be
executed as of the day and year first above written.


                                            ________________________________
                                             Dominic J. Frederico


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