ACE Limited

ACE Limited

Type	Public (NYSE: ACE) S&P 500 Component
Industry	Insurance and Reinsurance
Founded	1985
Headquarters	Zürich, Switzerland
Area served	Worldwide
Products	Property and Casualty Accident and Health Life Insurance Global Reinsurance
Operating income	US$ 2.7 billion (2010)
Net income	US$ 2.5 billion (2010)
Employees	more than 15,000
Website	ACEGroup.com

ACE Limited is the parent company of the ACE Group, a global provider of insurance products covering property and casualty, accident and health, reinsurance, travel, creditor, and life insurance. It also operates in the Lloyd's insurance market in London. It offers services including process management, unusual hazards identification and expected loss calculations, and engineering services.

Based in Bermuda and Switzerland, ACE trades on the NYSE. Its core operating insurance companies are rated "AA-" (Very Strong) for financial strength by Standard & Poor's^[1] and "A+" by A. M. Best. Moody's rates the U.S. companies "A2" and the unsecured loan notes "A3".[1]^[2] In 2010, the group controlled $83.4 billion in assets and received more than $19.5 billion of gross written premiums.

Clients of the ACE Group consist of multinational corporations and local businesses, insurers seeking reinsurance coverage, and individuals purchasing insurance policies.

History

1985–1999

ACE Limited was established in 1985, funded by a group of 34 individuals seeking difficult to obtain excess liability and directors and officers insurance coverage.^[3] That year, ACE and its Bermuda subsidiary, incorporated in the Cayman Islands and headquartered in Hamilton, Bermuda, wrote its first insurance policy with John Cox as its President and CEO. In 1987 the company assumed management of Corporate Officers & Directors Assurance Limited (CODA), expanding ACE Bermuda's product line.^[3]

Walter Scott became Chairman, President, and CEO of ACE in 1990 and saw the company listed on the New York Stock Exchange in 1993. Brian Duperreault succeeded Scott in 1994 as Chairman, President & CEO and worked for the next ten years as ACE went through a series of acquisitions and a diversification process that brought the ACE Group of Companies global status.^[4] One of the multiple acquisitions made during this time was the global property and casualty business of Cigna Corporation, which was purchased for $3.45 billion in 1999.^[5]

2000–2010

In 2004 Evan G. Greenberg became President and CEO of ACE Ltd.^[6] In 2004 ACE was also investigated by NY Attorney General Elliot Spitzer for participating in a bid rigging and price fixing scheme with insurance broker Marsh & McLennan.^[7][8]

In April 2008, ACE purchased the accident and health insurance provider Combined Insurance Company of America (founded by W. Clement Stone in 1919) from Aon Corporation for $2.56 billion.^[9]

Also in 2008, ACE relocated from the Cayman Islands to Zürich, Switzerland. Evan Greenberg described the move as a “natural progression” that would provide ACE with a “better strategic flexibility…and a solid legal and regulatory environment…”^[10] The re-domestication was completed in July that year.^[11]

In 2010 the ACE company ESIS Inc. was hired by BP to process claims made by the victims of the Deepwater Horizon oil spill.^[12][13]

In 2010, ACE Limited purchased Rain and Hail, LLC for $1.1 billion. Rain and Hail Insurance Service, headquartered in Johnston, Iowa, is an industry leader in crop insurance in the United States.^[14][15][16]

ACE under investigation

2004 Eliot Spitzer investigation

In 2004 New York Attorney General Eliot Spitzer conducted an investigation in the insurance industry. ACE, American International Group (AIG), Marsh & McLennan, and other large insurers and brokerages were named in Spitzer's investigation for possibly participating in questionable insurance practices including the payment of contingent commissions, bid-rigging, price-fixing, and improper accounting.^{[17] [18]}

Spitzer asserted that contingent commissions contributed to a widespread practice of “bid-rigging” where brokers solicited fake bids with deliberately less favorable terms for the consumer than the bid offered by the insurance company paying the highest commissions.^[19][20]

Resolution

As part of an $80 million settlement that abated further inquiry, ACE signed an Assurance of Discontinuance in which they acknowledged their prior conduct and agreed to alter their business practices. Evan Greenberg himself admitted no fault in Spitzer's allegations although a junior executive did plead guilty to criminal charges.^[21][22]

Spitzer's insurance industry probe additionally looked in early 2005 into ACE Ltd's subsidiary ACE Tempest Re's reporting to the SEC of a series of reinsurance transactions, together with the SEC reporting of a further 16 unaffiliated reinsurers. Evan Greenberg said that his company's investigation should be completed within a month. According to Greenberg, contracts appeared "generally structured in a way to provide for appropriate risk transfer and accounted for properly."^[23]

The Spitzer investigations also triggered civil litigation by policyholders who claim they were victimized by the bid rigging and commission schemes.^[24]

References

1. ^ "ACE Ltd And Most Related Entities Upgraded By One Notch; Outlook Stable". 2010-12-10. http://www.acegroup.com/Attachments/ACE-Ltd-And-Most-Related-Entities-Upgraded-By-One-Notch-Outlook-Stable.pdf. 
2. ^ "Moody's rates ACE Ltd. subsidiary’s senior unsecured notes". 2010-11-18. http://www.insurancenetworking.com/ratings_corner/-26368-1.html. 
3. ^ ^{a b} "ACE Company Site History Page". aceeuropeangroup.com. http://www.aceeuropeangroup.com/AceLimitedRoot/About+ACE/ACE+History/. Retrieved 8 Aug. 2010. 
4. ^ "Brian Duperreault's Executive Team Page". acebermuda.com. http://www.acebermuda.com/AceLimitedWeb/Template/About%20ACE/ExecutiveTeamTemplate.aspx?NRMODE=Published&NRORIGINALURL=%2FRecycleBin%2FBrian%2BDuperreault.htm&NRNODEGUID=%7BE7CFE322-D1D7-41AA-8023-1951CD21B7EE%7D&NRCACHEHINT=Guest. Retrieved 8 Aug. 2010. 
5. ^ "ACE Completes Acquisition of CIGNA's P&C Businesses; ACE Announces Expense Savings Targets; ACE Outsources Information Technology Operations to IBM". acelimited.com. http://www.acelimited.com/AceLimitedRoot/Media+Center/Press+Releases/1999/ACE+Completes+Acquisition+of+CIGNA_s+P_C+Businesses_+ACE+Announces+Expense+Savings+Targets_+ACE++614.htm. Retrieved 8 Aug. 2010. 
6. ^ Treaster, Joseph B. (12 Mar. 2004). "A Greenberg, 3rd in Family, To Be Chief Of an Insurer". New York Times. http://www.nytimes.com/2004/03/12/business/a-greenberg-3rd-in-family-to-be-chief-of-an-insurer.html?ref=evan_g_greenberg. 
7. ^ "ACE SETTLES BID-RIGGING PROBE: Agreement is Part of Ongoing Effort to Restore Competition in Insurance Industry". www.ag.ny.gov. 29 Apr. 2006. http://www.ag.ny.gov/media_center/2006/apr/apr26a_06.html. 
8. ^ "Marsh Settles Spitzer Bid-Rigging Accusations for $850 Million". Bloomberg. 21 Jan. 2005. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOn.OJnXVJFE. 
9. ^ ACE Completes Acquisition of Combined Insurance Company of America
10. ^ "ACE Limited Announces Proposed Re-Domestication of Holding Company from Cayman Islands to Switzerland". Bnet. 19 Mar. 2008. http://findarticles.com/p/articles/mi_m0EIN/is_2008_March_19/ai_n24940996/?tag=content;col1. 
11. ^ ACE Limited Announces Completion of Re-Domestication of Holding Company from Cayman Islands to Switzerland
12. ^ "BP hires company to handle oil spill claims whose goal is "reducing payouts" for clients". southernstudies.org. 10 Jun. 2010. http://www.southernstudies.org/2010/06/company-hired-by-bp-to-handle-oil-spill-claims-has-goal-of-reducing-payouts.htm. 
13. ^ ESIS Deepwater Horizon Incident Response
14. ^ ACE to acquire Rain and Hail Insurance Service, Inc. in $1.1 billion transaction
15. ^ "ACE Limited acquires Rain and Hail Insurance Service". 2010-09-14. http://www.canadianunderwriter.ca/issues/story.aspx?aid=1000385242. 
16. ^ "ACE Wraps Up Rain and Hail Buy". 2010-12-29. http://finance.yahoo.com/news/ACE-Wraps-Up-Rain-and-Hail-zacks-3259145490.html?x=0&.v=1. 
17. ^ "Spitzer Sues Marsh & McLennan". badfaithinsurance.org/. 10 Oct. 2004. http://www.badfaithinsurance.org/reference/General/0014a.htm. 
18. ^ "N.Y. Attorney General Spitzer Targets Insurance Broker Compensation Agreements". insurancejournal.com. 23 Apr. 2004. http://www.insurancejournal.com/news/national/2004/04/23/41434.htm. 
19. ^ "N.Y. Attorney General Spitzer Sues Marsh Over Contingent Commissions". insurancejournal.com. 25 Oct. 2004. http://www.insurancejournal.com/magazines/west/2004/10/25/features/48447.htm#ixzz0vBmtPije. 
20. ^ "Spitzer Says Insurance Broker Fees Fueled 'Improper Practices'". Business Week. 17 Feb. 2010. http://www.businessweek.com/news/2010-02-17/spitzer-says-insurance-broker-fees-fueled-improper-practices-.html. 
21. ^ Valdmanis, Thor (04 Nov. 2004). "Ace fires two executives, suspends three". USA Today. http://www.usatoday.com/money/industries/insurance/2004-11-04-insurance-probe_x.htm?loc=interstitialskip. 
22. ^ "Chief of Ace Unit Resigns". New York Times. 10 Jun. 2006. http://www.nytimes.com/2005/01/06/business/06ace.html?_r=1&ref=evan_g_greenberg. 
23. ^ "Finite Reinsurance Probes Appear Infinite". insurancejournal.com. 09 May. 2009. http://replay.waybackmachine.org/20081229060508/http://www.insurancejournal.com/magazines/east/2005/05/09/features/55086.htm. 
24. ^ "NEW CINGULAR WIRELESS HEADQUARTERS LLC et al v. MARSH & MCLENNAN COMPANIES INC". ACE Insurance Litigation Watch. 25 Oct. 2006. http://ace-insurance-litigation.com/ace-ina-litigation/case/new-cingular-wireless-headquarters-llc-et-al-v-marsh-mclennan-companies-inc. 

External links

• Official website