ACE Ltd. Axes Two, Suspends 3 In Broker Probe

ACE said the terminated employees are Geoffrey Gregory, president at ACE Casualty Risk, and Patricia Abrams, an employee in that unit. Both worked in the firm's excess casualty Philadelphia office.

It did not identify thee three suspended employees beyond saying they worked in ACE Casualty Risk on a team within the excess casualty unit that did business principally with Marsh Global Broking.

Mr. Gregory joined ACE May 30, 2002. He was previously with American International Group, one of the other major insurers involved in the brokerage imbroglio. At AIG he held the title of executive vice president and chief operating officer for the excess casualty division. At the time of his appoinment ACE praised him for his "Keen understanding of casualty underwriting and business development."

Ms. Abrams on Oct. 15 pled guilty to criminal misdemeanor charges brought by the office of New York Attorney General Eliot Spitzer a day after he filed a lawsuit against Marsh & McLennan Companies. The suit accused MMC's Marsh brokerage operation of steering business to ACE and other insurers that paid kickbacks disguised as contingency fees and commissions as part of a scheme to rig bids and fix prices.

ACE said the firings and suspensions resulted from an ongoing investigation into improper business practices being overseen by the Audit Committee of its board of directors, and were the result of the employees' "past improper actions in the excess casualty unit of ACE Casualty Risk, managerial issues, and/or failure to cooperate with the company's internal investigation or the attorney general's investigation."

The new ACE quote process should "avoid real or any appearance of conflicts of interest" the company said, and includes a requirement that any commissions paid to brokers be reported to policyholders on the declarations page of all commercial policies.

After Mr. Spitzer's lawsuit was filed on Oct. 14, ACE terminated all "contingent commission payments" to brokers.

ACE said it will also appoint a business practices compliance officer and will hire an outside consulting firm to review and recommend enhancements to the company's business practice training, compliance and controls.

In addition, the company said that its general counsel, Peter Mear, has assumed the responsibilities of the chief ethics officer, including serving as head of the ACE Ethics Committee.

"These new business practice compliance programs will support and strengthen our companywide commitment to ethical conduct," said Evan Greenberg, president and chief executive officer of ACE. "Our internal investigation is ongoing, and we will continue to look for further ways to enhance our business culture."

ACE's internal investigation is being conducted by the law firm of Debevoise & Plimpton LLP, under the direction of former Manhattan U.S. Attorney Mary Jo White. ACE said its comprehensive investigation encompasses facts and brokerage fee practices under review by Mr. Spitzer. ACE said it is cooperating fully with the attorney general's investigation as a participant but not a defendant in the MMC lawsuit.