The fastest riser in the Top 50, Ace has traced a path of underwriting excellence. Established in 27 EEA countries and exploiting new areas such as environmental and cyber risks. Andrew Holt talks to Andrew Kendrick, the man at the top of Ace European Group.

The top riser in this year's Top 50 is Ace, with a substantial jump of 21 places. This move was given a false boost by the transfer of business from Ace insurance SA-NV - Ace's legal entity based and regulated in Belgium until December 2004. This operation was transferred in its entirety to the UK based and FSA regulated entity, Ace European Group.

Andrew Kendrick, chairman and chief executive of Ace European Group, says: "The transfer was certainly a key factor, but not the only one. Ace has been a major player in the UK commercial market and the wider European arena, ever since it acquired the Ockham worldwide Lloyd's business in 1996 and the $3.45bn global general insurance business of Cigna Corporation in 1999."

It was through the latter that Ace inherited the Brussels based and regulated Ace Insurance SA-NV, which remained Ace Europe's principal retail underwriting platform until the end of 2004.

"For reasons of good corporate governance and in recognition of the fact that the UK acts as the headquarters for Ace's European, not to mention expanding Middle Eastern and North African operations, it made absolute sense to transfer the assets and liabilities of the Belgian business to the UK based and FSA-regulated Ace European Group," says Kendrick.

Although the transfer was a key factor behind Ace's climb within the Top 50, this should not conceal the fact that 2005 was a good year for Ace in Europe. "Our continued focus on underwriting discipline and cost control resulted in a 2005 pre-tax profit of £229.7m, despite the challenging market environment and increased competition levels, particularly here in the UK," says Kendrick.

But market share never has and never will be a strategic objective for Ace, says Kendrick. "Focused and profitable underwriting is the basis on which we will continue to grow. Maintaining our strategy of entering new geographies, strengthening those territories where we have an existing presence, and diversifying our product range is the recipe for future growth."

The financial success of Ace's underwriting operation was evidenced by a combined ratio of 82.7%. Ace European Group is now writing gross annual premium in the order of £2bn, contributing some 25% of Ace's global premium income.

But there are no plans to stand still. "We are continually looking for new opportunities, with further expansion planned for Hungary and the Czech Republic in 2007," says Kendrick. "Last year, we commenced insurance operations in Russia. The Russian economy is doing well and, although it might only represent a small market for us now, there is a growing middle class and an increasing consciousness of the need for insurance. We believe there is significant future potential."

Ace's relatively new operations in Austria and Switzerland have also made a good start. "Our Zurich office opened three years ago and in that time Ace has grown to become one of the most recognised industrial insurers in Switzerland. We are now looking to repeat this success story in Austria, having opened our Vienna office last year. We are continuing to expand geographically and to diversify our product portfolio to encompass new and emerging risks such as environmental and cyber liability."

On these sort of emerging risks, Kendrick says: "Both are relatively new and growing opportunities, often driven by changes in the market and the regulatory environment. For example, the new EU Environment Directive which places certain obligations on European businesses will undoubtedly increase awareness of company responsibilities in the field of environmental liability, increasing demand for insurance."

Ace successfully developed an environmental business in the US and Kendrick is confident that Karl Russek, who led that growth, can now repeat that same success in Europe.

The size and profile of the company and its financial strength and performance recently received a boost, with an upgrade from the rating agency, AM Best to A+ (superior). Ace European Group now carries an S&P rating of A+.

This all adds up to Ace European Group having become a leading European insurance and reinsurance player, with branch operations in 16 European countries and 'freedom of services' permission to provide insurance services to clients in 27 EEA countries.

Last year Ace celebrated its twentieth anniversary since the company was established in Bermuda. In that time the Ace Group of Companies has become a leading global player in commercial property and casualty insurance companies. Today, Ace has almost 10,000 employees worldwide, has offices in over 50 countries, and is actively servicing clients in over 140.

"Very few companies can match this on the ground presence," says Kendrick. Ace's gross premiums written in 2005 were $16.8bn. "In the past five years, we have more than doubled our size as measured by premiums, invested assets and shareholders' equity and we have built significant earning power. It is in this context that we are confident that the combination of Ace's global platform and broad product base will enable us to grow profitably even in a softening market."

Kendrick came into the Ace fold as part of the company's acquisition of the Lloyd's Ockham agency in 1996. "Initially, I found myself managing Ace's combined Lloyd's business, Ace Global Markets, which at that time was the largest syndicate within Lloyd's with a £900m capacity."

Following a period running Ace Bermuda, he was then brought back to London to head up Ace European Group, comprising both the Lloyd's business and Ace Europe retail operations.

"I think my experience in Lloyd's especially, but also Bermuda, has given me a strong perspective on the global insurance business. This has proven extremely useful in driving Ace European Group's geographical expansion, which has seen new offices opening not only in mainland Europe, but also in the Middle East and North Africa," says Kendrick.

Driving greater efficiency within the business has also been a key objective for Kendrick. "There is greater pressure than ever on the global insurance industry to remain competitive and we are required to constantly review our own systems and processes to ensure we remain as efficient as possible."

Relocation to Glasgow

To that end, Ace in the UK and Ireland has undertaken an initiative this year, leading to the relocation of its customer service and processing functions in a central location in Glasgow. Previously, these were spread over a number of different sites. The move, which affected as many as 400 employees, predominantly in the South East, is now well on its way to completion. "We now have 120 employees in the new Glasgow office, which should be fully operational by the end of first quarter 2007," says Kendrick.

But the business could have been negatively affected by international natural disasters such as Hurricane Katrina, which alone produced the largest insured loss in history. "2005 was certainly a challenging year for Ace and for everyone within the global insurance industry," concedes Kendrick.

"The year could be summarised as one of unprecedented volatility. Despite last year being the industry's costliest ever due to natural catastrophes, with claims totalling some $83bn, Ace still managed to generate over $1bn in net income. Our view was that this series of natural catastrophes proved to be an instant wake-up call for the industry, revealing who manages risk and separating the true underwriters from the gamblers."

In response, Ace was one of the first companies in the industry to recognise that the tremendous outflow of hard capital from the industry and increased risk perception of insurers and insureds would likely disrupt the global supply-demand equation for taking risk in certain classes of insurance.

Consequently, in October of last year, Ace Ltd raised $1.5bn of new equity capital. "We raised capital to take advantage of opportunities we saw arising from a changing underwriting environment, but we also raised capital because more capital was required to support the same amount of business."

The new capital is helping to fuel Ace's current momentum in 2006 and has contributed to an already strong capital position that now exceeds $14bn.

Innovation is also on the list, says Kendrick. "Not only in the shape of new products but also distribution channels such as e-commerce will provide a further opportunity for growth."

Ace is now investing in building both its own online platform, while also working with a number of broker software platforms such as Imarket, Sirius and Acturis.

"Competition is fierce in all sectors and geographies, more so in the UK than anywhere. Among our competitors we are witnessing the familiar disconnect between the message of continued underwriting discipline expressed by management and actual underwriting behaviour.

"I am concerned that in the current softening market, some operators are now pursuing market share at the expense of profitable underwriting. We all know the consequences of such behaviour." IT


- John Cox, Ace's first chairman, president & chief executive, is appointed

- Ace Bermuda writes its first official insurance policy

- Ace and its Bermuda insurance subsidiary are incorporated in the Cayman Islands and establish headquarters in Hamilton, Bermuda


- Walter Scott becomes chairman, president and chief executive


- Ace Bermuda assumes management of Corporate Officers & Directors Assurance (CODA), a specialist D&O underwriter


- Financial Lines (now Ace Financial Solutions International) joins Ace Bermuda's expanding product lines, providing strategic and alternative risk products

- Excess property and aviation product liability insurance lines broaden Ace Bermuda's diversification

Ace Bermuda's operations mark the 10th anniversary of the writing of its first official insurance policy


- Product line diversification continues with the addition of satellite insurance

- Brian Duperreault is named chairman, president & chief executive of Ace

- Ace Bermuda forms Sovereign Risk Insurance, a specialised Bermuda-based political risk insurance and reinsurance underwriter, with strategic partners XL Insurance Company and Risk Capital Re

- Ace European Markets is incorporated and licensed in Ireland to underwrite all classes of non-life insurance in the EU


- Ace acquires the global property and casualty business of Cigna Corporation for $3.45bn, making Ace one of only a handful of truly international property and casualty insurance companies

- Ace acquires Capital Re Corporation (now Ace Financial Services), a company providing specialty reinsurance for financial guaranty insurance and other financial risks


- Ace forms strategic alliance with the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group to provide treaty reinsurance for MIGA's political risk operations

- Ace acquires CAT Limited, a property catastrophe reinsurance concern, and integrates it as part of Ace Tempest Re

- Ace Global Markets acquires Lloyd's-based Tarquin Limited. Ace now manages approximately 9.3% of the total underwriting capacity at Lloyd's

- Ace Global Markets is formed in London from Ace's existing operations at Lloyd's


- Evan Greenberg becomes president & chief executive, Ace Ltd

- Ace's actuarial organisation sets new standards for transparency in the industry with the publication of its Global Loss Triangles, which provide in-depth information on loss reserves


- Standard & Poor's adds Ace to S&P 500 Index

- Ace Bermuda and Huatai Insurance Company of China announce a strategic partnership that will allow both companies to jointly develop new products and services for delivery nationally in China

- Ace Bermuda and Freisenbruch-Meyer Group partner to form a new Bermuda insurance company, Freisenbruch-Meyer Insurance Ltd, to write insurance cover for the domestic Bermuda market

- Ace Tempest Reinsurance opens underwriting operations in Dublin, Ireland

- Ace European Group opens its new headquarters in London


- Ace opens its new global headquarters in Hamilton, Bermuda

Sovereign Risk Insurance is elected to the -International Union of Credit and Investment Insurers (the Berne Union) as one of only three private sector political risk insurers to be eligible and approved


- Ace Bermuda restructures its tailored risk solutions division into a service company named Ace Financial Solutions International (Ace FSI) that provides non-traditional insurance, reinsurance and risk financing solutions

- In a partnership with Egypt-based Commercial International Investment Company, Ace International acquires a 5% shareholding in Egyptian American Insurance Company giving Ace an immediate, significant market presence in a key emerging financial centre

- Ace announces its intention to establish companies in Gibraltar to provide insurance services to the local and international markets


- Ace announces the formation of Ace Captive Solutions to provide solutions across the multiple Ace product lines to the captive community

- Ace Ltd forms Ace Risk Management International to address the risk financing needs of major corporations.

- Ace Financial Solutions Europe and Ace Financial Reinsurance Europe are created to provide customised, non-traditional finite insurance and reinsurance products for European customers


- Ace receives regulatory approvals to begin providing commercial property and casualty insurance in Poland and Russia

- Ace observes its 20th anniversary by hosting a Global Day of Service, during which more than 5,000 employees in 30 countries participate in community service projects


- Brian Duperreault, Ace chairman, retires from the company. He continues to serve as non-executive chairman

- Ace sells three run-off reinsurance subsidiaries to Randall & Quilter Investment Holdings, an international insurance management firm. The sale greatly reduces exposure to legacy liabilities, including asbestos, by approximately $900m, and reduces reinsurance recoverables by approximately $400m

Andrew Kendrick at a glance

Andrew Kendrick was appointed to the position of chairman and chief executive, Ace European Group, in November 2004. In this role, he oversees Ace's operations in 16 European countries and the activities of more than 1,800 employees. Prior to his appointment to this position, Kendrick served as president and chief executive, Ace Bermuda.

He joined Ace in 1996, bringing with him over 25 years of insurance industry experience. Originally working in London, Kendrick previously served as Ace's director of underwriting and active underwriter of Syndicate 2488, which forms Ace Global Markets.

Kendrick started his career at Sturge Syndicate 210 in 1978. With a focus on underwriting the financial institutions account. Kendrick held various positions within that syndicate and other syndicates owned by the Sturge Group.

When Ace purchased Ockham Underwriting Agency (previously known as Sturge Underwriting Agency) Kendrick continued his career with Ace.