Ace is reaping the benefits of the restructure of its UK operation. Elliot Lane reports

Regional drives by the major insurers are de rigueur at present. Ace is no exception and UK and Ireland president Carl Bach is bullish that the insurer has found the right recipe to entice brokers north of Watford.

"Where many of our competitors have decided to exit places like Newcastle and Leeds, we have opened offices and are placing business. The formula is simple - we find local people and give them the autonomy to manage their area," Bach says.

Newcastle has been successful in its first year, achieving £6m premium income from zero. Ace European Group restructured the UK operation in March into three units: commercial risks, affinity risks and major risks.

The first focuses on medium-sized companies, major risks caters for the multinationals and FTSE 500 companies, while affinity tackles scheme business such as regional social clubs.

Bach says the strategy does not hinge on the ubiquitous SME market that the composites and larger Lloyd's vehicles have been pursuing relentlessly for the past 18 months.

"We are not driven by class of business. We are an insurer that picks the risk and then applies the best underwriting to that risk. We are very disciplined."

However the insurer works with the SME market to try to offer specialist cover that local businesses might not regard as important or too expensive.

"Small businesses are not fully aware of the corporate risks they now face under FSA rules, particularly issues such as contract certainty. It means we can underwrite directors' and officers' (D&O) business for them even though other insurers are exiting the D&O market," says Bach.

Since the changes, Ace has been implementing a review of the national and regional brokers it uses. Ace business development manager Steve Burridge says the insurer has worked on improving the quality of its business brokers deliver.

"We are targeting specific lines more than ever. Around 250 of our agencies have been closed because we were not getting the right quality. So what we want to do is find a smaller number of preferred parties," says Burridge.

In the next few weeks a preferred list will be produced and, unlike some insurers who have hundreds of brokers on their panels, Ace will drop to a select few.

"Let's just say it will be around 20 major regional brokers, but definitely above 20," added Burridge.

Advice on the list also comes from Ace's broker advisory panel where senior figures from the independent broking community meet regularly with Ace's senior management to discuss strategy.

Bach says that brokers are crucial for the insurer's future when dealing with the client in a "tripartite" relationship. Ace is not interested at the moment in dealing with the client direct.

"We do deal with some clients directly, but the broker can help us in service delivery and retaining high quality business.

"I wouldn't rule out co-badging products with brokers in the future," he added. IT

Carl Bach on
State of the market:

"Commercial rates are static. Our rate of growth overall is slowing but the future is bright. I don't worry about the cycle - it doesn't matter if the underwriting is focused."

On rumours that Evan Greenberg has increased his grip on Ace globally:
"It is true Evan has taken more control post-Spitzer. But all underwriting decisions are made here in UK and Europe. There is no referral to the US, we make the decisions."

On Ireland:
"We have a reputation in Ireland as purely a specialist insurer. We only write £35m but we have hired a business development manager to look at new lines such as D&O and some casualty lines. But we are very cautious in that market."

Ace financial performance
Ace overseas general insurance net premiums (including UK & Ireland) increased by 17% in 2004 to $4.3bn (£2.38bn) compared to $3.7bn (£2.05bn) in 2003.

Retention ratio for general insurance increased to 75% in 2004, compared to 72% in 2003.

Ace Global Market's main lines of business include aviation, property, energy, professional lines, marine, political risk and accident and health. Its net premiums increased 3% to $1.1bn (£610m) in 2004.

Regional structur
Four regions:

  • North

  • Midlands and South West

  • London and South East

  • Ireland
  • Nine Property & Casualty offices: Manchester, Leeds, Newcastle, Glasgow, Birmingham, Southampton, London, Watford, Maidstone and Dublin.