Ace Ltd. has issued an apology acknowledging improper conduct and has agreed to adopt a series of sweeping reforms of its business practices as part of its $80 million settlement of bid-rigging and accounting probes, documents on the settlement show.

Ace announced on Tuesday night that it would pay the restitution and fines to settle lawsuits brought by Attorneys General from three US states.

New York Attorney General Eliot Spitzer ? whose office first uncovered the bid-rigging ? yesterday accused Ace of being ?a full participant in a scheme? which stifled competition and forced policyholders to pay more for their insurance.

As part of its settlement with Mr. Spitzer, Connecticut Attorney General Richard Blumenthal and Illinois Attorney General Lisa Madigan, Ace will pay $40 million to policyholders who purchased or renewed certain of Ace?s excess casualty policies through insurance broker Marsh between January 1, 2002-September 30, 2004. It must also wire monetary fines for improper conduct of $24 million to New York, and $8 million each to Connecticut and Illinois.

?We continue to clean up the insurance industry,? said Mr. Spitzer in a statement yesterday. ?ACE has acknowledged its problems and co-operated fully in our investigation. ACE is also adopting reforms designed to address the problems created by the use of contingent commissions and finite reinsurance.?

As part of its pledged reforms, Ace has agreed to disclose to policyholders on its practices and policies regarding compensation.The agreement also prohibits pay-to-play, bid rigging, leveraging. ACE is required to sharply curtail its use of contingent commissions, paying no contingent commissions on excess casualty insurance placements through 2008. It has also agreed to support legislation banning contingent commissions and requiring greater disclosure of compensation to brokers and agents.

?This settlement ends another high-stakes game of pay-to-play,? Mr. Blumenthal said in a statement yesterday. ?ACE is compensating consumers for more than a decade of deliberate secret payments to brokers in exchange for business, and bid rigging. It paid big bucks to brokers ? loading the cost of these payments into premiums. Consumers have been footing the bill for this greed, and now they will get money back.?

Ace will record a cost of $66 million after taxes, or 20 cents a share, in the first quarter.

The settlement does not resolve private lawsuits or probes by the US Securities and Exchange Commission and other states, Evan Greenberg said on a conference call with analysts yesterday.

At year-end 2004, Ace, its subsidiaries and affiliates had received forty-three subpoenas, interrogatories, civil investigative demands, and letters of inquiry in connection with the pending investigations of insurance industry practices. As a result of the probes, two ACE employees were fired ? one of whom pleaded guilty to a misdemeanour charge. Three other employees were suspended as a result of the company?s internal investigation and Susan Rivera stepped down as president of ACE INA Holdings Inc., the holding company for ACE Ltd.?s US operations after revelations last November that she knew an ACE unit was being pressured by Marsh to rig bids. She has not been accused of any wrongdoing.

Since announcing the joint probe of misconduct in the insurance industry, in the fall of 2004, the New York Attorney General?s Office and Insurance Department has settled with six insurers and brokers including Marsh & McLennan Cos., American International Group Inc. and Zurich Financial Services AG.

It secured guilty pleas from some seventeen executives in five companies and recovered approximately $3 billion in restitution and penalties. Other high profile resignations as a result of the probe include Mr. Greenberg?s brother, Jeffrey Greenberg, who resigned as CEO of Marsh, the world?s largest insurance broker, in 2004 and their father, Maurice Greenberg, who was removed from the helm of AIG, the biggest insurer, last year.

Mr. Blumenthal said moves are continuing to pursue other companies involved in the scandal. As part of its settlement, Ace is required to cooperate in the continuing investigations.

?We will leverage this cooperation and use evidence from Marsh?s co-conspirators in our legal action against Marsh,? Mr. Blumenthal said.