These are details of how Ace was a full participant in a scheme to fix insurance prices in the excess casualty area, according to its settlement agreement with the Attorneys General of three US states:

Ace signed a “lucrative placement service agreement” in 2002 to pay sufficient contingent commission to ensure Marsh's commission totalled a minimum of ten percent for the first $1 of premium to 20 percent for any amount over $180 million dollars of premium. Where Ace was the incumbent on the lead layer of business, Marsh generally sought to protect Ace's incumbency and gave Ace an unfair competitive advantage by seeking out non-competitive bids from other insurers. Ace would also provide quotes to protect other incumbents in return for business on an excess layer without competition.

“This pretence of competition was intended to, and did, give clients the impression that Ace's bid was the best available. It also had the effect of directing business to Ace, not at terms best for the client, but rather at terms advantageous of Ace,” the settlement agreement said. The arrangement with Marsh allowed Ace to quickly become the third largest carrier of excess casualty behind only Marsh's long time partners AIG and Zurich. In 2002, prior to the scheme, ACE only received $5 million in Excess Casualty premiums in the US from Marsh. This number increased to $41 million in 2002, $98.6 million in 2003 and $93.5 million in 2004.

November, 2003: Ace's president of casualty wrote an e-mail detailing one such scheme to provide a losing bid to create the appearance of a competitive bidding process.

“Marsh is consistently asking us to provide what they refer to as ‘B' quotes for a risk. They openly acknowledge we will not bind these ‘B' quotes . . . but that they ‘will work us into the program' at another attachment point . . . . It has been inferred that the ‘pricing targets' provided are designed to ensure underwriters ‘do not do anything stupid' as respects pricing.”

December, 2002: An ACE assistant vice president of underwriting sent a fax to Greg Doherty, a senior vice president in Marsh global Broking Excess Casualty division quoting an annual premium of $990,000 for the policy.

Later that day Ace revised its bid upward to $1.1 million. An e-Later that day Ace revised its bid upward to $1.1 million. An e-mail from the assistant vice president to an Ace vice president explained the revision, “We were more competitive than AIG in price and terms. Marsh requested we increase premium to $1.1 million to be less competitive, so AIG does not loose [sic the business...”

June, 2003: Although Ace had the ability to submit a lower bid for a client that was unhappy with its incumbent carrier, an Ace vice president of underwriting wrote to Ace's president of casualty risk, “Our rating has risk at $890,000 and I advised Marsh NY that we could get to $850,000. Doherty gave me [a song & dance that game plan is for AIG at $850,000 and to not commit our ability in writing!”

Ace submitted a higher bid of $890,000 and incumbent AIG won the contract.

October, 2003: In an e-mail, an Ace underwriter advised Marsh of its interest in covering both the lead and excess layer for a client and asked for the “game plan”. The Marsh broker made it clear the lead was not available for a real bid from Ace forwarding an internal Marsh e-mail that stated, “Zurich hit the revised target of $535,000. We will need an e-mail indication for $25 mm x P from Ace.” Ace responded by quoting less favourable coverage.

August, 2003: Incumbent AIG missed Marsh's target of $525,000 for a client's lead and excess casualty insurance and submitted a bid for a premium of $545,000. Even so, a Marsh e-mail said, “This is slightly above plan and if we need to adjust the excess to the same percentage, no big deal...We need a hard copy led from Zurich and Ace. Both should not mind as they both get the excess.” Ace responded by protecting AIG with a quote over $100,000 higher than AIG's bid.

July, 2003: Marsh's broking plan dictated that St. Paul was to receive the coverage for the lead layer of coverage at a premium of $200,000. Once St. Paul hit the target, an internal Marsh e-mail said, “I am going to need a B quote from Ace...so I can get the CA [Marsh client advisor off my back...”

Ace responded with a price that was almost double St. Paul's coverage

In addition to participating in bidrigging with Marsh, Ace also engaged in other activities to ensure brokers gave Ace preferential treatment in the placement of contracts. This included compensating brokers for business steered to Ace by agreeing to obtain Ace's own reinsurance through the same broker.

November, 2003: Ace retained Guy Carpenter, the reinsurance brokerage unit of Marsh, to place reinsurance for a contract that Willis Retail had awarded to Ace. Willis called Susan Rivera, Ace North America's president - who departed Ace last January - and insisted that the reinsurance business be placed through Willis Re instead. After the call, Rivera ordered Ace to move the reinsurance to Willis Re. Upon replacing Guy Carpenter, Willis Re performed no work, instead simply using quotes already obtained by Guy Carpenter, the settlement agreement said.

“It wasn't till senior management received calls from Willis on this account that I started “working” with Willis Re. Willis Re just went and retrieved the quote that was already presented by Guy Carpenter,” said an Ace underwriter.

Ace also sent fraudulent e-mails to a broker misrepresenting Ace's payments to help the broker meet its targeted performance goals.

Late, 2003: At a dinner, a Willis executive approached an Ace employee and Ms. Rivera. He was under significant pressure from his superiors to meet serious income deficiency shortfalls in the year and quarter and “expressed his intention to approach a couple of “partner markets” in exchange for a “guarantee” of significant new business growth to [sic in ‘04.

“Those who did not choose to help him as a partner now would not be designated Favoured market,” the Ace employee said, adding that the Willis executive indicated he needed $500,000 from Ace in the fourth quarter this year as an advance payment for next year.

Ace accepted the offer for the promise of significant new business growth. In order to justify the receipt of these funds on its books, Willis' head of contingent commissions personally convinced Ms Rivera to send fraudulent e-mails (originally drafted by Willis indicating that Willis was entitled to the payment in 2003, the settlement agreement said.