Investigations into alleged bid-rigging and other "shrewd business tactics" have now cost Ace Ltd. $89 million in paybacks and fines across the US.

In the latest settlement Bermuda's biggest insurance and reinsurance company has agreed to pay $9m to the State of Pennsylvania following an investigation which that state's attorney general Tom Corbett said revealed Ace "cheated consumers out of millions of dollars".

It is the largest settlement of its kind in Pennsylvania and is to settle charges against Ace arising from its contingent commission practices in 2004 and prior years, according to acting Pennsylvania insurance commissioner Randy Rohrbaugh.

In a statement, Ace said the settlement will be paid from reserves set aside in prior quarters and will have no effect on its financial results for 2007.

Bermuda's biggest insurance and reinsurance company, which made a profit of $2.3 billion last year, has already paid back $40m to policyholders in the US who brought or renewed certain Ace excess casualty policies through insurance broker Marsh between 2002 and 2004.

In addition it has paid $24m in fines to New York state and $8m each to Illinois and Connecticut.

"Ace participated in a scheme with various insurance brokers to falsify quotes in order to easily steer business to preferred insurers, in exchange for the same thing in return," said Pennsylvania attorney general Mr. Corbett.

"This shrewd business tactic created a false appearance of market competition and cheated consumers out of millions of dollars."

Ace's business practices in the US came under investigation by the attorney generals of New York, Illinois and Connecticut in 2004.

In April 2006, Ace issued an apology in conjunction with an assurance agreed with the then New York attorney general Eliot Spitzer in which Ace acknowledged: "Certain of its employees violated both acceptable business practices and Ace's own standards of conduct by engaging in behaviour that included improper bidding practices."

A lawyer for Ace said yesterday the company views the latest $9m settlement in Pennsylvania, which is the domicile and home state regulator of most of Ace's US operations, as an important step towards closure of the insurance industry investigations that started in 2004. Ace's general counsel Robert Cusumano added: "We are pleased to be able to resolve these issues with our primary insurance regulator after an investigation that extended over several years and included thousands of documents and dozens of interviews. The settlement also reinforces our belief that the reforms and guidelines that the company put in place two years ago continue to be state-of-the-art safeguards that the regulatory community will embrace."

Pennsylvania attorney general Mr. Corbett said that, beyond the improper bidding practices, Ace had paid "contingent commissions" to brokers and agents in additions to their base commissions in exchange for those brokers and agents steering policies for excess casualty to Ace and increased premiums on existing policies.

"The bid-rigging that Ace engaged upon in this scheme essentially raised premium prices for insurance customers and steered business directly to themselves, which stifled competition without policyholders knowledge," said Mr. Corbett.

Ace has agreed to comply with business practice guidelines it established in 2004, which it said will assure ongoing antitrust compliance in its domestic operations.

As part of the agreement with the Pennsylvania attorney general and the state's insurance department, Ace has agreed to pay $9m to the Commonwealth of Pennsylvania and fully disclose to present or prospective policyholders compensation information.

Ace has also agreed to establish a toll-free telephone number that policyholders can request disclosure of compensation information, and the company will "not provide or offer any broker or non-executive agent a false, fictitious, inflated, artificial, alternative, back-up or throw away bid, quote or indication, or any other illegal quote".

Mr. Rohrbaugh said the settlement included a $6m penalty, with the rest used to provide restitution to Ace's customers and reimburse the state for investigative costs.

Ace must pay the settlement by July 10.