ACE says it will file to dismiss a lawsuit brought by the state of Connecticut alleging the company paid a secret $50,000 commission to broker Marsh & McLennan to steer an $80 million state contract its way. On an investment call with analysts yesterday morning ? following the company announcing 2004 earnings of $1.1 billion ? CEO Evan Greenberg said: "Regarding the action taken by the Connecticut attorney general, we have investigated the complaint and both we and our outside counsel believe it is without merit. We will be proceeding accordingly, beginning with a motion to dismiss which we expect to file in the near future," he said.

Connecticut AG Richard Blumenthal announced the suit against both Marsh and a US-based unit of ACE one week ago.

The lawsuit against the two already-under-fire companies ? with both being the subject of New York attorney general Eliot Spitzer's high-profile probe ? alleges that ACE Financial Solution paid the 'secret' commission after winning the bid for a loss portfolio programme to cover workers' Mr. Spitzer's investigation pointed to alleged abuses in ACE's casualty risk unit while the Connecticut action names another ACE company, ACE Financial Solutions.

In a letter to employees on January 5, Mr. Greenberg said an internal investigation launched in November ? which is being handled by outside counsel Debevoise & Plimpton along with the board's audit committee involved hundreds of interviews being conducted and thousands of documents being reviewed. Two employees in the casualty risk unit have been fired after "several specific incidents of wrongdoing" were discovered. One of those, Patricia Abrams, also pleaded guilty to a misdemeanour charge in the Spitzer matter.

Mr. Greenberg yesterday told that former US attorney Mary Jo White ? who is ACE's outside counsel with Debevoise & Plimton ? was also handling the Connecticut matter.

He said that ACE would continue to make "routine updates, as we have something to say" in its internal investigation of whether there was "any illegal or grossly improper behaviour at ACE".

Mr. Greenberg said the internal investigation ? described yesterday as "at arms length; a truly independent review" ? following Mr. Spitzer's probe was still on track to be concluded by the end of the month.

"To date, nothing ? and we are sure glad to report it ? nothing has been discovered which smells like anything we have found in that excess unit. So far it is all confined to that and that is how we expect it to conclude."