The sub-prime mortgage crisis still has a long way to run, but it will not be a "major event" for Ace Ltd, said the Bermuda insurer's chief executive officer Evan Greenberg.

Speaking at a Merrill Lynch investor conference in New York on Tuesday, Mr. Greenberg said some of the speculation over potential industry losses arising from the crisis was "pure speculation", sometimes bordering on the irresponsible.

And he anticipated that insurance business opportunities would arise from the crisis for Ace and other insurers.

Talking about the "unwinding of the credit markets", Mr. Greenberg said: "We are in the middle of it and there is more to come... I believe it's just a natural phenomenon that will ultimately prove to be a healthy one."

He said Ace had no exposure to the CDOs (collateralised debt obligations) — securities backed by pools of bonds, loans and other assets — which had been subject to large write-downs in value because their content included sub-prime or risky mortgages, which have been subject to a wave of delinquencies during the housing slump.

Insurers are bracing themselves for an expected increase in claims on directors and officers (D&O) and errors and omissions (E&O) policies, as management of companies whose share values have plunged during recent months faces lawsuits from shareholders.

Mr. Greenberg said Ace's financial institution (FI) policies generally had limits in the single-digit millions and he added: "We will have losses from the sub-prime crisis, but this will not be a major event for Ace. The story is still unfolding."

Ace had "kept its powder dry" to be ready to take advantage of insurance opportunities in the wake of the crisis, the CEO said. "That time is coming upon us," Mr. Greenberg said. "Opportunity is created out of environments like this. When others head for the exit, that's maybe when we want to look at the front door."

Mr. Greenberg said property and casualty insurers were competing in a "classic soft market" around the world, conditions he believed would continue for some time to come, as a large amount of insurance company capital chased relatively static demand. While Ace was always looking for opportunities, it would walk away from inadequately priced business, he stressed.

Ace preferred to look at the long term and the CEO believed its major growth opportunities would arise from the developing world, with Ace already doing business at a local level in more than 50 countries, and with around half of its revenue coming from outside the US. "In Asia, Latin America and the Middle East, where you see economies expanding, a rising middle class, development of infrastructure, all the small businesses that need to be insured, growing capital markets, consumerism and laws coming in to protect the consumer, all of these things will need to be insured," Mr. Greenberg said. "And Ace is well positioned to do that."

He cited Ace's involvement in China, where the group has been involved in selling life, non-life and asset management for the past seven years, as a likely area of major growth in future years. In 2002, Ace made a strategic investment in the Beijing-based Huatai Insurance Company, which has branches in 26 cities in China and which has been increasing its property premiums by 26 percent a year since its incorporation in 1998.

Ace also has reinsurance interests in China, through its subsidiary Ace Tempest Re, which has since last year had an underwriter stationed in Lloyd's China Re's Shanghai office. And Ace's risk management services arm ESIS also has a subsidiary operation in Shanghai.

"I believe that in the next decade China will become our second largest country," Mr. Greenberg said. Mr. Greenberg spoke about two acquisitions late last year, Combined Insurance Company of America, an accident and health insurer, and Atlantic Companies, which specialises in personal lines for high net-worth individuals.

Ace could benefit from Combined's network of tied agencies, a different form of distribution for the group, Mr. Greenberg said, and also intended to expand Combined's business outside the US and into developing markets, such as Latin America and Asia.

And it will help Atlantic to "round out the package" by adding Ace's own expertise in yachts and fine arts insurance.

As for future acquisitions, Mr. Greenberg said Ace was always looking, but refused to pay more than a fair price. "The prices of what has been available have been inflated," he said. "We looked at 60 opportunities in the last year and we only bid on a handful."

Last week, Ace reported a record annual net income of nearly $2.6 billion.