8-KEarnings & ResultsMaterial AgreementsExhibits & Filings

Chubb Ltd 8-K Report, Material Agreement (Apr 28, 2006)

Filed April 28, 2006For Securities:CB

Summary

This 8-K filing from ACE Limited (the registrant, which was Chubb Ltd in the prompt but the filing clearly states ACE Limited) on April 27, 2006, reports the resolution of investigations with multiple New York, Illinois, and Connecticut state attorneys general, as well as the New York Department of Insurance. The investigations pertained to accounting, public reporting, and insurance brokerage practices, particularly concerning nontraditional and finite insurance/reinsurance. As part of the settlement, ACE will pay a total of $80 million, comprising $40 million for restitution to excess casualty policyholders and $40 million in fines. Additionally, the company has agreed to implement significant business reforms, including restrictions on contingent commission payments in the U.S. through 2008 and limitations on other lines of business. ACE will also recognize a first-quarter 2006 after-tax charge of approximately $66 million related to these settlements.

Key Highlights

  • 1ACE Limited has settled investigations with the New York, Illinois, and Connecticut Attorneys General, and the New York Department of Insurance.
  • 2The settlements address issues related to accounting, public reporting, and insurance brokerage practices, specifically concerning nontraditional and finite insurance and reinsurance.
  • 3ACE will pay a total of $80 million, with $40 million designated for restitution to excess casualty policyholders and $40 million as fines.
  • 4The company has agreed to implement business reforms, including a ban on contingent commissions for excess casualty business in the U.S. through 2008.
  • 5ACE will incur an after-tax charge of approximately $66 million in the first quarter of 2006 related to these settlements.
  • 6The settlements resolve outstanding investigations but do not include all issues in the ongoing examination of Westchester Fire Insurance Company.

Frequently Asked Questions

This 8-K filing was made to announce ACE Limited's entry into material definitive agreements to resolve investigations by the New York, Illinois, and Connecticut Attorneys General, and the New York Department of Insurance. These investigations concerned specific accounting, reporting, and brokerage practices within the company.

ACE Limited will pay a total of $80 million. This amount includes $40 million for restitution to affected policyholders and $40 million in fines. The company will also record an after-tax charge of approximately $66 million in its first quarter 2006 results.

ACE Limited has agreed to implement prescribed business reforms. Notably, the company will not pay contingent commissions on excess casualty business in the United States through 2008 and will cease paying contingent commissions on other U.S. lines of business if 65% of the market for that line is not paying such commissions.

No, the stipulation with the New York Department of Insurance resolves issues uncovered to date but specifically excludes matters related to the NYDOI's current examination of Westchester Fire Insurance Company, one of ACE's New York-domiciled insurance subsidiaries.