ACE Bermuda Insurance Ltd. (ACE Bermuda), a subsidiary of ACE Limited (NYSE: ACL), and Willis, the London-based global risk management and insurance intermediary, today announced the launch of a strategic partnership based on the establishment of an ACE-owned Protected Cell Company (PCC) in Guernsey.
Called ACE PCC Insurance Ltd. (ACE PCC), the company will write a wide range of Alternative Risk Financing products which, when combined with the security benefits provided by PCCs, will create substantial new capacity for non-traditional exposures.
ACE PCC is owned 100 percent by ACE Bermuda. It will be operated under a partnership with Willis, who will provide management and marketing input. With the backing of the resources of the ACE Group, ACE PCC will offer a wide range of specialist financial solutions backed by substantial net capacity of up to US$200 million.
Mark Kealy, Underwriting Manager at ACE European Markets Insurance Limited, Dublin will be the primary contact in ACE for the PCC and will work with Willis to implement a marketing strategy for the venture.
Gary Schmalzriedt, Chief Executive Officer of ACE Bermuda, said: "We are delighted that Willis chose ACE as their preferred partner for this exciting new venture. I look forward to developing innovative risk finance solutions with them through this new Guernsey company."
Christine Douse, Managing Principal of Willis Risk Solutions, said: "ACE is the ideal company for us to have as a partner as we enhance our ability to provide risk financing solutions tailored to the increasingly sophisticated demands of our client base. Their capacity and expertise will be allied to our global network to create exciting new opportunities for both companies."
The Protected Cell Company regulation was established in Guernsey in 1997 and has been mirrored by many other countries. It enables multiple-owner companies to segregate the assets of each individual owner from the assets of other owners with full statutory protection. In so doing, it can be used to enhance many types of financial transactions by providing additional security compared with traditional alternatives. PCCs have been one of the major success stories in the world of insurance risk finance in recent years, and are extending their products into wider financial markets.
Working with Roger Gillett, Senior Vice President, Business Development, ACE Bermuda, the business proposition was conceived and developed by Tim Edwards of Willis Consulting. Mr. Edwards said: "The ACE PCC will combine the best of all existing companies whilst creating a completely new market based on risk transfer and tailored ART contracts with complete flexibility of membership structure."
The company aims to establish itself as the leading PCC in the Guernsey market. It will offer a uniquely wide range of products, positioning itself as an ideal platform for any type of corporate risk financing program. Traditional insurance classes will be written but it is the company's ability to provide alternative risk transfer based on regulated and formalized risk retention that differentiates it from traditional PCCs.
Mr. Gillett, who is responsible for the development of market strategy for captive and captive-related business for the ACE Group, said: "The PCC provides an important alternative to traditional captive and rent-a-captive business. It complements our existing capabilities and will enable us to develop new strategies and products for clients in major growth markets around the world."
The ability to provide real transfer of underwriting risk will be a feature of the ACE PCC, with a one-stop shop concept applying to most contracts. Admitted paper is available through ACE companies where required, and Willis will source additional capacity from both traditional and non-traditional markets on a facultative basis, ensuring simplicity of operation from the buyer's viewpoint.
The company will accept business generated by any broker or insurer anywhere in the world. ACE and Willis recognize that many potential PCC beneficiaries have existing insurer and broker relationships, and these can be maintained within the facility. Confidentiality is assured by the nature of the PCC arrangement.
Malcolm Cutts-Watson, Managing Director of Willis Management (Guernsey) Limited, said: "We analyzed the entire market before deciding how to develop our proposal. We identified ACE as the ideal partner, given their flexibility and willingness to develop innovative ideas without being restricted by traditional product lines."
The ACE Group of Companies provides insurance and reinsurance for a diverse group of clients. The ACE Group conducts its business on a global basis with operating subsidiaries in nearly 50 countries. Additional information can be found at: www.acelimited.com.
Willis Group limited, headquartered in London, is one of only three major risk management and insurance intermediaries that operate on a worldwide basis. The Group, together with its associates employs 12,500 people and is represented through a network of 235 offices in 73 countries. Willis develops and delivers professional insurance, reinsurance and risk management advice and solutions.