For most commercial lines of business we offer, insureds typically use the
services of an insurance broker or agent. An insurance broker acts as an agent
for the insureds, offering advice on the types and amount of insurance to purchase
and also assisting in the negotiation of price and terms and conditions. We
obtain business from the local and major international insurance brokers and
typically pay a commission to brokers for any business accepted and bound. Loss
of all or a substantial portion of the business provided by one or more of these
brokers could have a material adverse effect on our business. In our opinion,
no material part of our business is dependent upon a single insured or group
of insureds. We do not believe that the loss of any one insured would have a
material adverse effect on our financial condition or results of operations,
and no one insured or group of affiliated insureds account for as much as 10
percent of our total revenues.
The Insurance – North American Agriculture segment comprises Rain and
Hail, which provides comprehensive Multiple Peril Crop Insurance (MPCI) and
crop-hail insurance, and ACE Agribusiness, which offers farm and ranch coverages
as well as specialty P&C coverages for companies that manufacture, process
and distribute agriculture products. The MPCI program is offered in conjunction
with the U.S. Department of Agriculture (USDA). The USDA's Risk Management Agency
(RMA) sets the policy terms and conditions, rates and forms, and is also responsible
for setting compliance standards. As a participating company, we report all
details of policies underwritten to the RMA and are party to a Standard Reinsurance
Agreement (SRA). The SRA sets out the relationship between private insurance
companies and the Federal Crop Insurance Corporation (FCIC) concerning the terms
and conditions regarding the risks each will bear including the pro-rata and
state stop-loss provisions which allow companies to limit the exposure of any
one state or group of states on their underwriting results.
ACE International maintains a presence in every major insurance market in the
world and is organized geographically along product lines as follows: ACE Europe,
ACE Asia Pacific, ACE Far East, and ACE Latin America. Products offered include
P&C, A&H, specialty coverages, and personal lines insurance products
and services. ACE International enhanced its P&C offerings through the acquisition
of ABA Seguros and expanded its global franchise in the surety business and
enhanced its commercial lines and personal accident insurance business through
the acquisition of Fianzas Monterrey. ACE International's P&C business is
generally written, on both a direct and assumed basis, through major international,
regional, and local brokers and agents. Certain ACE Europe branded products
are also offered via an e-commerce platform, ACE Online, that allows brokers
to quote, bind, and issue specialty policies online. Property insurance products
include traditional commercial fire coverage as well as energy industry-related,
marine, construction, and other technical coverages. Principal casualty products
are commercial primary and excess casualty, environmental, and general liability.
A&H and other consumer lines products are distributed through brokers, agents,
direct marketing programs, and sponsor relationships. ACE International specialty
coverages include D&O, professional indemnity, energy, aviation, political
risk, and specialty personal lines products. The A&H operations primarily
offer personal accident and supplemental medical coverages including accidental
death, business/holiday travel, specified disease, disability, medical and hospital
indemnity, and income protection. We are not in the primary health care business.
With respect to our supplemental medical and hospital indemnity products, we
typically pay fixed amounts for claims and are therefore largely insulated from
the direct impact of rising health care costs. ACE International's personal
lines operations provide specialty products and services designed to meet the
needs of specific target markets and include property damage, automobile, homeowners,
and personal liability.
Global Reinsurance services clients globally through its major units. Major
international brokers submit business to one or more of these units' underwriting
teams who have built strong relationships with both key brokers and clients
by providing a responsive, client-focused approach to risk assessment and pricing.
ACE Tempest Re Bermuda principally provides property catastrophe reinsurance
on an excess of loss basis globally to insurers of commercial and personal property.
Property catastrophe reinsurance is on an occurrence basis and protects a ceding
company against an accumulation of losses covered by its issued insurance policies,
arising from a common event or occurrence. ACE Tempest Re Bermuda underwrites
reinsurance principally on an excess of loss basis, meaning that its exposure
only arises after the ceding company's accumulated losses have exceeded the
attachment point of the reinsurance policy. ACE Tempest Re Bermuda also writes
other types of reinsurance on a limited basis for selected clients. Examples
include proportional property where the reinsurer shares a proportional part
of the premiums and losses of the ceding company and per risk excess of loss
treaty reinsurance where coverage applies on a per risk basis rather than per
event or aggregate basis, together with casualty and specialty lines (catastrophe
workers' compensation, crop and terrorism). ACE Tempest Re Bermuda's business
is produced through reinsurance intermediaries.
ACE Life provides individual life and group benefit insurance primarily in
emerging markets, including Egypt, Hong Kong, Indonesia, South Korea, Taiwan,
Thailand, and Vietnam; also throughout Latin America; selectively in Europe;
and in China through a non-consolidated joint venture insurance company. ACE
Life offers a broad portfolio of protection and savings products including whole
life, endowment plans, individual term life, group term life, group medical,
personal accident, credit life, universal life, and unit linked contracts. The
policies written by ACE Life generally provide funds to beneficiaries of insureds
after death and/or protection and/or savings benefits while the contract owner
is living. ACE Life sells to consumers through a variety of distribution channels
including agency, bancassurance, worksite marketing, retailers, brokers, and
direct to consumer marketing. We continue to expand ACE Life with a focus on
opportunities in emerging markets that we believe will result in strong and
sustainable operating profits as well as a favorable return on capital commitments
over time. Our dedicated agency distribution channel, whereby agents sell ACE
Life products exclusively, enables us to maintain direct contact with the individual
consumer, promote quality sales practices, and exercise greater control over
the future of the business. We have developed a substantial sales force of agents
principally located in our Asia-Pacific countries. ACE also maintains approximately
35.8 percent direct and indirect ownership interest in Huatai Life Insurance
Co., Ltd. (Huatai Life), which commenced operations in 2005 and has since grown
to become one of the largest life insurance foreign joint ventures in China.
Huatai Life offers a broad portfolio of insurance products through a variety
of distribution channels including approximately 265 licensed sales locations
in 13 Chinese provinces.
