Hoping to Avoid The Third Out

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By Dean Starkman
Washington Post Staff Writer
Tuesday, July 5, 2005

Evan G. Greenberg, the last member of his family to head a major insurance company, is walking a fine line, staying on his feet despite investigations into the U.S. insurance industry that have toppled his brother and father.

A son of industry icon Maurice R. "Hank" Greenberg, 50-year-old Evan heads Ace Ltd., a major Bermuda-based insurer that is one of the most profitable in the industry. The company is a big underwriter in Asia and a leading U.S. insurer against big corporate losses, such as those from asbestos claims.

Evan Greenberg has so far managed to keep a low profile and mollify authorities -- unlike his father, who was ousted in March after heading giant American International Group Inc. for 37 years, and older brother Jeffrey, who resigned last fall as chief executive of Marsh & McLennan Cos. after New York state Attorney General Eliot L. Spitzer filed civil bid-rigging charges against the company and publicly signaled his desire for Jeffrey W. Greenberg's ouster.

In comments to investors, Evan Greenberg has acknowledged his own company's shortcomings and called for industry-wide reforms. But he also said Ace has weathered an internal review of bid-rigging allegations without major findings of wrongdoing beyond those disclosed earlier this year. At the time of the disclosure, Ace fired three executives, suspended two others and forced the resignation of the head of its U.S. operations, who reported to Greenberg.

"We are an ethical company," he said on a conference call in May. "We have conducted ourselves in a fit and proper manner."

Greenberg has decided to fight a civil suit filed by Connecticut Attorney General Richard Blumenthal alleging that Ace paid an improper secret commission to Marsh to win a state contract to administer $80 million in workers' compensation claims.

Greenberg has said the company believes the case has no merit, and Ace has a filed a motion to dismiss the claim.

Some observers say the company is confident that Greenberg will weather the industry-wide investigations.

"ACE believes its CEO is not a focus of any investigation, despite having the last name Greenberg," J. Paul Newsome, an analyst for A.G. Edwards & Sons Inc., wrote in April. Newsome added recently that he has not learned anything since then to contradict that notion.

Greenberg and Ace, through a company spokesman, declined to comment.

The company faces plenty of questions. According to documents Ace filed in March with the Securities and Exchange Commission, the company has received 43 subpoenas, civil demands and other queries from attorneys general in 10 jurisdictions, including the District, and 10 state insurance departments or other regulators, including Maryland's.

State authorities are investigating whether insurance firms took kickbacks or colluded with one another to increase prices. State and federal officials are also looking into whether companies misled investors by accounting for a type of insurance as a loan when there was no transfer of risk.


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© 2005 The Washington Post Company

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