Sovereign Risk Insurance, a joint venture between Ace Bermuda Insurance and XL Insurance (Bermuda), is to be wholly-owned by Ace and write business solely for Ace, subject to receipt of Bermuda regulatory approval and agreement of definitive documentation. Sovereign’s agency structure, underwriting team, limits and tenors will remain unchanged.

Brian O ‘Hara, XL Capital’s president and chief executive officer comments: “Sovereign has been a consistently profitable part of XL’s insurance operations since its formation in 1997 and I would like to commend the team at Sovereign for a job well done. Our exit stems from a change in our strategy for assuming risk in emerging markets, and we believe this restructuring is a win for all parties.”

Sovereign is a leading provider of political risk insurance and reinsurance. Sovereign’s portfolio exceeds US$6.5bn of exposure spread over 75 emerging markets.

All policies issued by Sovereign after February 1 will be 100% Ace security, rather than 50:50 Ace and XL. The security on all outstanding policies will remain unchanged, and Sovereign will continue to manage these policies as before.