Johannesburg — GLOBAL insurance giant ACE has re-entered the South African market and plans to open its doors to new business in June.

ACE, which discontinued its short-term operation in SA in 2000, has since kept an insurance licence and a foot on the ground through a management deal with Hollard Insurance.

Apart from signalling renewed confidence in the local market, ACE's re-entry will boost competition in a sector dominated by a few large insurance companies. In a discussion paper on contractual savings in the life industry, the treasury says it is concerned about concentration in the short-term market.

South African Insurance Association CEO Barry Scott said there had been a significant drop in the number of insurance companies serving the South African market in the past 10 years.

The association's membership had fallen from 72 to 53 companies due to companies leaving SA and being acquired by groups such as Aegis, Guardian National and General Accident. Scott said that as a result, there were fewer companies with a larger market share.

"Five companies account for about 80% of the market, whereas 10 companies accounted for the same percentage six to seven years ago."

He said the manner in which ACE tackled the market would determine whether it would succeed in building market share.

"We welcome the fact that there is a new insurer and (increased) capacity in the market to be able to underwrite new risks," Steve von Roretz, CEO of listed broker Glenrand MIB.

Von Roretz said he hoped the group would succeed in building its business and would not disappear again in four to five years' time.

ACE has appointed former New Zealand CEO and country manager Scott Pickering as CEO of ACE SA.

Pickering said the group had an existing global customer base that it would service from SA.

It would start scouting for South African customers once it launched in June.

He said ACE planned to build a significant presence in SA, and would use the country as a base to grow its African business.

"I think that we cannot afford to be just another insurer," Pickering said.

"Clearly one of the benefits we offer is that we have a global presence and are able to facilitate business beyond the border of SA as South African businesses expand regionally and globally."

Pickering said ACE had offices in 52 countries and was able to do business in 140 countries across the globe.

Last year ACE reported global premium income of $17bn.

"We're really one of only a handful of truly global players," he said.

ACE SA nonexecutive chairman Brian Seach said the group would focus on major corporations such as Eskom and large retailers. "We don't intend to be a spectator, so we will be competing for some of the large corporate risk business."

Pickering said ACE would distribute products through affinity partners in the consumer market. "This is something we have been very successful with globally, whether with banks, financial institutions or large associations," he said.

He said ACE would be able to write profitable business in SA, despite a softening in the insurance rates.

"We are not coming into the South African market to differentiate ourselves on pricing alone. We are not coming in to undercut the market to establish market share," said Pickering.

He said the group had already held talks with the regulator, the Financial Services Board.