Insurance Acquisitions: ACE Acquiring Chubb in $28.3 Billion Deal
Perhaps one of the largest Insurance Acquisitions this year, ACE Limited board of directors has approved the acquisition of The Chubb Corp. for $28.3 billion in stock and cash, also approved by the Chubb board of directors. The two firms agree that this merger will result in complementary business, skills and distribution, plus better growth and earnings than the two companies separately.
The combined company, using the Chubb name and location, had total shareholders’ equity of almost $46 billion and cash, investments and other assets of $150 billion as of December 31, 2014. Under the terms of this new transaction, Chubb shareholders will receive $62.93 per share in cash and 0.6019 shares of ACE stock.
Maintaining a balance or products and product mix along with reduced exposure to the property and casualty industry pricing cycle, ACE and Chubb believe that the combination of their two companies will create efficiencies that will allow for investment in people, technology, products and distribution. They intend to market themselves as a global leader in commercial and personal property/casualty insurance.
In an interview with Insurance Journal Evan G. Greenberg, chairman and CEO of ACE Limited, has this to say about the acquisition, “This transaction advances our strategy in a meaningful way and represents an outstanding opportunity to create significant value over a reasonable period of time for both ACE and Chubb shareholders. We are combining two great underwriting companies that are highly complementary. We will make each other better and create a unique company in a class of its own that has greater growth and earning power than the sum of the two companies separately.”
In addition to coverage for high net worth personal lines markets, ACE is primarily a commercial insurer with a presence in 54 countries. Chubb is also a commercial and professional lines insurance carrier, specializing in the middle and upper middle market and operating in 25 countries. Greenberg states that there is an overlap in product for the two firms, but in general one company is more present at the large end of the corporate market while the other is serving the smaller or mid-market segment.
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