July 1, 2015
In a major transaction, ACE Limited has agreed to acquire The Chubb Corp. for $28.3 billion in cash and stock.
The two firms said the combined company will have complementary businesses, skills and distribution and greater growth and earnings than the two companies separately.
The balance sheet’s size and strength will elevate the combined company into the elite group of global P/C insurers. As of December 31, 2014, on an aggregate basis, the combined company had total shareholders’ equity of nearly $46 billion and cash, investments and other assets of $150 billion.
The combined company will use the Chubb name.
The boards of directors of both companies have approved the deal.
Upon closing of the transaction, ACE shareholders will own 70 percent of the combined company, and Chubb shareholders will own 30 percent. The consideration represents an approximately 30 premium premium to Chubb’s closing price of $95.14 on June 30, 2015.
Together, ACE and Chubb believe they will create a global leader in commercial and personal property/casualty insurance, with a balance of products and a product mix with reduced exposure to the P/C industry pricing cycle.
They also said the combination will create efficiencies that will allow for investment in people, technology, products and distribution.
“We are thrilled to announce the acquisition of Chubb, a venerable company with a great brand,” said Evan G. Greenberg, chairman and CEO of ACE Limited. “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.”
Greenberg said on a conference call today that ACE approached Chubb “only a few weeks ago” and the “deal came together rapidly.”
Chubb will continue to operate under its name while the combined company transitions to operate under the Chubb name globally. The combined company will remain a Swiss company with principal offices in Zurich.
The announcement said Chubb’s headquarters in Warren, New Jersey, will house a “substantial portion” of the headquarters function for the combined company’s North American Division and ACE will continue to maintain a significant presence in Philadelphia, where its current North American division headquarters is based.