Insurance giant Chubb offers to buy rival Hartford

In a statement after the market closed, Chubb said the proposal would value Hartford at $ 65 per share, saying the combination “would be strategically and financially attractive to both groups of shareholders and other constituents”.

At $ 65, the offer is 12% above Thursday’s opening price of $ 57.94. Chubb said it submitted its proposal on March 11.

“We have not yet received a response to our proposal, but we expect constructive and private discussions in order to quickly complete a fair transaction that benefits all of our respective stakeholders,” said Chubb in the statement.

The offer signals that Chubb’s CEO Evan Greenberg is ready for another bold business.

In 2016, Mr. Greenberg was CEO of home insurance company Ace Ltd. when he combined it with the then New Jersey-based Chubb Corp. in a transaction of approximately $ 30 billion. The merger transformed Chubb into an international power.

Mr. Greenberg and his team delivered solid financial results, and Chubb became one of the largest global insurers, with a market capitalization of more than $ 75 billion on Thursday. Its shares fell 2.6% at the close of the market.

After news of Hartford’s takeover approach to Chubb was first reported on Thursday by Bloomberg News, Hartford’s stock soared. They jumped even further after the insurer’s mid-afternoon press release to end the day with an increase of almost 19%. Its market capitalization is around US $ 24 billion.

Hartford was one of the hardest hit American insurers during the 2008-09 global market meltdown. The company received federal aid, which has since been fully reimbursed. In the years that followed, Hartford sold several units to focus primarily on property accident insurance for businesses and individuals, offers for employer benefit programs and a mutual fund business.

Its chief executive, Christopher Swift, has made some acquisitions in recent years as the company narrowed its focus. These deals included the purchase of a specialist business insurer, Navigators Group, and a unit of Aetna Inc. that provides life insurance, disability income and other products for corporate employee benefit programs.

Prior to its merger with Ace, Chubb was known to the public as a leading provider of home insurance for wealthy Americans through its expensive but extensive Masterpiece coverage.

David Motemaden, an analyst at Evercore ISI, said Hartford was a logical choice for a company like Chubb, which is trying to step up operations to insure small business customers. In a research note, he said Hartford’s small commercial franchise could complement Chubb’s leadership position in insuring large companies, while Hartford’s business in holding midsize companies would strengthen Chubb’s operations in that part of the market.

Hartford said in his statement that his board of directors “is committed to acting in the best interest of shareholders in the long term.”

Write to Leslie Scism at [email protected]