ACE Limited To Acquire Chubb For $28.3 Billion

July 1, 2015

ACE Limited and The Chubb Corporation announced today [July 1] that the Boards of Directors of both companies have unanimously approved a definitive agreement under which ACE will acquire Chubb.

The announcement said, “Under the terms of the transaction, Chubb shareholders will receive $62.93 per share in cash and 0.6019 shares of ACE stock.

“Based on the closing price of ACE stock on June 30, 2015, the total value is approximately $124.13 per Chubb share, or $28.3 billion in the aggregate. This is the equivalent of $125.87 per Chubb share using ACE’s 20-day volume weighted average share price for the period ending June 30, 2015.

“Upon closing of the transaction, ACE shareholders will own 70% of the combined company, and Chubb shareholders will own 30%. The consideration represents an approximately 30% premium to Chubb’s closing price of $95.14 on June 30, 2015.

“The combination will create efficiencies that will provide flexibility for the company to invest in people, technology, products and distribution as well as improve the company’s competitive profile.

“Additionally, 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.

“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.”

John D. Finnegan, Chairman, President and CEO of Chubb, said, “This is a compelling transaction for all Chubb and ACE stakeholders. The combination brings together two highly respected and successful companies with complementary capabilities, assets and geographic footprints.

“We are confident that it will deliver strong value to Chubb shareholders, including an immediate premium and participation in the future growth and profitability of a well-positioned combined company.

“We are pleased that the combined company will adopt the Chubb brand and view this as an affirmation that both companies share a commitment to the attributes of quality and service the brand represents. We look forward to working together as we create a best-in-class global franchise in P&C insurance.”

“We will be well balanced with greater presence and capabilities in product areas that have less exposure to the commercial P&C cycle,” continued Mr. Greenberg. “We have complementary product strengths – where one of us is not present, the other is. Where one of us is strong, the other is even stronger.

“Where there is overlap in product, generally one of us is more present at the large end of the corporate market while the other is serving the smaller or mid-market segment. The data and insight we will gain from our respective skills and experience will allow us to do so much more.

“For example, Chubb will enhance ACE’s ability to serve the upper middle market, while ACE will provide more products to serve Chubb’s middle market clients, and our combined strengths will enable us to pursue the small and micro markets globally.

“Finally, we will benefit from each other’s complementary cultures, including a shared passion for underwriting discipline and outstanding claims service. Operating under the Chubb name, with sustained long-term underwriting profit and a larger invested asset base that will benefit from rising interest rates, we will take advantage of the growth opportunities and significant efficiencies to be gained between us.

“Together, we will grow more substantially and at a faster rate, producing greater earnings, than we could achieve as two separate companies. We look forward to welcoming the talented Chubb employees and their customers and distribution partners to the ACE family.”

Upon completion of the transaction, the combined company will be led by Mr. Greenberg as Chairman and Chief Executive Officer. Mr. Finnegan has agreed to serve as Executive Vice Chairman for External Affairs of North America and will assist with integration. The company’s Board will be expanded from 14 directors to 18 directors with the addition of four independent directors from Chubb’s current Board.

Chubb will continue to operate under its name while the combined company transitions to operate under the Chubb name globally.

ACE intends to finance the cash portion of the transaction through a combination of $9 billion of ACE and Chubb excess cash plus $5.3 billion of senior notes with a range of maturities to be determined. ACE intends to target a debt-to-total capital ratio of approximately 20% following the acquisition, within the guidelines for the company’s ratings.

The transaction is expected to close during the first quarter of 2016, subject to approval by ACE and Chubb shareholders, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and regulatory approvals.

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Comments (5)

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  1. And the common people in this chess game of life still soldier on.

  2. Terry says:

    Define “the common people” Onion juice’.

    Your all over the place with your latest comments on different posting by BERNEWS.

    Without “ACE” monies would not come in in many forms.
    They also employ people who pay taxes, purchase goods, vehicles, food et al.

    Get real.

    Have a rum and get off the “juice”.

    Shalom.

  3. Navin Johnson says:

    Little impact on Bermuda…Chubb has a small presence here and ACE operations are very small in the grand scheme of things…….good for us shareholders though……

    • watching says:

      A small presence is still a presence. Chubb has employees and there is no guarantee over what will happen to these employees. Likely more job losses at some point. Sigh.

  4. Navin Johnson says:

    ACE has gone from 500 hundred to around 200 over the years and Chubb has operated with a handful of people here for over 20 years with little change …they may all stay but the impact on this to Bermuda is of little consequence to ACE operations here as this office is very small compared to other operations around the globe…..nothing more nothing less…good for shareholders of companies….other insurance mergers of acquisitions in Bermuda have resulted in far greater job losses…in this there are not that many to lose