Chubb Ltd.
CB -2.63%
, one of the country’s largest, oldest and best-known non-life insurers, has made a preliminary proposal to acquire Hartford Financial Services Group Inc.,
HIGH 18.71%
another legendary name in the industry.
Connecticut-based Hartford said in a press release Thursday afternoon that it “received an unsolicited, non-binding proposal from Chubb” to acquire the 211-year-old company. Hartford said the board is “carefully considering the proposal with the help of its financial and legal advisers.”
In a statement after the market closed, Chubb said the proposal would value Hartford at $ 65 a share, saying the combination would be “strategically and financially attractive to both groups of shareholders and other constituencies.”
At $ 65, the offer is 12% higher than 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 look forward to constructive, private discussions to quickly establish a fair transaction that will benefit all of our respective stakeholders,” Chubb said in the statement.
The offer indicates that Chubb’s CEO, Evan Greenberg, is ready for another bold deal.
In 2016, Mr. Greenberg was CEO of business and 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 made Chubb an international powerhouse.
Mr. Greenberg and his team have delivered strong financial results and Chubb has grown into one of the largest insurers in the world, with a market cap of more than $ 75 billion as of Thursday. Its shares fell 2.6% at the close of the market.
After news of Chubb’s takeover approach to Hartford was first reported by Bloomberg News on Thursday, Hartford shares soared. They jumped even further after the insurer’s afternoon press release, closing the day at nearly 19%. Its market capitalization is approximately $ 24 billion.
Hartford was one of the hardest hit US insurers during the 2008-2009 global market collapse. The company took federal aid, which it has since repaid in full. In the years since, Hartford has divested several units to focus primarily on property non-life insurance for businesses and individuals, benefits program offers for employers and a mutual fund.
Its CEO, Christopher Swift, has made some acquisitions in recent years as the company narrowed its focus. Those deals include buying a specialty corporate insurer, Navigators Group, and a division of Aetna Inc. which provides life insurance, disability income and other products for companies’ employee programs.
Before the merger with Ace, Chubb was known to the public as a leading provider of homeowners insurance to wealthy Americans through its expensive, yet comprehensive Masterpiece coverage.
Evercore ISI analyst David Motemaden said Hartford was a natural choice for a company like Chubb, which is seeking to strengthen its operations to secure small business customers. In a research note, he said that Hartford’s small-scale commercial franchise could complement Chubb’s leadership in insuring large businesses, while Hartford’s business of insuring medium-sized businesses would bolster Chubb’s business in that part of the market.
Hartford said in his press release that the board of directors “is committed to acting in the best interests of shareholders over the long term.”
Write to Leslie Scism at [email protected]
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Appeared in the March 19, 2021 print edition as ‘Chubb Bids For Rival Hartford’.