Insurance deal: Ace to buy Chubb for $28.3 billion

 

Swiss insurer Ace Ltd, with operations in more than 50 nations, has agreed to purchase US based property and casualty insurer Chubb Corp, for dollar 28.3 billion in cash and stock as Chief Executive Officer Evan  Greenberg extends his acquisition spree. 

 

Chubb investors will receive dollar 62.93 in cash and 0.6019 share of Ace stock for each share they own, the companies said recently. Ace, based in Zurich, will own 70 per cent of the company after the transaction closes, and Greenberg will lead the combined insurer. The purchase price is equivalent to about dollar 124.13 per share for Chubb investors, or 30 per cent higher than that before the close. 

 

The deal will add coverage for commercial clients guarding against lawsuits and property damage, and for wealthy individuals in the US protecting their mansions and yachts. 

 

Greenberg, 60, has been expanding Ace through acquisitions around the world gaining scale and diversifying risk, rather than focusing on share buybacks as Chubb had preferred.

 

 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. Chubb would have needed a new CEO as John Finnegan, 66, was slated to step down at the end of new year after leading the company since late 2002. The combined company will take the Chubb name. 

 

Ace has bought businesses in Brazil, Thailand and Mexico in recent years. In December, the company agreed to purchase Allianz SE’s Fireman’s Fund unit serving wealthy clients to expand its coverage of luxury homes, yachts and art collections.