ACE, Chubb Merge in $28.3 Billion Deal, Creating Insurance Mega-Company

ACE Ltd. bought Chubb Corporation this week in a $28.3 billion deal that may well be the largest insurance deal the world has ever seen. Both companies’ boards voted unanimously for the transaction.

“We are thrilled to announce the acquisition of Chubb, a venerable company with a great brand," Evan G. Greenberg, ACE’s CEO and chairman said in a statement, according to USA Today. "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."

The transaction is not likely to be completed until the first quarter of next year. ACE shareholders will own 70 percent of the merged company while Chubb shareholders will own 30 percent and will receive $62.93 in cash per share in addition to 0.6019 of the ACE stock, USA Today reported.

“This is a landmark deal that puts two awfully good companies together and forms a global powerhouse with deep and defensible U.S. market penetration,” David Havens, an Imperial Capital LLC credit analyst, told The Wall Street Journal of the Swiss and New Jersey companies.

Greenberg appears to be following in his father, Maurice R. “Hank” Greenberg’s, footsteps. Maurice Greenberg is credited with revolutionizing American International Group Inc. into the global insurance leader it is today. Greenberg worked his way up to president and chief operating officer under his father but decided to leave AIG in 2000, The Journal noted.

Now, Greenberg will serve as CEO of the merged and expanding company with Chubb CEO John Finnegan as his executive vice chairman for external affairs of North America.

Chubb is one of the best-acclaimed companies in the homeowner’s insurance coverage industry and ranks as the eighth-largest property and casualty insurer in the U.S. The company typically caters towards wealthy homeowners and middle-market commercial customers. ACE mostly targets wealthier business owners, although each company also has many middle-market customers.

Mark Dwelle, RBC Capital Markets analyst, expects the deal to produce “a global player almost unrivaled by anyone else,” he told CNBC.

After news of the transaction broke, Chubb’s stock rose approximately 36.16 percent while ACE’s grew about 12.07 percent, according to USA Today.

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