Chubb, the largest U.S. non-life insurer by market capitalization, has contacted rival Hartford Financial Services Group with an unsolicited $ 23.2 billion takeover bid, as part of what could be the first mega-deal in an industry hit by losses from the coronavirus pandemic.
The company led by Evan greenberg said he had offered $ 65 per share to buy Hartford, a 13% premium over the Connecticut-based group’s closing share price on Wednesday before news of a potential approach emerged on Thursday. The offering was mostly cash and stocks, Chubb said, without providing exact details.
Hartford said its board is considering a non-binding proposal from Chubb. However, according to those briefed on the matter, company executives were not impressed because the premium was too low.
After Bloomberg first announced Chubb’s approach, shares of Hartford rose 18.7% to $ 68.20 to give it a market value of $ 24.4 billion – above the l offer made by Greenberg’s company.
There are no active talks between the two sides, people briefed on the matter said. They added that it was not clear whether a deal could be reached given that any combination would be exposed to significant regulatory risks.
Chubb said in a statement he believed a combination “would be strategically and financially compelling for both shareholder groups and other constituencies.”
Son of Maurice “Hank” Greenberg, who transformed AIG into a financial powerhouse in four decades, Evan Greenberg spent several years building his own insurance empire. His biggest problem was the Combination of $ 30 billion of Ace and Chubb in 2015.
A deal would give Chubb greater scale in an industry still recovering from pandemic-related losses. Insurers have paid billions of dollars in claims on a variety of policies, from business disruptions to event cancellations, and there could be more to come. According to some estimates, the total claims of the pandemic in the global insurance industry, it will exceed $ 100 billion.
These losses have prompted insurers to raise prices for coverage, especially on commercial insurance policies, leading some investors to expect healthy future returns from the industry.
Hartford’s main business is commercial insurance, where the price increases over the past year have been the strongest. She also sells personal insurance such as automobiles – where claims plummeted last year while drivers stayed home – and owns a benefits business.
Hartford is no stranger to negotiating large contracts, swelling three years ago with the $ 2.1 billion acquisition of Navigators, a specialty commercial insurer. The year before he sold a portfolio of life insurance businesses to a consortium led by Atlas Merchant Capital of Bob Diamond.