Complementary Businesses and Skills Will Create Global P&C Industry
Leader with Superior Product, Customer and Distribution Channel
Capabilities
Growth and Efficiencies from Greater U.S. Capabilities and Increased
International Presence Will Enhance Earning Power and Drive Substantial
Growth and Future Value Creation
Combination Will Have Greater Growth and Earnings Than The Sum of the
Two Companies Separately
Transaction Immediately Accretive to EPS and Book Value
Combined Company to Assume Renowned Chubb Name
ZURICH & WARREN, N.J.--(BUSINESS WIRE)--
ACE Limited (NYSE: ACE) and The Chubb Corporation (NYSE: CB) announced
today that the Boards of Directors of both companies have unanimously
approved a definitive agreement under which ACE will acquire Chubb.
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.
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Together, ACE and Chubb will create a global leader in commercial and
personal property and casualty (P&C) insurance, with enhanced growth and
earning power and an exceptional balance of products as a result of
greater diversification and a product mix with reduced exposure to the
P&C industry pricing cycle. The combined company will remain a growth
company with complementary products, distribution, and customer
segments, a shared commitment to underwriting discipline and outstanding
claims service, and substantially increased data to drive new,
profitable growth opportunities in both developed and developing markets
around the world. 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.
Growth and Earning Power of the Combination
“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.”
Complementary Presence and Capabilities
In the United States commercial lines business, ACE provides a broad
range of products and services for industrial commercial, multinational
and upper middle market companies with distribution substantially
through a major brokerage presence. Chubb is primarily a middle-market
commercial, specialty and surety insurer with a broad product portfolio
and a major agency presence. In personal insurance, Chubb is a leading
provider of personal lines coverage to high net worth customers in the
U.S. while ACE has been increasingly focused on these customers as well.
Outside the U.S., ACE is a premier commercial insurer with a presence in
54 countries and a broad product, customer and distribution capability.
Chubb’s operations in 25 countries will complement and deepen ACE’s
presence. ACE has a leading market position in global accident and
health (A&H) and both companies offer complementary personal lines
offerings in Canada, Europe, Asia and Latin America. The combined
company will have a leading position in professional lines globally with
broad product offerings for all sizes of commercial customers.
“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.”
Attractive Shareholder Returns
It is expected that the transaction will be immediately accretive to
earnings per share and book value, and by year three, the transaction
will be accretive to EPS on a double-digit basis and will be accretive
to ROE. It is anticipated that the ROI will exceed ACE’s cost of capital
within two years, result in a double-digit return by year three, and
tangible book value per share will return to its current level in three
years.
Management, Board of Directors, Name and Headquarters
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. The combined
company will remain a Swiss company with principal offices in Zurich.
Chubb’s headquarters in Warren, New Jersey, will house a substantial
portion of the headquarters function for the combined company’s North
American Division. ACE will continue to maintain a significant presence
in Philadelphia, where its current North American Division headquarters
is based.
Financing, Efficiencies, Closing and Approvals
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.
By the third year after closing, the company expects to realize annual
expense savings of approximately $650 million pre-tax where both
companies overlap. The company also expects to achieve meaningful growth
that will result in substantial additional revenue. By year five,
earnings accretion is expected to be balanced between revenue and
expense-related synergies. The efficiencies created will provide greater
flexibility for the company to invest in people, technology, product and
distribution.
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.
Advisors
Morgan Stanley & Co. LLC is serving as financial advisor and Sullivan &
Cromwell LLP is serving as legal counsel to ACE. Guggenheim Securities,
LLC is serving as financial advisor and Wachtell, Lipton, Rosen & Katz
is serving as legal counsel to Chubb.
Conference Call Webcast and Dial-in Information
ACE and Chubb will hold a joint conference call today at 8:30 a.m.
Eastern. The conference call will be available via live webcast on the
investor relation sections of ACE’s and Chubb’s websites at www.acegroup.com
or www.chubb.com.
Those participating via telephone should dial 888-481-2864 (within the
United States) or 719-325-2214 (international), passcode 3219329. A
replay of the call will be available until Wednesday, July 15, 2015, and
the archived webcast will be available for one month. To listen to the
replay, please dial 888-203-1112 (in the United States) or 719-457-0820
(international), passcode 3219329.
Additional information with respect to the transaction will be posted in
the investor relations sections of the acegroup.com and chubb.com
websites.
About ACE Group
ACE Group is one of the world’s largest multiline property and casualty
insurers. With operations in 54 countries, ACE provides commercial and
personal property and casualty insurance, personal accident and
supplemental health insurance, reinsurance and life insurance to a
diverse group of clients. ACE Limited, the parent company of ACE Group,
is listed on the New York Stock Exchange (NYSE: ACE) and is a component
of the S&P 500 index. Additional information can be found at: www.acegroup.com.
About Chubb
Since 1882, members of the Chubb Group of Insurance Companies have
provided property and casualty insurance products to customers around
the globe. These products are offered through a worldwide network of
independent agents and brokers. The Chubb Group of Insurance Companies
is known for financial strength, underwriting and loss-control
expertise, tailoring products for the needs of high-net-worth
individuals and commercial customers in niche markets and select
industry segments, and outstanding claim service.
The Chubb Group of Insurance Companies is the marketing term used to
describe several separately incorporated insurance companies under the
common ownership of The Chubb Corporation. The Chubb Corporation is
listed on the New York Stock Exchange (NYSE: CB) and, together with its
subsidiaries, employs approximately 10,300 people throughout North
America, Europe, Latin America, Asia and Australia. For more information
regarding The Chubb Corporation, including a listing of the insurers in
the Chubb Group of Insurance Companies, visit www.chubb.com.
Forward Looking Statements
All forward-looking statements made in this press release, related to
the acquisition of Chubb, potential post-acquisition performance or
otherwise, reflect ACE’s current views with respect to future events,
business transactions and business performance and are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. In some cases, you can identify forward-looking statements
by words such as “may,” “will,” “should,” ”expect,” “plan,”
“anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,”
“continue,” “could,” “future,” “project” or other words of similar
meaning. All forward-looking statements involve risks and uncertainties,
which may cause actual results to differ, possibly materially, from
those contained in the forward-looking statements.
Forward-looking statements include, but are not limited to, statements
about the benefits of the proposed transaction involving ACE and Chubb,
including future financial results; ACE’s and Chubb’s plans, objectives,
expectations and intentions; the expected timing of completion of the
transaction and other statements that are not historical facts.
Important factors that could cause actual results to differ, possibly
materially, from those indicated by the forward-looking statements
include, without limitation, the following: the inability to complete
the transaction in a timely manner; the inability to complete the
transaction due to the failure of Chubb’s shareholders to adopt the
transaction agreement or the failure of ACE shareholders to approve,
among other matters, the issuance of ACE common stock in connection with
the acquisition; the failure to satisfy other conditions to completion
of the merger, including receipt of required regulatory approvals; the
failure of the proposed transaction to close for any other reason; the
possibility that any of the anticipated benefits of the proposed
transaction will not be realized; the risk that integration of Chubb’s
operations with those of ACE will be materially delayed or will be more
costly or difficult than expected; the challenges of integrating and
retaining key employees; the effect of the announcement of the
transaction on ACE’s, Chubb’s or the combined company’s respective
business relationships, operating results and business generally; the
possibility that the anticipated synergies and cost savings of the
merger will not be realized, or will not be realized within the expected
time period; the possibility that the transaction may be more expensive
to complete than anticipated, including as a result of unexpected
factors or events; diversion of management’s attention from ongoing
business operations and opportunities; general competitive, economic,
political and market conditions and fluctuations; and actions taken or
conditions imposed by the United States and foreign governments and
regulatory authorities. In addition, you should carefully consider the
risks and uncertainties and other factors that may affect future results
of the combined company described in the section entitled “Risk Factors”
in the joint proxy statement/prospectus to be delivered to ACE’s and
Chubb’s respective shareholders, and in ACE’s and Chubb’s respective
filings with the Securities and Exchange Commission (“SEC”) that are
available on the SEC’s website, located at www.sec.gov,
including the sections entitled “Risk Factors” in ACE’s Annual Report on
Form 10–K for the year ended December 31, 2014, which was filed with the
SEC on February 27, 2015, and “Risk Factors” in Chubb’s Annual Report on
Form 10–K for the year ended December 31, 2014, which was filed with the
SEC on February 26, 2015. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
press release. ACE undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information,
future events or otherwise.
Additional Information and Where to Find It
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any
vote or approval. This press release may be deemed to be solicitation
material in respect of the proposed transaction between ACE and Chubb.
In connection with the proposed transaction, ACE intends to file a
registration statement on Form S-4, containing a joint proxy
statement/prospectus with the SEC. The final joint proxy
statement/prospectus will be delivered to the shareholders of ACE and
Chubb. This press release is not a substitute for the registration
statement, definitive joint proxy statement/prospectus or any other
documents that ACE or Chubb may file with the SEC or send to
shareholders in connection with the proposed transaction. Shareholders
are urged to read all relevant documents filed with the SEC, including
the joint proxy statement/prospectus, because they will contain
important information about the proposed transaction.
Shareholders will be able to obtain copies of the joint proxy
statement/prospectus and other documents filed with the SEC (when
available) free of charge at the SEC’s website, http://www.sec.gov.
Copies of documents filed with the SEC by ACE will be made available
free of charge on ACE’s website at www.acegroup.com.
Copies of documents filed with the SEC by Chubb will be made available
free of charge on Chubb’s website at www.chubb.com.
Participants in Solicitation
ACE, Chubb and their respective directors, executive officers and other
members of management and employees may be deemed to be participants in
the solicitation of proxies in respect of the proposed transaction.
Information about the directors and executive officers of ACE is set
forth in the proxy statement for ACE’s 2015 Annual General Meeting,
which was filed with the SEC on April 8, 2015, and ACE’s Annual Report
on Form 10-K for the year ended December 31, 2014, which was filed with
the SEC on February 27, 2015. Information about the directors and
executive officers of Chubb is set forth in the proxy statement for
Chubb’s 2015 Annual Meeting of Shareholders, which was filed with the
SEC on March 13, 2015, and Chubb’s Annual Report on Form 10-K for the
year ended December 31, 2014, which was filed with the SEC on February
26, 2015. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect interests,
by security holdings or otherwise, will be contained in the joint proxy
statement/prospectus and other relevant materials filed with the SEC.
You may obtain free copies of these documents as described above.
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Source: ACE Limited & The Chubb Corporation