According to a report published on Bloomberg, global primary insurance carrier and reinsurance company Chubb is looking at significant expansion opportunities, with a potential $22 billion acquisition of the Hartford said to be being explored. Update: Chubb confirmed it had made a $23.24bn offer for the Hartford.
Bloomberg said that its sources point towards what would be one of the insurance and reinsurance industry’s largest acquisition deals being possible, as Chubb led by Evan Greenberg looks at options that could deliver a significant growth opportunity for the company.
The sources, who didn’t want to be named because these discussions are private in nature, told Bloomberg that Chubb has already made a preliminary takeover approach for the Hartford.
It’s said that discussions between the pair are at a very early stage and may not lead to any transaction.
As we’ve said before, it’s not unusual for major companies in the insurance and reinsurance space to be in informal discussion regarding potential synergies they’d expect to realise if they came together.
Sometimes even a meeting of two CEO’s can be enough to spark rumours of an acquisition or merger.
However, in the case of Chubb, it is widely understood that Greenberg is keen to grow the company and turn it into one of the world’s largest.
The Hartford would be a good fit, as there are many areas of the business that it and Chubb compete, while also a number of areas that potential synergies could be recognised, not least reinsurance.
The $22 billion valuation of the Hartford comes from Bloomberg’s analysis of its market capitalisation.
Chubb’s market capitalisation is said to be roughly $77 billion, making it a significantly larger player due to its greater global diversification.
The Hartford’s shares have more than doubled in price over the last year, while Chubb’s are up roughly 70%.
Following this news breaking, Hartford Financial Services Group Inc’s shares rose by almost 10%, while Chubb’s rose by 1% and then fell by more than 2.5%.
Trading in shares in the Hartford were halted briefly due to the volatility in the sudden spike after the rumour of Chubb’s interest broke.
We’ll update you should any further information become available.
Also read: Our recent analysis of Chubb’s third-party capitalised joint-venture reinsurer ABR Re.
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