Hartford CEO Surprised by Chubb Proposal; Board Has Now Rejected Three
By Leslie Scism
Chubb Ltd.'s March proposal to acquire rival Hartford Financial
Services Group Inc. arrived with little warning, surprising
Hartford's chief executive.
On March 11, insurance company Chubb offered to buy Hartford in
a roughly $23 billion transaction. After its board discussed the
proposal, Hartford rejected the offer before the end of the
In an interview Thursday, Hartford Chief Executive Christopher
Swift said he received a quick head's up from Chubb that an offer
was coming. But there were no dinner meetings or other advance
conversations about the potential pairing of two of the nation's
best-known property-casualty insurers.
He said the March offer was an impersonal start to what are now
three proposals from Chubb to acquire Hartford. Each one has been
evaluated and unanimously rejected by the insurer's board.
"He wrote us three letters," Mr. Swift said of Chubb's chief
executive, Evan Greenberg. "He didn't ask to sit down with me ahead
of time. He didn't ask to meet. He gave me a head's up one
afternoon he was sending a letter."
As for the proposals: "They just showed up in my email," and the
two companies "corresponded from there," Mr. Swift said.
Early Thursday, Hartford Financial filed with the Securities and
Exchange Commission copies of Chubb's second and third proposals,
along with its first-quarter earnings report. Chubb's third
proposal took the deal price up to $70 a share in a cash-and-stock
deal, from $65 a share in cash as initially proposed. The proposal
letter, dated April 14, said the $70 share price was "the top end
of our range."
The disclosures came as Hartford also said it would boost its
share-buyback program. Mr. Swift said the buybacks reflect
increased confidence that the worst of the coronavirus pandemic is
behind the U.S. economy thanks to vaccines, improved medical
treatments and other developments.
Chubb said in a statement Thursday that Hartford "has chosen not
to engage in response to any of our proposals. The path to a
transaction would have been engagement coming from The Hartford on
the terms of our last proposal."
Chubb didn't have immediate comment on Mr. Swift's description
of the deal process.
A transaction would have been one of the biggest-ever deals in
the U.S. property-casualty insurance industry. In 2016, Mr.
Greenberg merged a business insurer, ACE Ltd., with the
personal-property and business insurer Chubb, and kept the
better-known name, in an approximately $30 billion transaction.
Hartford's shares were down nearly 1% to $66.82 in
early-afternoon trading Thursday. The shares had traded below $60
when the first Chubb approach was made.
Mr. Swift said in the interview that the Hartford directors'
rejection of Chubb's proposals was "a rejection of even
contemplating sitting down because of the strength and the
conviction they have in our strategic plan. We are moving
He added: "The board knows its fiduciary duty. It had its
advisers and lawyers look at everything with a clear eye."
In its first-quarter results, Hartford profit fell 9% to $244
million and "core earnings," which are adjusted to strip out items
considered nonrecurring, dropped 58% to $203 million.
Results included the impact of a $650 million settlement with
the Boy Scouts of America, $214 million in pretax net catastrophe
losses, and $185 million in Covid-19-related excess mortality
losses in Hartford's business of selling life insurance and other
products for employers' benefits packages.
Hartford is a leading seller of insurance to small businesses in
the U.S., which is a franchise Chubb was eager to acquire. Chubb is
best known for selling coverage to protect rich people's personal
property, as well as complex insurance packages for some of the
world's biggest companies.
"We have a strong capital base; we'll buy shares back. We've
been undervalued for a while, but I think clearly better days are
ahead of us, " Mr. Swift said.
Write to Leslie Scism at firstname.lastname@example.org
(END) Dow Jones Newswires
April 22, 2021 14:16 ET (18:16 GMT)
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