NEW YORK • Ace, the insurer with operations in more than 50 nations, has agreed to purchase insurance firm Chubb for US$28.3 billion (S$38.3 billion) in cash and stock as Ace chief executive Evan Greenberg extends his acquisition spree.
Chubb investors will receive US$62.93 in cash and 0.6019 shares of Ace stock for each share they own, the firms said yesterday in a statement.
Zurich-based Ace will own 70 per cent of the firm after the transaction closes, and Mr Greenberg will head the merged unit, the statement said.
The purchase price is equivalent to about US$124.13 a share for Chubb investors, or 30 per cent higher than Tuesday's close.
The deal will add coverage for commercial clients guarding against lawsuits and property damage, and for wealthy individuals in the United States protecting their mansions and yachts.
Mr Greenberg, 60, has been expanding Ace through acquisitions around the world, gaining scale and diversifying risk rather than focusing on share buybacks, as Chubb preferred.
"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," Mr Greenberg said in the statement.
Ace advanced 12 per cent to US$113.40 in early trading at 7.55am in New York. Chubb jumped to US$128.
Chubb would have needed a new CEO as Mr John Finnegan, 66, was slated to step down at the end of next year after leading the company since 2002. The combined firm will take the Chubb name.
Ace has bought businesses in Brazil, Thailand and Mexico in recent years. In December, the firm agreed to purchase Allianz SE's Fireman's Fund unit serving wealthy clients, to expand its coverage of luxury homes, yachts and art collections.
Mr Greenberg, the son of former American International Group CEO Maurice "Hank" Greenberg, had predicted a wave of mergers and acquisitions (M&A) among insurers amid increased competition.
"That hunger builds," he said in October. "I expect you'll see more M&A activity as time goes on. I expect you'll see more of a feeding frenzy for what comes to market."