Chubb Makes $23 Billion Offer For Insurance Rival Hartford

The insurance company Chubb Ltd. has offered a $23.2 billion cash and stock deal to acquire its rival Hartford Financial Services Group Ltd., Reuters reported on Thursday (March 18).

Hartford has said the company received a takeover bid from Chubb — which provides property and casualty insurance — but did not disclose the terms of the offer. According to Reuters, Chubb hadn’t received a response as of Thursday, and said that “even if a deal is agreed upon, its terms, structure or timing cannot be assured.”

If the deal did go forward, it would be the industry’s largest since Aon Plc acquired Willis Towers Watson for $30 billion last year, and the largest in the American property and casualty insurance sector since Chubb merged with ACE Ltd. five years ago in a $28 billion deal.

Per Reuters, analysts at Wells Fargo say that Hartford’s small-business insurance franchise is likely the biggest selling point for Chubb, which focuses on insuring mid- to large-sized companies and has roughly $9.4 billion in excess capital.

Wells Fargo’s analysts “noted that previous deals in the P&C space valued companies at upwards of 1.8-times book value, likely seen as a baseline for negotiation by The Hartford, which traded at 1.14-times prior to Thursday’s news,” Reuters said. “A 1.75-times valuation would price The Hartford at $30 billion.”

The acquisition offer comes at a time when a changing business climate is forcing the small business insurance market to reassess the way it offers products to SMBs as well as the products themselves. “Insurance needs to adapt to the small business today, because small businesses have really seen a change in the risks they face,” said Superscript Digital Risks Chief Underwriting Officer Ben Rose in a recent conversation with PYMNTS. “A decade ago, the largest risks a business faced were physical risks, but in many cases, that’s changed.”