Search
Close this search box.

The Hartford rejects Chubb’s acquisition offer

pexels-gabby-k-5849579

The Hartford rejects Chubb’s acquisition offer

Hartford rejects Chubb’s acquisition offer

The proposed deal, valued at approximately $23B, was driven by Chubb’s hunger for small commercial, S&P Global commented.

While the proposal and firm rejection did come as a surprise, John Iten, a director at S&P Global covering the domestic P&C insurance market, said in retrospect the shock shouldn’t have been as large given The Hartford’s upper share level projections.

Less than a week after receiving it, The Hartford‘s board of directors unanimously rejected the unsolicited acquisition offer from Chubb Ltd. The deal was valued at $23 billion.

The Hartford said in a release it would not enter discussions regarding strategic transactions, as such a move would not “be in the best interest of the company or its shareholders.”

The proposal valued The Hartford at $65 per share, which represents a 26% premium based on its unaffected 20-day volume-weighted average share price of $51.70 (as of March 10), according to Chubb. The transaction was to be financed primarily with cash.

While the proposal and firm rejection did come as a surprise, John Iten, a director at S&P Global covering the domestic P&C insurance market, said in retrospect, the shock shouldn’t have been as large given The Hartford’s upper share level projections. To date, The Hartford’s share price has risen 37%, according to The Street.

For the deal to make sense, The Hartford is targeting a share price closer to $80, according to a London hedge fund manager, who spoke on the condition of anonymity as he was not authorized to comment publicly on the proposal. While not confirmed by either insurer, those projections are in line with estimates from S&P Global.

Why The Hartford?

Noting the deal was pretty interesting from the start, Iten said The Hartford’s book of small-commercial policies was the primary attraction.

“That is something Chubb has been trying to increase,” he told PropertyCasualty360.com. “From that perspective, I think the deal made sense. It (small commercial) is not historically where Chubb’s strength has been.”

While there is a strong possibility this deal is dead in the water, Iten did note the proposal was unlikely to catch regulators’ attention. While there is some overlap in certain lines, S&P data showed the companies’ pro forma 2020 market share of 1.9% would rank them 11th nationally.

Asked if the industry should expect more mega-deals as 2021 proceeds, Iten cautioned they are nearly impossible to predict.

“Particularly, major transactions like Hartford and Chubb would have been,” he said, elaborating, “What we do expect to see are small transactions throughout the year.”

This belief is being driven by the flurry of activity seen late last year, primarily in life insurance, as major players such as Allstate and American Financial.

“That has been an interesting development. In most of those cases, the life operations had been part of the group for a long time,” he told PC360. “For all of them to suddenly decide the time is right to sell was interesting.”

Leave a Reply

Your email address will not be published. Required fields are marked *

Related posts

Insurance-technology

InsurTech Priorities for 2024 and Beyond

As we head into 2024, the tech sector is experiencing a shift in focus amid an evolving market landscape. The past few years saw a talent boom with a surge in funding and hiring, leading to widespread workforce changes known as the “Great Resignation.” But recent economic conditions have altered the playing field significantly, with over 86,000 tech layoffs reported in 2024 alone. Now, companies must balance the high cost of operations with new challenges in talent retention and risk management. People, Prices, and Pressures in Tech Managing cash flow has become a top concern for many tech companies. Rising costs and inflation are making it challenging for organizations to sustain growth, with 59% of tech leaders reporting struggles in managing these financial pressures. Interestingly, only 20% are prioritizing funding this year, while 43% are concentrating on increasing revenue through enhanced sales initiatives. This pivot towards financial stability reflects a broader industry sentiment, with over three-quarters of tech firms expressing optimism about market recovery and the potential for growth in product development and automated processes. The Path Forward: Enhancing Risk Management To remain resilient, many tech companies are re-evaluating their approach to risk. While two-thirds of organizations have adopted new risk mitigation strategies, a significant portion is still determining the best path forward. Here are four key strategies that tech firms can consider to strengthen their risk management framework: Looking Ahead: Opportunities Amid Uncertainty Despite current challenges, tech companies are positioning themselves for future success. Economic conditions are stabilizing, interest rates are anticipated to ease, and revenue growth is expected to improve retention rates. By enhancing risk management practices and focusing on strategic growth areas, tech companies can navigate uncertainty with greater confidence and lay a strong foundation for sustained innovation. Ben Jennings, CEO of Embroker, highlights the critical role of innovative insurance solutions in supporting businesses of all sizes and driving future growth in InsurTech. With over 25 years of industry experience, Jennings brings a wealth of expertise in aligning technology and insurance to meet the evolving needs of modern businesses.

Read More
Risk Management

California’s Cannabis Growers Struggle to Find Insurance Amid Rising Wildfire Risks

In California’s wildfire-prone regions, cannabis farmers face unique challenges in securing insurance for their high-value operations. Cannabis, despite its booming $5 billion industry within the state, remains federally classified as a Schedule I substance, preventing many conventional insurance providers from covering the crop. The Wildfire Risk Impacting California’s Emerald TriangleIn areas like Humboldt, Mendocino, and Trinity counties — collectively known as the Emerald Triangle — cannabis cultivators face increased risk. With wildfire seasons growing longer and more intense, even established insurers like State Farm are withdrawing from the market, leaving properties uninsured and at risk. Farmers like Hannah Whyte, whose farm produces up to 1,600 pounds of cannabis annually, have become “uninsurable” under traditional and state-created plans due to federal restrictions. The FAIR Plan’s Limited Options for Cannabis FarmersCalifornia’s FAIR Plan, established to help provide coverage for high-risk properties, excludes cannabis farms, citing federal restrictions. Cannabis growers must either forgo insurance altogether or attempt to cover their farms in other ways — a choice that presents significant risk, especially as wildfires continue to escalate. Regulatory Hurdles and Cost ConcernsEven where insurance is available, premiums for cannabis growers are notably higher than other agricultural sectors, and policies may require additional, costly coverage beyond wildfire protection. Michael Polson, of UC Berkeley’s Cannabis Research Center, highlights that these challenges often stem from policy restrictions on where cannabis farms can be located, placing many within high-risk zones. A Call for Change in Cannabis CoverageAlthough regulatory steps, such as California’s 2022 law allowing insurers to provide cannabis coverage without facing criminal charges, have improved the landscape, the demand for further reform persists. Former insurance commissioner Dave Jones has advocated for expanding the FAIR Plan to include cannabis-related risks, noting that these farmers are essential contributors to California’s economy. As Skyscraper Insurance strives to support a diverse range of clients facing unique challenges, these issues underscore the importance of continually adapting our insurance solutions. At Skyscraper, we aim to work closely with top underwriters and industry leaders to craft comprehensive solutions, even as the landscape of cannabis insurance evolves.

Read More
Try your instant quote