Big ACE-Chubb Deal Triggers ‘Feverish’ Merger Speculation

By Brooke Sutherland and | July 1, 2015

  • July 2, 2015 at 11:10 am
    KC Cowgirl says:
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    Wow, what a snafu this will be for employee’s. Just another conglomerate gobbling up another insurance company with employee’s paying the price. As though Chubb’s environment isn’t already a sweat shop with their “best practices” nonsense, unethical behavior and overworking of their employees. Now Greenberg will be at the helm. Oh Joy! While this is good news for stockholders, investors and the wealthy, this is bad news for their employees.

    • July 2, 2015 at 2:22 pm
      Agent says:
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      The most often affected are the mid level management types who are replaced by the acquiring company with people they want running the show. Lower end worker bees may be left alone since they are needed for processing business.

      • July 2, 2015 at 3:07 pm
        I don't agree, Agent says:
        Hot debate. What do you think?
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        Been there. It’s mostly the worker bees that pay the price.

    • July 2, 2015 at 4:41 pm
      integrity matters says:
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      KC Cowgirl –

      Do you or have you ever worked at Chubb?

      I haven’t but know many that have. Tough, well disciplined but fair is what I have heard. They have had a very good reputation in the industry, as well.

      I’d like to hear from some “chubbies” with their opinion.

      • July 6, 2015 at 8:57 am
        KY jw says:
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        I don’t work there, but I have worked with Chubb on many occasions. I never got the impression the employees were overworked, stressed or morally bankrupt.

        • July 14, 2015 at 12:06 pm
          Agent says:
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          Who knows what ACE will do with the Chubb employees? I am sure they will make some efficiency studies to see if Chubb has too many or too few employees to do the job. I stand by my original statement that mid level management employees will probably feel the brunt of any cuts if they decide to do that. I have seen it before with other companies over the years and it will probably happen in this case as well.

  • July 2, 2015 at 1:55 pm
    BigIGuy says:
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    I fear that the smaller, regional and super-regional carriers may become takeover targets. These are the carriers that are getting the highest marks for agent satisfaction. Those grades may not last once they become part of large national carrier groups.

  • July 2, 2015 at 2:35 pm
    Underwriter says:
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    KC Cowgirl – I’m not sure which employees you interact with, but I work for Chubb and you couldn’t be further off the mark with your comment regarding “unethical behavior and overworking of their employees”… I’ve literally never heard of Chubb being unethical (especially given our prestigious brand name) and experience first hand the very positive work/life balance the company offers. We follow “best practices” for a reason, and it’s apparently worth quite a bit of money to investors & customers.

  • July 2, 2015 at 7:03 pm
    Yogi Polar Berra says:
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    The only thing that can resolve M&A fever is … more cowbell.

  • July 2, 2015 at 7:41 pm
    Tomodachi says:
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    Say it ain’t so, Joe, say it ain’t so . . .

  • July 8, 2015 at 9:31 am
    CT Agent says:
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    So, what this article is saying is, size matters? Sophomoric overtone aside, I see this being a little more isolated. Ace needed Chubb as much as Chubb likely needed to shed some overheard cost by combining with Ace. Many will lose their jobs over this. However, I would think given a choice of employees, the Chubb employees are more likely to be retained. They do intend to set up shop in NJ supposedly. The other speculation here that could be of benefit to Chubb, is that the ACE parent company is not based in the US which may give Chubb some ability to maneuver profit off shore for a substantial tax savings? Also, ACE needs Chubb’s acumen to stabilize that high end market they desperately are trying to become a big player in.

    That said, AIG has been shedding companies not buying them. Allstate is already huge. Travelers is the only one that I could see giving it thought. Their pricing year over year is unstable and subject to massive price swings. Acquiring additional carriers and expanding their book or allowing itself to be acquired by another non-us based carrier might be worth it They also reside in CT…a state that appears to be unfavorable for business to thrive. Moving out of CT might be smart for them.

    **I am speculating of course and openly admit I could be completely off base. Just rambling thoughts.

    • July 8, 2015 at 11:54 am
      CT Agent says:
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      I should add that I was just told that PURE, another cog in the high end insurer market intends to sell once it reaches a key book value in the next 2 years…making it a perfect target to be purchased by a competitor. The timing of which I believe is coincidental to the Chubb-Ace merger. (PURE is owned by venture capitalists) Either Chubb/Ace, AIG Private Client or some other multinational conglomerate would be the most likely consumer interested in getting into the high net-worth market.

      • July 14, 2015 at 10:43 am
        NA says:
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        PURE is basically a reciprocal exchange, which makes them hard to purchase strictly for blending their book into an existing one. Once they hit critical mass, which should get easier given their pricing and the HNW market consolidation, they’ll no doubt sell and cash out. Probably not to AIG given the founders came from AIG. Probably not Ace/Chubb/Fund either given the internal work to integrate the companies ahead of them and the relative size of Pure’s book.

        I wouldn’t want to be one of the Fireman’s Fund employees acquired by Ace. Chubb’s management is of a much higher quality than Ace and will probably be put in charge of PL. Greenberg has not hid his displeasure with Ace PRS’s historically lackluster results, so current Ace employees should be nervous too. Someone could probably start another company will all of the personnel who will be shed.

    • July 10, 2015 at 4:54 pm
      nomesaneman says:
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      CT, I think you are spot on with the offshore tax advantage angle – especially given the price ACE paid for Chubb. ACE is based in Zurich Switzerland. Travelers, however, is actually based in Minnesota. They moved occurred after the “merger of equals” with St Paul about 10 years ago, forming the short-lived “St Paul Travelers Companies”. They changed the name back to “Travelers” a few years later.

    • July 14, 2015 at 10:52 am
      Agent says:
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      Does anyone remember Travelers buying a Canadian company a year or so ago for about $1.2 Billion? They could have more plans for acquisition. The problem with very large companies is that they are typically not as responsive to agents and customers as the regional markets.

  • July 10, 2015 at 3:39 pm
    V says:
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    This merger activity is primarily driven by rigged low interest rates, which is killing investment income for the insurance industry. The acquiring companies, are leveraging themselves up when they should be doing the opposite. These companies will be forced to cut staff to the bone.

    • July 13, 2015 at 6:57 pm
      TruthorFiction says:
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      I disagree they are leveraging up. Here is the transaction for Chubb – 49% stock and 51% cash. Of the Cash, $9 Billion is from Cash on hand and $5.3B is from Senior Debt. I would not consider $5.3B of $28 Billion a “leveraging up” proposition. Tokio Marine is acquiring HCC for roughly $8B all from operating Cash, no leverage.

  • July 17, 2015 at 11:04 am
    Survivor says:
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    Seems like all the merger or buy out chatter from insurance merger professionals is very similar to what we heard when Insurance Company of North America (INA) “merged” with little Aetna. Oh so many good things would happen in the long run and how each company complimented the other. And profit predictions were to come about from the formation of CIGNA. Results: staff reductions, location mergers, organized mass confusion as who was “top dog”, personal lines would eventually be sold off or run off, P&C market exited, and today CIGNA is a health organization. I know, I lived through it but did keep my CIGNA stock.

    • July 17, 2015 at 2:39 pm
      Agent says:
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      Hi Survivor, I also had Little Aetna & INA back in the day. I remember all the promises made and their spiel about why I should book roll my other markets to them for additional contingency opportunities etc etc. I did not do that and am glad I didn’t because I smelled a rat and have seen all the scenarios with company mergers over the years.

  • September 28, 2015 at 2:47 pm
    ALAN ALBERTI says:
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    I am a retired employee who worked for chubb for 41 years. with the takeover by ace, chubb will have to cancel their 401k’s. what will happen to my 401k. will it be taken over by ace.? I understand that the employees working for chubb now, will be given the ace 401k’s. when I called the chubb retiree benefits, they knew nothing about the retiree 401ks. thank you



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