Chubb looks to buy The Hartford
Insurance giant seeks unsolicited takeover of rival that employs more than 6,000 in Connecticut
The Hartford Financial Services Group, with local roots stretching back centuries and an employer of thousands in the city, is facing an unsolicited takeover attempt by a larger rival.
Zurich, Switzerland-based Chubb Ltd. said it is offering $65 a share, a 13% premium to The Hartford’s closing price Wednesday of $57.41. Shares surged Thursday, closing at $68. The offer values The Hartford at about $23 billion.
“The Hartford’s Board of Directors is carefully considering the proposal with the assistance of its financial and legal advisors,” The Hartford said in a statement. “The Board of Directors is committed to acting in the best interests of shareholders over the long term.”
The Hartford has 18,500 employees nationally and 6,100 workers in Connecticut, with many at its Asylum Hill headquarters in Hartford. The proposed takeover comes after another Hartford-based insurer, Aetna Inc., was acquired by CVS Health Corp., based in Woonsocket, R.I., in a $69 billion deal in 2018.
In a statement released Thursday evening, Chubb said it was “looking forward to constructive, private discussions in order to expeditiously consummate a fair transaction that benefits all of our respective stakeholders.”
“On March 11, Chubb Ltd. presented The Hartford with a proposal for a combination of our two companies that we believe would be strategically and financially compelling for both sets of shareholders and other constituencies,’’ Chubb said.
It was not immediately clear what such a corporate combination would mean for employees of The Hartford or the city itself. The Hartford’s Chief Executive Officer Christopher Swift was one of three executives among Aetna Inc. CEO Mark T. Bertolini and CEO Alan D. Schnitzer of Travelers Cos. Inc. who promised in 2017 to give $50 million to Hartford over five years.
The Hartford disclosed the takeover offer Thursday afternoon, just hours after a report of a possible acquisition by Chubb drove shares of the Hartford-based insurer sharply higher, halting trading. Chubb stock closed down 2.6% to $168.13, off $4.54.
Chubb’s takeover approach is preliminary and at an early stage and may not lead to a deal, according to unidentified sources cited by Bloomberg News, which was the first to report the offer. Chubb is incorporated in Zurich, Switzerland, with U.S. headquarters in Warren, New Jersey.
The Hartford was founded in 1810 as the Hartford Fire Insurance Co. The company has its headquarters in Hartford and offers a range of property and casualty insurance. It is a leading provider of workers’ compensation insurance.
The Hartford sells its products mostly through a network of independent agents and brokers and has more than one million small business customers, according to the company’s website. The Hartford had revenues of $20.5 billion in 2020.
Chubb is by far the larger company, with a market value of about $76 billion, nearly four times larger than The Hartford.
Mark Dwelle, an analyst at RBC Capital Markets, said in a note to investors Thursday that “obviously the details matter — but our initial sense would be that such a combination would not bring a lot to the table for Chubb.”
Dwelle pointed to The Hartford’s attractive small business franchise, but noted that its specialty and middle market businesses are considerably less profitable than Chubb’s “and would require substancial re-underwriting.”
“Similarly, Hartford’s auto/home business which primarily targets mass-market AARP customers is very dissimilar to Chubb’s industry leading high-net-worth product,” Dwelle wrote.” There would also be little to no overlap for Hartford’s Group and mutual fund businesses.”
If acquired by Chubb, The Hartford would find itself being purchased for a second time in its history.
In 1970, The Hartford and the International Telephone & Telegraph Corp. completed what at the time was the largest corporate merger in U.S. history, overcoming a lengthy antitrust challenge sparked by consumer advocate Ralph Nader.
The company was renamed ITT Hartford and remained based in Hartford but part of the larger ITT
ITT announced plans in 1995 to spin off to its shareholders The Hartford along with its industrial products and hospitality, entertainment and information services businesses. The company again became an independent publicly-traded company. It was later given the name The Hartford Financial Services Group.
The Hartford’s storied history includes insuring the only home Abraham Lincoln ever owned, in Springfield, Illinois. In 1940, Babe Ruth purchased a policy for protection against disability. Poet Wallace Stevens spent most of career at the company, composing verses while walking to work from his West End home.
Since 1947, The Hartford has “deputized” more than 111 million children in the insurer’s Junior Fire Marshal program — one of the oldest corporate-sponsored public education programs in the country, the insurer says.