The Hartford rejects 2 more offers from Chubb

HARTFORD — The future of insurance giant The Hartford remains uncertain after the company announced Thursday that it had turned down two more acquisition offers from insurance multinational Chubb Ltd., which has proposed making Connecticut’s capital city a focal point of its operations.

Chubb launched its pursuit of The Hartford with a March 11 offer that valued The Hartford at $65 per share, or about $23 billion. After being rebuffed, Chubb then sent a March 30 letter in which its CEO and chairman, Evan Greenberg, said that his firm was prepared to offer “in excess of ” $67 per share. A follow-up letter from Greenberg, on April 14, outlined Chubb’s willingness to increase its offer to $70 per share, comprising “the top end of our range,” which would value The Hartford at about $25 billion.

“The Hartford’s board of directors, along with its financial and legal advisors, has fully and carefully evaluated the proposal set forth in Chubb Ltd.’s most recent letter of April 14, 2021,” Christopher Swift, The Hartford’s CEO and chairman, said in a letter Thursday to Greenberg. “The board unanimously determined to reject the proposal, confirming its prior determination that entering into discussions regarding a strategic transaction would not be in the best interests of the company and its share

holders. The board also unanimously reaffirmed its conviction and confidence in The Hartford’s strategic business plan.”

Chubb’s initial offer alarmed many state legislators, who expressed misgivings about its potential impact on the Connecticut operations of the 1810-founded The Hartford. Ranking No. 160 on last year’s Fortune 500 list, The Hartford employs about 6,100 in its home state.

In the April 14 letter, Chubb sought to allay concerns with a “community commitment” section. In that part, it pledged to make Hartford a “major technology and operations center,” relocate personnel to the city to “minimize net job reductions” and make “significant new investment to revitalize Hartford and enhance attractiveness of Connecticut for skills-based jobs, including both tech and non-tech related.”

Chubb also said in the letter that Hartford would become a “center for excellence” for group benefits, workers’ compensation and “small commercial and AARP businesses.”

It also promised to have Swift become a “key member” of its executive management team and add two to three of The Hartford’s board members to its own board.

In response to an investment analyst’s question on The Hartford’s earnings call Thursday, Swift said that he had not met with Greenberg and that the firms had interacted through “mostly a letter correspondence.”

“I would just share with you we’re still in a pandemic, so that (in-person meeting) did not happen,” Swift said. “If you really look at our statements and messages that the board has put out, it’s pretty clear that we had no interest in doing it because of ultimately the conviction and commitment around executing our business plan.”

A member of the S&P 500 index, Chubb describes itself as the world’s largest publicly traded property and casualty insurance company. Operating in 54 countries and territories, it employs approximately 31,000 people, with executive offices in cities including New York, London, Paris and Zurich.

In Connecticut, Chubb has locations in Cromwell, Ledyard, New Haven, Simsbury, Stamford and Windsor.

“The path to a transaction would have been engagement coming from The Hartford on the terms of our last proposal,” Chubb said in a statement Thursday. “Although we are disappointed, we want to repeat that our shareholders demand of us, and we demand of ourselves, that we remain a disciplined acquiror. Chubb is well positioned. Our organization has been and remains totally focused, capitalizing on excellent (property and casualty) market conditions and executing our longer-term operating strategies.”

State legislators remain wary of a prospective merger of Chubb and The Hartford. The Democratic chairpersons of the Insurance and Real Estate Committee have said that they plan to schedule oversight hearings to examine how a potential acquisition would affect The Hartford’s policyholders and the general public.

“My concerns from before remain,” state Sen. Matt Lesser, D-Middletown, co-chairman of the Insurance and Real Estate Committee, said in an interview Thursday. “We’re going to make sure we scrutinize the proposed impact on our community with a magnifying glass because it’s potentially very serious. I’m not going to get in the middle of two boards of directors, but I am going to look at the impact of any (potential) merger on the folks I was elected to represent.”

A message left Thursday for Hartford Mayor Luke Bronin was not immediately returned.

The Hartford’s main offices are located at One Hartford Plaza, near Union Station and a few blocks west of the downtown.

Earnings drop, stock buybacks increased

The Hartford also reported Thursday its first-quarter final results, which included a 9 percent year-over-over decline in its earnings, to $244 million.

Those numbers factored in the impact of the $650 million settlement that the company announced last week with the Boy Scouts of America; $214 million in catastrophe losses, which were mainly due to winter storms in areas including Texas; and $185 million in COVID-19-related “excess mortality” losses in group benefits.

The Hartford’s payment would help settle sexual abuse claims against the bankrupt Boy Scouts of America, with those claims related to policies mostly issued in the 1970s. Its payout would go into a proposed settlement trust to compensate abuse survivors, supplementing contributions from a number of other parties.

“Boy Scouts is just a very unique situation,” Swift said. “We’ve been in lengthy and meaningful discussions and intense negotiations with them… that ultimately culminated in what I thought was a fair settlement for all parties.”

“If you think in terms of the nature of the industry, (it) being sexual molestation (claims), they’re not good facts there. On the other hand, we thought we had prudent defenses and legal postures to ultimately defend ourselves, but that would have been costly, that would have been lengthy. As Boy Scouts of America are trying to emerge from bankruptcy, there was an opportunity, and we seized it to work with them and develop the settlement that we did.”

Also Thursday, The Hartford announced that it would increase its share buyback program from $1.5 billion to $2.5 billion. It intends to repurchase about $1.5 billion of shares in 2021 and an additional $1 billion in 2022.

The Hartford’s shares closed Thursday at nearly $67, down 1 percent from Wednesday. They have hit a 52-week high of approximately $70 and a 52-week low of around $30.