Finnegan will assist with the transition and be executive vice chairman for external affairs of North America. Ace’s board will be expanded to 18 members, with four from Chubb.
“Combined, with a larger, stronger balance sheet, we will be even better positioned to compete and win in a market environment in which size, global reach, and differentiating capabilities are increasingly key to long-term success,” Finnegan said in a conference call.
‘Hunger Builds’
Greenberg, who was named to lead Ace in 2004, had predicted a wave of mergers and acquisitions among insurers amid increased competition.
“That hunger builds,” he said in October. “I expect you’ll see more M&A activity as time goes on. I expect you’ll see more of a feeding frenzy for what comes to market.”
The transaction is expected to be completed in the first quarter of next year and will immediately add to earnings per share and book value, Ace said. The buyer forecast annual savings of about $650 million before taxes by the third year after closing, according to the statement.
Ace plans to fund the deal through a combination of cash on hand and the issuance of $5.3 billion in senior notes with a range of maturities. Chief Financial Officer Phil Bancroft said the company will probably limit share buybacks.
The combined company will be based in Zurich and maintain substantial operations in New Jersey and also in Philadelphia, a center of Ace’s U.S. operations, the company said.
Morgan Stanley is the banker for Ace, which is getting legal advice from Sullivan & Cromwell. Chubb is using Guggenheim Securities and Wachtell, Lipton, Rosen & Katz.