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Merger mania in global insurance industry

Source: Asia Insurance Review | Aug 2015

The global insurance industry has seen a flurry of M&A activity recently as market players have rushed to make deals amongst themselves. 
   Earlier last month, global insurance broker and risk advisory firm, Willis Group Holdings, and international professional services group, Towers Watson, announced that they had agreed to an all-stock merger that valued the combined company at US$18 billion. Meanwhile, multiline property and casualty insurer ACE said it would buy US property insurer Chubb Corporation for US$28.3 billion.
 
ACE-Chubb deal
The ACE-Chubb deal, in which the combined entity will adopt Chubb’s name, will be led by ACE Chief Executive Evan Greenberg, the son of AIG ex-chief Maurice “Hank” Greenberg. “This transaction advances our strategy in a meaningful way and represents an outstanding opportunity to create significant value over a reasonable period of time for both ACE and Chubb shareholders. We are combining two great underwriting companies that are highly complementary,” Mr Greenberg said in a statement.
   The takeover, which is expected to close in the first quarter of 2016, gives ACE access to wealthy clients who pay higher premiums at a time when fierce competition has cut deeply into the industry’s profit margins. In Chubb, ACE gets one of the most well-known brand names in the property-and-casualty insurance industry, as its Masterpiece home-owners coverage is the choice of wealthy Americans to protect their houses.
 
Willis-Towers merger
For the Willis-Towers merger, Willis Group shareholders will own 50.1% of the combined group and Towers Watson shareholders will own the rest. The board of the merged company will consist of six directors from each side.
   Willis Chairman James McCann, will be Chairman of the combined company and Towers Watson Chairman & Chief Executive John Haley, will be its CEO. Willis CEO, Mr Dominic Casserley, will be President and deputy CEO of the combined company while Towers Watson’s Chief Financial Officer, Mr Roger Millay, will be CFO.
 
More US deals in the making
Also in the US, health insurance giant Aetna had also announced its acquisition of smaller rival Humana for $37 billion in cash and stock, whilst industry observers have noted that another deal between Anthem and Cigna could be struck soon.
 
AXIS-PartnerRe-Exor battle continues
Meanwhile, the four-month battle for PartnerRe, at press time, has seen AXIS and PartnerRe improving their merger agreement weeks before their shareholder vote on 7 August. The special cash dividend payable to PartnerRe’s common shareholders has been increased to US$17.50, up from $11.50 when it was first offered in May, said Intelligent Insurer. 
   The companies have also agreed to match the terms contemplated by Exor’s, the investment group of Italy’s Agnelli family, proposed exchange offer for PartnerRe’s preferred shares. 
   The battle for PartnerRe has been acrimonious as Exor disrupted an existing merger agreement between AXIS and PartnerRe and improved its offer twice since its first bid. But at every turn, PartnerRe had insisted that Exor’s offer was inferior to its merger agreement with AXIS. Both companies had also defended their deal repeatedly and have now, sweetened the deal considerably for PartnerRe’s shareholders.
 
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