Hartford Financial Services Group, the US insurer, has rejected an unsolicited $23bn takeover offer by its rival Chubb, knocking back what would have been a large consolidation in a sector that has suffered badly during the coronavirus crisis.
Chubb, which has grown under Evan Greenberg to become the largest US non-life insurer by market value, last week made a $65-per-share offer for Hartford, a 13 per cent premium to its previous closing share price. The offer was mostly in cash with some stock, Chubb said.
New York-listed Hartford said on Tuesday that its board of directors had unanimously rejected the offer, judging that it “would not be in the best interests of the company and its shareholders”.
The board “reaffirmed its commitment and resolve” to the company’s own strategic business plan, Hartford said. The company’s biggest business is in commercial lines insurance, where steep price rises have followed a wave of pandemic-related claims.
Chubb’s shares, which have fallen 3 per cent in March, were broadly flat in early trading on Wall Street.
Hartford, whose shares are up almost a third this month following news of the approach, was 1 per cent lower in early trading.
People briefed on the matter told the Financial Times last week that any combination of the two companies would face significant regulatory risks.
Chubb did not respond to an immediate request for comment.
“We don’t think that this is a surprise,” said Meyer Shields, an analyst at broker Keefe, Bruyette & Woods, in a note following the news.
A higher bid, either from Chubb or other potential suitors, was “likely”, he added.