ACE (ACE) and Chubb (CB) have each demonstrated strong operating performance over the past few years. Investments to expand product lines, combined with prudent expense management, have led to lower combined ratios for both entities. ACE and Chubb have combined ratios of 91.3% and 89.8%, respectively. In comparison, North American peers have an average combined ratio of 98.8%, and global peers have a combined ratio of 96.6%.
ACE and Chubb’s North American peers include AIG (AIG), with operating income of $6.6 billion, Hartford Financial Services Group (HIG), with operating income of $1.7 billion, Travelers Companies (TRV), with operating income of $3.6 billion, and XL Group (XL), with operating income of $258 million.
Their global peers include Allianz, AXA, Munich Re, RSA, Zurich, and QBE.
Leading market position
The combined entity will become the world’s number one property and casualty insurance company by underwriting income, with total underwriting income of $3.3 billion. It will become number two in the US public property and casualty insurance business in terms of market cap. In terms of book value and operating income, globally, it will become the fourth-largest public multiline insurance company. The combined entity will have an operating income of $5.2 billion and a book value of $45.9 billion.
In the commercial lines segment, the combined entity will rank second in the US. It will have a significantly enhanced presence in fast-growing markets including Asia and Latin America, with an approximate total premium of $7 billion.
Mergers and acquisition activity has increased in the insurance industry (XLF), with the equity value of takeovers sealed this year reaching its highest level since at least 2000.