ZURICH, Oct. 7, 2021 /PRNewswire/ -- Chubb Limited
(NYSE: CB) today announced a definitive agreement to acquire the
life and non-life insurance companies that house the personal
accident, supplemental health and life insurance business of Cigna
(NYSE: CI) in seven Asia-Pacific
markets for $5.75 billion dollars in
cash.
The operations to be acquired include Cigna's A&H and life
business in Korea, Taiwan,
New Zealand, Thailand, Hong
Kong and Indonesia and its
interest in a joint venture in Turkey. These operations
generated approximately $3 billion in
net premiums written in 2020.
This highly complementary transaction advances Chubb's strategy
to expand its presence in the Asia-Pacific region, a long-term growth area
for the company, and adds to an already sizable A&H business
while expanding the company's Asia-based life insurance presence. Upon
completion of the transaction, Asia-Pacific's share of Chubb's global
portfolio will increase from approximately $4 billion to $7
billion in premium and represent approximately 20% of the
company (excluding China).
Over 80% of the premiums from the business to be acquired are from
supplemental A&H products, further building Chubb's leadership
in global supplemental A&H, with premiums growing from
$3.7 billion to $6.1 billion. Together, A&H and life
will comprise 21% of the company's overall premium revenue compared
to 14% today.
"The addition of Cigna's business, which is overwhelmingly
A&H, will further balance our global portfolio toward this
important region," said Evan G.
Greenberg, Chairman and Chief Executive Officer of
Chubb. "We have long admired and respected Cigna's business
in Asia including its talented
people, innovative products, technical and analytical capabilities,
distribution and management. We know these businesses well as
we already have a sizable operation of our own in the region and
globally. These businesses produce very stable, high-quality
earnings. The digital opportunity across the region is large
and untapped and suitable for our direct-marketed A&H products
and our consumer P&C and simple life insurance products.
We are looking to the future. Broadly across the region,
Chubb will be better able to capitalize on market and product
opportunities with strong brand, complementary direct marketing
skills and the cross-selling of Chubb's non-life product to life
customers."
"Our agreement with Chubb is another step forward in advancing
our strategic focus on our global health services portfolio," said
David M. Cordani, president and
chief executive officer, Cigna Corporation. "We are proud of
our success in building these accident, supplemental and life
benefits businesses in Asia
Pacific and improving the well-being and sense of security
of our customers throughout the region."
Attractive Shareholder Returns
The underlying
economics and value creation of the transaction are very
attractive. Upon close, the transaction is expected to be
immediately accretive to Chubb's core operating earnings per share
and return on equity (ROE) for full-year 2023 by 6% and
approximately 55 basis points, respectively. Deal ROE goes
from 11% to 14% over five years after PGAAP adjustments. The
company also expects a strong return on investment (ROI), with a
three-year ROI of 15% and an IRR of approximately 20%. The
tangible book value per share dillution is expected to earn back
within six months. There is strong, steady cash generation
with high dividend payout capacity of approximately 70% of
operating income. The company will maintain its strong
balance sheet and does not expect the transaction to impact its
current AA investment grade rating or its capital management
commitments, including its current share repurchase program and
annual dividend.
Financing, Efficiencies, Closing and Approvals
The
$5.75 billion cash consideration is
not contingent upon financing. Chubb estimates that it will
realize in excess of $80 million of
expense savings. The transaction is expected to be completed
in 2022 and is subject to required regulatory approvals and
customary closing conditions.
Please refer to the presentation titled "Chubb to Acquire
Cigna's Personal Accident, Supplemental Health and Life Insurance
Business in Seven Asia-Pacific Markets," which is posted on the
company's investor relations website, investors.chubb.com, in the
Events & Presentations section for further information on the
transaction.
About Chubb
Chubb is the world's largest publicly
traded property and casualty insurance company. With operations in
54 countries and territories, Chubb provides commercial and
personal property and casualty insurance, personal accident and
supplemental health insurance, reinsurance and life insurance to a
diverse group of clients. As an underwriting company, we assess,
assume and manage risk with insight and discipline. We service and
pay our claims fairly and promptly. The company is also defined by
its extensive product and service offerings, broad distribution
capabilities, exceptional financial strength and local operations
globally. Parent company Chubb Limited is listed on the New York
Stock Exchange (NYSE: CB) and is a component of the S&P 500
index. Chubb maintains executive offices in Zurich, New
York, London, Paris and other locations, and employs
approximately 31,000 people worldwide. Additional information can
be found at: www.chubb.com.
Cautionary Statement Regarding Forward-Looking
Statements:
Forward-looking statements made in this
press release, such as those related to the acquisition of the
businesses noted above, potential post-acquisition performance or
otherwise, reflect our current views with respect to future events,
business transactions and business performance, and are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements involve risks and
uncertainties that could cause actual results to differ materially
from such statements, including without limitation, statements
about the anticipated benefits of the proposed transaction,
including future financial results; the expected timing of
completion of the transaction and our ability to complete it;
receipt of any required regulatory approvals and completion of
other closing conditions; our ability to integrate the acquired
businesses, operations and employees; general competitive,
economic, political, insurance and reinsurance business market
conditions; and judicial, legislative, regulatory and other
governmental developments, as well as management's responses to
these factors, and other factors identified in our filings with the
Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the dates on
which they are made. We undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
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SOURCE Chubb Limited