Like Father, Like Son: Evan Greenberg Seeks Insurance Empire

(Bloomberg) -- Another Greenberg wants to turn an insurance-industry giant into a behemoth.

Evan Greenberg has already built Chubb Ltd. into the second-largest U.S.-listed insurer, with a market value almost double that of American International Group Inc. -- the industry powerhouse his father, Maurice “Hank” Greenberg, ran for years. Now he’s looking to get even bigger.

Chubb’s proposed $23 billion acquisition of Hartford Financial Services Group Inc., announced Thursday, would expand the company’s reach into the small-business insurance industry and add a fund manager and employee-benefits operation. It comes roughly five years after Chubb combined with Ace Ltd. in what at the time was the industry’s biggest deal ever.

Even without Hartford, Evan Greenberg’s business is an empire spanning more than 54 countries and territories and comprising operations including a lucrative high-net-worth segment and businesses serving multinational corporations.

“He has a long track record of making stuff work, and that’s pretty rare,” Paul Newsome, an analyst at Piper Sandler Cos., said of the 66-year-old Chubb chief executive officer. “I think the Chubb people wouldn’t make a formal offer unless they were quite serious about making it happen.”

Hartford’s board is reviewing the deal with its advisers, the company said Thursday.

Greenberg’s string of takeovers harks back to the taste for acquisitions his father showed in building AIG into a colossus that once had a market capitalization topping $220 billion. Hank Greenberg, 95, stepped down from running AIG in 2005 as the insurer grappled with regulatory probes. Then, the 2008 financial crisis nearly ended the firm, which took a government bailout that swelled to more than $182 billion.

Pandemic Impact

Chubb’s Hartford proposal comes as more certainty creeps back into the market a year after the Covid-19 pandemic began. Hartford’s stock was beaten down in 2020 as the crisis spurred lawsuits regarding whether business-interruption coverage applied. The shares slumped 19% last year, compared with the S&P 500’s 16% gain.

But a mix of motions and case withdrawals have started to chip away at that risk, and Hartford CEO Chris Swift said last month that pending case counts against the firm had dropped about 25%.

Chubb’s offering to pay roughly 13% more than Hartford’s closing price Wednesday of $57.41.

Chubb “now has good presence within the middle market and the large-accounts space, both in the U.S. and globally,” Elyse Greenspan, an analyst at Wells Fargo & Co., said in a phone interview. “But that small-commercial presence is something that they’ve been working on building, and that’s kind of the crown jewel of the Hartford.”

Meyer Shields, an analyst at Keefe Bruyette & Woods, said mega deals in the insurance industry often wind up hurting the acquirer, but “it’s really hard to point to that throughout the entire history of Ace and Chubb.”

What Bloomberg Intelligence Says

“Chubb has already pulled off a large transformative acquisition in 2015 and could do it again with the proposed $23.3 billion deal for Hartford that may be accretive to EPS, given its majority cash mix.”

--Matthew Palazola, senior industry analyst, and Kylie Towbin, associate analyst

Insurance wasn’t a given for the son of AIG’s CEO. Evan took a winding road to the industry, working odd jobs such as a cook at a nursing home and bartender. He wanted to be a veterinarian in high school and attended New York University at night although he did not get a degree. But once he settled on insurance, he rose through the ranks at AIG, and became president in 1997.

He eventually left and later joined Ace Ltd. to lead reinsurance operations in 2001. Greenberg was promoted in 2004 to the CEO spot at Ace.

For years, he pieced together deals to help expand the company, purchasing a life-reinsurance business from Hartford in 2006, buying an accident, health and life-insurance unit from Aon Plc in 2008, and snapping up an operation serving wealthy clients from Allianz SE in 2015.

But he made the biggest splash in the M&A market with the deal to combine Ace and Chubb in an almost $30 billion transaction. That gave Ace a lucrative high-net-worth business and expanded its presence in the middle-market commercial-insurance sector. Chubb’s stock has gained roughly 44% since Jan. 14, 2016, the day that transaction closed.

Greenberg’s Hartford deal isn’t necessarily a given. Mark Dwelle, an analyst at RBC Capital Markets, said the proposed price is “much lower” than he would have expected. And Dwelle said he wouldn’t rule out other bidders such as Berkshire Hathaway Inc. -- the biggest U.S. insurer by market value -- and Travelers Cos.

A combined Chubb and Hartford could be a formidable competitor for companies such as Travelers, according to Shields at KBW. Greenberg has long promoted a hard-driving culture, once telling staff that he’d be willing to throw himself “out the window” to win an account that was $50,000 or more.

“He’s got very clear ambitions in terms of growth and he’ll run the company with that culture,” Shields said. Chubb is “a very, very efficiently run company.”

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