Jul. 1, 2015, 3:47 PM
- "The management teams of virtually every large property-casualty company will be having a conversation today about whether they should be more active acquirers,” says Sandler O'Neill's Paul Newsome.
- Before sellers get too excited, they should note the price Ace is paying for Chubb is just 1.7x book value - a discount to what high-quality insurance businesses typically sell for. "“I probably need to reassess what I’m holding out for because I’m never going to get that big price-to-book multiple now," says Newsome. "If a much-vaunted, well-regarded shop gets 1.7x book value, what should the mid-cap company that lacks scale and is kind of struggling get?”
- Possible buyers would include AIG, Allstate, and Travelers. With each having less than a $15B market cap, maybe on the block: W.R. Berkley (WRB +5.2%), Arch Capital (ACGL +2.7%), XL Group (XL +2%), and Cincinnati Financial (CINF +4.5%). Sporting just an $18B market cap and thus also maybe a target is Hartford Financial (HIG +6%).
- "There is now literally no deal that cannot be contemplated in P&C," says Citi's Todd Bault.
- Source: Bloomberg
- Previously: Ace builds more scale with Chubb purchase (July 1)
- Previously: P&C stocks on the move after Chubb sale (July 1)
- Previously: ACE buying Chubb in cash and stock deal for $28.3B (July 1)
Sep. 29, 2011, 9:45 AM