ACE’s Greenberg Addresses Chubb Employees on Buyout

A landmark purchase was announced this week when ACE Limited released news that it planned to acquire Chubb for $28.3 billion.

Once the transaction is completed the combined companies will operate under the Chubb name.

The purchase will provide ACE shareholders with 70 percent of the combined company, and Chubb shareholders with a 30 percent premium to Chubb’s June 30 closing price of $95.14 and is expected to create a financially strong, global company that will offer a wide range of products.

Working to complete the transaction by the first quarter of 2016, Evan Greenberg, chairman and CEO of ACE Limited, spoke at length during a Chubb employee town hall meeting webcast on July 20, 2015. He addressed Chubb employees on the vision for the newly combined companies, immediately noting the elephant in the room, whether Chubb employees would keep their jobs.

“Moments like this create tremendous uncertainty. They make people uneasy, and the one promise I can give you is to the extent I am in control of it, we will make decisions rapidly and that we’ll communicate and provide answers and clarity as we know it and as we’re allowed to provide it,” said Greenberg, in an attempt to reassure employees.

ACE is a company that is experienced in mergers, having acquired 15 companies in the past 12 years. Half of the company’s business is outside the United States, Greenberg said.

“We’re deep in the markets around the world, in Asia and Latin America and Europe. You take places like Malaysia. We’re not there with one or two offices. We have 25 offices around the country,” said Greenberg.

During the same period, ACE’s income has grown from $500 million a year to $3.8 billion (as of 2014).

“We’ve grown at twice the rate of the industry and our average combined ratio is seven points better than North American or international peers,” said Greenberg, a 40 year insurance industry veteran. “Only one company was either equal or even better in one or two years than us, and that’s this company, Chubb.”

Future Plans

Greenberg emphasized that the result of the North America merger will be a “merger of equals” looking at each company’s strengths.

“In management there isn’t going to be ACE lording over Chubb, nor Chubb lording over ACE. It’s a merger of equals in that way,” added Greenberg.

He explained that the merger won’t result in a cobbling of two organizations together.

“You’re not going to end up with two home offices, you’re not going to end up with two of all support functions, you’re going to have one; and internationally we are going to fold the Chubb organization in the various countries into the ACE operations,” explained Greenberg. “And when we eliminate duplication at the same time we’re going to engineer for efficiency and for elegance.”

The ACE CEO also emphasized that there won’t be several layers of management – decisions will be made quickly, he said.

“We’re a flat organization. There’s not a lot of layers of management in the company, and the higher you go in the organization, the harder you’re expected to work,” Greenberg said.

Employee benefits at each company will remain the same through 2016.

Besides the business aspect of merging the two companies, he explained what he felt the hardest part will be – the merging of two different company cultures.

“The hardest part is integrating cultures and paying attention to those norms of behavior that people share in common and that they prize about their organization. That’s culture, and how we communicate, how we think about that, how we articulate that and the process we all go through, which takes time,” Greenberg said. “I don’t kid myself about that, it will take us time to form one culture, but the way to do that is to pay attention to it, give great respect to it, recognize it, and help people through that journey of it.”

To stem possible resignations as a result of the announcement he said the companies were already working to create a retention plan.

Enhanced Claims Training Program

Speaking about claims, he remained optimistic, and said he anticipates continued excellence in that area. He said both companies are committed to claims service, noting ACE’s ability to handle large, more complex claims. The high marks Chubb has earned for claims handling in the high-net-worth and middle market arena will serve as an educational model for ACE, according to Greenberg.

“Both companies…are committed to claims service. Chubb has built a claims organization that is very close to the customer. Chubb has a reputation born particularly out of high-net-worth and the middle market and frequency claims that is just stellar,” Greenberg said. “We will do nothing to damage that and ACE will learn from that… but ACE- we get good marks for our claims service, and we’re seriously committed to claims service.”

He addressed Chubb’s service reputation, indicating the company is skilled in quality customer service.

“We will preserve, enhance, and learn from the Chubb claims practices and organization,” Greenberg said “We’re committed to great service, which is one of the reasons why we decided to take the Chubb name. I don’t know any other way to show respect to somebody to begin with than to say we’re going to take your name.”

Leadership Team Announced

ACE Limited announced the leadership team likely to be appointed for the company’s North American insurance operations. The appointments will take effect upon completion of the acquisition of Chubb.

John Lupica will serve as vice chairman of the parent company and co-president of the North America Insurance division. Lupica’s scope of responsibility will include all property/casualty products, underwriting, claims, actuarial and support functions related to these businesses.

Dino Robusto will serve as executive vice president of the parent company and co-president of the North America Insurance division. The company’s personal lines insurance business serving affluent and HNW individuals and families in North America (known as ACE Private Risk Services and Chubb Personal Insurance) will report to Robusto. In addition, he will have executive responsibility for the company’s North American claims organization serving both commercial and personal property/casualty customers.

Harold Morrison, Jr. will serve as senior vice president of the parent company and executive vice president and chief field officer for the North America Insurance division. He will be responsible for the branch and field organization, which includes more than 50 offices in the U.S. and Canada.