Phila. work could shift to N.J., as Ace Ltd. buys Chubb for $28B

Ace Ltd., the Zurich- and New York-based global property-insurance giant, says it will pay $28 billion, or $124.13 a share in cash and stock, for Chubb, the Warren, N.J.-based insurance group. Ace boss Evan Greenberg will be chairman and CEO of the combined company. Greenberg said the deal will be profitable from the beginning, as the companies cut $650 million of "overlap" expenses, out of roughly $4 billion in yearly operating expenses; they also hope to boost sales. Both stocks rose in early New York Stock Exchange trading.

"Ace will continue to maintain a significant presence in Philadelphia," home to the company's company's U.S. property and casualty business; but "a substantial portion of the headquarters function" for the U.S. and Canada will be combined at Chubb's office complex in Warren, Somerset County, west of New York City, the companies said in the statement. Ace also owns the former INA golf course and conference center near Lafayette Hill. The company employed around 2,200 in the Philadelphia area as of 2010. 

Chubb boss John Finnegan will get the title "Executive Vice Chariman for External Affairs of North America" and hang around to help with the merger, which will presumably include laying off duplicate headquarters staff. Finnegan also stands to collect more than $90 million in stock and severance.

Ace had been one of the few remaining large insurance employers in Center City. Health insurer Cigna Inc., which also traces part of its heritage to INA, is the subject of current takeover speculation that could result in office cutbacks; that company moved its headquarters out of Center City and north to Connecticut after CEO David Cordani took over a few years back.

In their joint statement, the companies said their businesses fit well: Ace generally has larger corporate clients, while Chubb targest "mid-market" companies. Chubb also sells insurance to rich people, a market Ace has been trying to enter. Ace and Chubb compete as a business insurer abroad: Ace is in 54 countries, Chubb in 25.

Ace says it will take the Chubb name, since Chubb is an older and more-established brand. (This is common among financial institutions: the largest U.S. commercial banks -- J.P. Morgan Chase, Wells Fargo, Bank of America -- are each brands that buyers scavenged from acquired companies whose names they considered more marketable than, respectively, Chemical, Norwest and NationsBank.) 

Ace reported "administrative expenses" totalling $2.2 billion last year. Chubb said it spent $1.6 billion on combined corporate expenses plus "other insurance operating costs and expenses." They hope to close the merger early next year if regulators approve.