As predicted by stock analysts and Gov. Ned Lamont himself, courtship of The Hartford Financial Services Group continues.
The Hartford on Thursday confirmed it has received — and rejected — two additional offers from global insurer Chubb Limited, based in Switzerland.
“The Hartford’s board of directors, after consultation with its financial and legal advisors, unanimously rejected both proposals, determining that entering into discussions regarding a strategic transaction would not be in the best interests of the company and its shareholders,” The Hartford said. “The board also unanimously reaffirmed its conviction and confidence in The Hartford’s strategic business plan.”
Citing its “impressive outlook” and “strong capital position,” the company also announced Thursday that it would increase and accelerate its share buyback program to $2.5 billion over 2021 and 2022.
The Hartford last December had set a target of $1.5 billion in repurchases for those two years, but will now repurchase $1.5 billion worth of its stock in 2021 alone, and another $1 billion in 2022.
The announcement came alongside the company’s first-quarter earnings, which fell 9%, to $244 million from a year earlier.
Chubb sought to up the ante after its initial unsolicited takeover bid in March was unsuccessful. The initial offer had valued The Hartford at $65 per share, or $23 billion.
The Hartford revealed Thursday that Chubb told the company on March 30 that it was prepared to offer in excess of $67 per share if The Hartford would engage in “meaningful discussion and due diligence.” A subsequent letter from Chubb on April 14 offered to increase its bid to $70 per share (60% cash, 40% Chubb stock), identifying that price as “the top end” of Chubb’s range.
The offer in that letter, from Chubb CEO Evan Greenberg, was more detailed than the first. Chubb, which was hoping to announce a deal by May 19, said two or three Hartford directors would join its board and that Swift would be offered a key role on the executive management team. Chubb also attempted to assuage any concerns about a potential acquisition’s impacts on The Hartford’s home city and region, saying it would honor
The Hartford’s pledged donations to the city and that it would make the city a “major technology and operations center” for Chubb.
“I have never been more excited about The Hartford’s future,” Chairman and CEO Christopher Swift said in a statement. “Going forward, the macroeconomic environment and favorable industry outlooks should provide significant tailwinds, which when coupled with our strong portfolio of businesses and the continued execution of our strategy, position us to deliver accelerated growth and continued margin expansion as evidenced by our strong underlying results this quarter.”
Several stock analysts pressed Swift during The Hartford’s Thursday earnings call about his and the board’s thinking on merger considerations, but Swift mostly declined to elaborate. Responding to one analyst, Swift said he and Greenberg had not met in person to discuss Chubb’s solicitation, citing the pandemic, and said correspondence was mostly through written letters.
Another analyst asked what it might take for the board to enter talks with a potential acquirer. Swift didn’t bite.
“I think our statements are clear and unambiguous as far as our intentions, our views,” he said. “We know our fiduciary duty, so that’s all I’m going to say.”
