The Hartford received an unsolicited purchase offer from Chubb Limited on March 18, 2021. The non-binding proposal, valued at $23.2 billion in cash and stock, is under review by The Hartford’s board of directors and their legal advisors.
If approved, this transaction would continue a trend of mergers and acquisitions in the property and casualty (P&C) insurance industry. Chubb itself was acquired by ACE Limited for $28.3 billion in January 2016, with Chubb selected as the name of the surviving entity.
[UPDATE: On March 23, 2021 The Hartford issued a news release rejecting the Chubb offer. According to the statement, The Hartford “determined that entering into discussions regarding a strategic transaction would not be in the best interests of the company and its shareholders. The board reaffirmed its commitment and resolve in the continued execution of The Hartford’s strategic business plan.”]
The Hartford has also been active on the acquisition front. In May 2019, The Hartford acquired Navigators Group in a $2.1 billion cash transaction. Maxum Specialty Insurance Group was acquired by The Hartford in August 2016 to be run as a separate unit, although the Maxum identity has since been brought under The Hartford’s corporate branding.
Implications for Panel Counsel Law Firms
Both Chubb and The Hartford maintain robust panel counsel programs to defend claims ranging from auto liability, homeowners, premises liability and professional liability to workers compensation. While the number of law firms each insurer works with through its panel counsel program is not published, it easily reaches into the hundreds across the country.
Given the size of each insurer, it would not be unusual for an insurance defense law firm to be active on both the Chubb panel and The Hartford panel.
It is too early to predict the impact of a Chubb-Hartford merger in regard to insurance panel matters, and it’s possible the deal may not go through. Nevertheless, there are a few trends that insurance defense law firms face:
- P&C industry mergers and acquisitions reduce the number of potential carrier clients.
- Many carriers are consolidating the number of law firms on their panels.
- Larger law firms with multiple office locations are gaining favor with carriers.
- Carrier reorganizations, combined with COVID “work from home” initiatives, are making it more difficult to build personal relationships with claims executives.
- Automation is being used by carriers to accelerate the claims resolution process.
Staying ahead of the competition will be an important consideration for managing partners at insurance defense law firms. New business often goes to the law firm with the best marketing. Client e-newsletters, social media marketing, and website updates are a few of many effective ways to increase visibility for your law firm.
About Chubb
Chubb Limited is a publicly traded property and casualty insurer headquartered in Zurich, Switzerland. It maintains operations in 54 countries with approximately 31,000 employees worldwide as of December 2020. Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. Chubb operates through six business segments: North America Commercial P&C Insurance, North America Personal P&C Insurance, North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance, and Life Insurance. Chubb was incorporated in 1985 and started operations in Bermuda.
Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance (A&H), reinsurance, and life insurance to a diverse group of clients. They offer commercial insurance products and service offerings such as risk management programs, loss control, and engineering and complex claims management. Specialized insurance products offered range from Directors & Officers (D&O) and professional liability to various specialty/casualty and umbrella and excess casualty lines to niche areas such as aviation and energy.
Chubb’s personal lines insurance coverage for high-net-worth individuals and families in North America includes homeowners, automobile, fine art (and other valuables), umbrella liability, and recreational marine insurance. These personal lines are offered through independent regional agents and brokers
The company is distinguished by its extensive product offerings, broad distribution capabilities, financial strength, underwriting excellence, claims handling expertise and local operations globally. At December 31, 2020, Chubb had total assets of $191 billion and shareholders’ equity of $59 billion.
About The Hartford
The Hartford Financial Services Group, Inc. is one of the nation’s largest insurance and financial services companies. The company is a leading provider of automobile and homeowners insurance, commercial property and casualty insurance, investment products, life insurance, and group benefits. It is headquartered in Connecticut with a history dating back to 1810. The Hartford had total assets and total stockholders’ equity of were $74.1 billion and $18.6 billion, respectively, as of December 31, 2020.
According to The Hartford website, panel counsel selection is an ongoing process, and law firms are added to match current needs. Law firms that are invited to be considered for inclusion on The Hartford defense panel are asked to complete a detailed Request for Information.
The Hartford is a leader in the small and mid-sized business sectors across a wide range of industries including construction and transportation. Business coverage includes business income, commercial auto, commercial flood, cyber / data breach, directors & officers (D&O), errors & omissions (E&O), employment practices liability (EPLI), environmental, fiduciary liability, general liability, marine / transportation, property, surety, umbrella, and workers’ compensation.
Commercial lines insurance represents 49 percent of The Hartford’s 2020 revenue, personal lines accounts for 16 percent of revenue, and group benefits at 29 percent
The Hartford reports that it has experienced increased property claims, resulting in increased litigation activity and legal expenses as a result of the COVID-19 pandemic. The workers’ compensation line is particularly sensitive to COVID claim, in part because states have passed laws granting coverage for certain industry classes, including health care and other essential workers.
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Disclaimer
This article is provided for educational purposes only. It is not to be interpreted as legal advice or an opinion in regard to any topic discussed. The article should not be used as a substitute for legal advice from a licensed attorney in your state. Every situation is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.
