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March 23 (Reuters) - Hartford snubbed a $23.24 billion takeover offer from Chubb Ltd on Tuesday, a move that could push the larger rival to sweeten its offer for the property and casualty insurer.
Hartford said its board had determined that entering into talks about a deal would not be in the best interests of the company and its shareholders.
Chubb had made an offer of $65 per share for the insurer on March 18, a premium of about 13% to Hartford’s closing stock price a day earlier.
Hartford’s rejection was widely expected, as analysts had said the company was worth $80 per share or more.
Wells Fargo analyst Elyse Greenspan wrote in a note to clients on Tuesday that Chubb may raise its offer.
Greenspan also said she was not surprised by Hartford’s rejection and recommended buying its shares if they fall. The stock was down more than 2% in early trade.
“And we think as a stand-alone company, Hartford has a good path ahead, given the margin outlook they have provided for 2021,” she added.
A deal between Hartford and Chubb would be the biggest in the sector since Aon Plc’s $30 billion bid to buy Willis Towers Watson last year, and the largest in the U.S. P&C insurance space since Chubb was created in its current form in January 2016.
Chubb’s unsolicited offer for Hartford has come after its chief executive officer, Evan Greenberg, warned in April that the pandemic would likely spur the single-largest loss in the industry’s history.
The insurance industry has faced claims from businesses that are losing revenue because the coronavirus-led crisis has led to canceled events and travel disruption, with the virus also causing an unprecedented loss of lives.
Chubb booked $1.19 billion in pandemic-related losses in 2020. The insurer did not immediately respond to a request for comment on Tuesday.
The deal would have given Chubb a strong presence in insuring small businesses.
Founded in 1810, Hartford famously sold baseball slugger Babe Ruth an insurance policy in 1920 for disability protection and also insured the only home Abraham Lincoln ever owned.
The insurer has also provided coverage for former U.S. President Dwight Eisenhower’s 190-acre farm, the Hoover Dam and the Golden Gate Bridge.
Chubb, which has underwritten the production of “E.T. the Extra Terrestrial”, traces its roots to 1882. (Reporting by Noor Zainab Hussain in Bengaluru and Alwyn Scott in New York; Editing by Anil D’Silva)