TRADE........AMTD...CB
Taking a shot on AMTD under 80.00
hard sell-off in i-net brokers and
2/1 split payable on 2/23..
Also CB made a deal to buy ER for
1.235 shsres CB per share of ER..
this is a 63% premium to ER's closing
price on Friday..translation...look at the
insurance group..they must be 'cheap' if
CB was willing to pay that kind of premium..
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FOCUS-Chubb to buy Executive Risk
in $850 mln deal
(Adds byline, CEO quotes in paragraphs 7 and 11, details in
paragraphs 8-10 and 16 and background in paragraphs 12-15)
By Patricia Vowinkel
NEW YORK, Feb 8 (Reuters) - Chubb Corp., a large property-casualty insurer, has agreed to buy
specialty insurer Executive Risk Inc. in a stock swap valued at about $850 million, Chubb said on
Monday.
Shareholders of Executive Risk (NYSE:ER - news), a Simsbury, Conn.-based company known for
insuring the liability of top corporate executives, will receive 1.235 shares of Chubb (NYSE:CB -
news) common stock in exchange for each Executive Risk share.
The deal values Executive Risk at $71.71 a share -- a 63 percent premium over Friday's closing
price of $44. Chubb shares closed Friday at $58.06.
Chubb, based in Warren, N.J., said it expects the transaction to result in about a 2 percent decrease
in earnings in 1999 and a slight increase in earnings in 2000.
The agreement contains customary termination provisions, including an option for Chubb to buy 19.9
percent of Executive Risk's shares.
The directors of Executive Risk have agreed to vote their shares in favor of the merger. Closing is
expected in the second quarter of 1999.
''Our partnership with Executive Risk will enable Chubb to solidify leading market positions in
numerous, profitable executive protection lines and move to top positions in others,'' said Chubb
Chairman and Chief Executive Dean R. O'Hare.
Chubb said that following completion of the merger, it plans to establish a new operation,
Chubb-Executive Risk, based in Simsbury, Conn., which will manage the combined company's
book of executive protection business.
This business had combined gross premiums of about $1.7 billion in 1998.
The new entity will be managed by Executive Risk's President and Chief Executive Stephen J. Sills
and Gary J. Tully, the head of Chubb's executive protection practice.
''While the combination will result in expense savings, the driving force here is the opportunity to
accelerate premium growth in attractive specialty markets,'' Sills said.
Most commercial insurers have had a hard time growing their top line premiums over the past few
years as an industry price war has made much of the business unprofitable.
Chubb, the eighth largest writer of commercial insurance in the United States, last week reported
lower fourth-quarter profits as prices in the company's standard commercial business continued to
deteriorate.
The decline in profits follows several disappointing quarters last year, all of which has helped to spur
speculation about Chubb as a possible takeover target.
This week's edition of financial newspaper Barron's featured an article on Chubb's recent earnings
disappointments and its potential takeover appeal.
Chubb was advised by Goldman, Sachs & Co and the law firm of Davis Polk & Wardell.
Donaldson, Lufkin & Jenrette and the law firm of Dewey Ballantine LLP advised Executive Risk.
EOM----------------------------------------------------------------
Jim in CT.. |
