Ace is buying its North American rival Chubb in a landmark $28.3bn mix of shares and cash.
Unusually for an acquisition, the combined company will adopt the acquired Chubb brand, Ace giving way on its own name to its acquired branding.
The combined company will be led by Ace CEO Evan Greenberg as chairman and CEO.
The major insurance deal values Chubb at about $125.87 per share.
The combined companies have total shareholders’ equity of nearly $46bn as well as cash, assets and investments of $150bn, as of the end of last year.
“This transaction advances our strategy in a meaningful way and represents an outstanding opportunity to create significant value over a reasonable period of time for both Ace and Chubb shareholders,” said Greenberg, Ace's chief executive.
Under the terms of the deal, Chubb shareholders will receive $62.93 in cash plus 0.6019 of an Ace share for each Chubb share.
Ace shareholders will own 70% of the combined company and Chubb shareholders will own 30%, when the transaction closes.
Chubb’s stock closed at $96.14 on June 30. Based on the closing price of Ace stock the same day, the total value is $124.13 per Chubb share, or $28.3bn for the entirety.
"We are pleased that the combined company will adopt the Chubb brand and view this as an affirmation that both companies share a commitment to the attributes of quality and service the brand represents," said John Finnegan, chairman, president and CEO of Chubb.
Finnegan has agreed to serve as executive vice chairman for external affairs of North America and will assist with integration.
"This is a compelling transaction for all Chubb and Ace stakeholders. We are confident that it will deliver strong value to Chubb shareholders, including an immediate premium and participation in the future growth and profitability of a well-positioned combined company," he said.
"We look forward to working together as we create a best-in-class global franchise in P&C insurance,” added Finnegan.
The combined company will remain a Swiss company with principal offices in Zurich.
Ace will continue to maintain a significant presence in Philadelphia, where its current North American divisional headquarters is based.
Chubb’s headquarters in Warren, New Jersey, will house a substantial portion of the headquarters function for the combined company’s North American Division.
The combined company’s board will be expanded from 14 directors to 18 directors with the addition of four independent directors from Chubb’s current board.
Chubb will continue to operate under its name while the combined company transitions to operate under the Chubb name globally.