Fitch puts Chubb on watch

Fitch Ratings said it affirmed the insurer financial strength ratings of the Chubb Corp.’s property- and casualty- insurance subsidiaries, which are led by Federal Insurance Co. at AA with a stable outlook.

Fitch also said it placed Chubb’s AA- issuer default rating and A+ senior debt rating on Rating Watch negative.

The negative watch follows new that ACE Ltd. will purchase all outstanding shares of Chubb for $29 billion with a combination of cash, debt and equity, or about a 30% premium relative to the June 30 closing stock price for Chubb, the agency said.

The close is expected to occur in the first quarter of 2016, Fitch said.

Chubb’s ratings reflect a proposed combination of two large insurance organizations with strong, well capitalized operating franchises, the agency said, and a history of favorable underwriting performance and profitability.

Both ACE’s and Chubb’s operating performance consistently exceeds peers, characterized by low combined ratios with manageable catastrophe losses, consistent favorable loss-reserve development and stable investment income from strong operating cash flow, Fitch said.

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