The New Chubb Will Preserve Old Chubb’s Agency Culture, Says ACE’s Greenberg

The new company formed as a result of ACE Limited’s $28 billion acquisition of The Chubb Corp. will continue the Chubb practices that have made it a favorite among independent insurance agents, ACE CEO Evan Greenberg has promised.

The new company will adopt the best of both companies and Chubb’s agency system is better than ACE’s, whereas ACE is better at brokerage, Greenberg said during a webcast for Chubb employees from around the globe on July 20 in which he also addressed Chubb employees’ anxiety about the deal and why the new company will use the Chubb name.

He called Chubb a “great” agency company.

“We’re going to preserve the agency culture. We’re going to preserve the agency distribution. We’re going to preserve the branch system,” said Greenberg.

The ACE CEO said he would not be changing the contingent commission system — to do so he’d have “to be stupid” or have “rocks” in his head, he said. Some insurers pay contingent commissions to agents for achieving certain goals with the insurer, such as placing a particular amount of business, retaining a number of policies or achieving a particular loss ratio.

The plan for the new company calls for not only keeping the agency distribution and branch structure of Chubb, but also growing this distribution channel with new products and customers, he said.

In urban centers where both ACE and Chubb have branches, the two will be combined.

“ACE is better at brokerage. Chubb is better at agency. We’re going to get the great strengths of both companies in that,” he said.

“We’re going to go with our strengths of each company. In North America, this is like a merger of equals. That’s the way we’re viewing this, and again, ACE is more brokerage,” Greenberg told Chubb employees.

Complementary Strengths

In the webcast remarks, the ACE executive stressed that the two companies have complementary strengths and cultures and the new company will build on those.

“Complementary means where one is strong, the other one is stronger. Where one is not present, the other one is present. That’s what creates this enormous balance and this enormous opportunity. We each add, in so many dimensions, what the other doesn’t have or, as I said, where both do it, one does it better,” Greenberg said.

He said the two are complementary in their distribution, knowledge, risk appetite and geographic reach and both have maintained strong balance sheets. He called the geographic reach of the combined entity “simply stunning.”

Both companies have product line profit structures and this will be true of the new company as well, he said.

He cast the marriage of the two as historic. “There is no other way to say it. It is game changing for our industry,” he said, adding that the deal will create a “global powerhouse.”

Yet size is not the goal.

“It’s going to be unrivaled in quality. That is the most important thing. I don’t care about size. It’s going to be pretty damn big, but that’s not really the point. It’s the quality. It will be unrivaled in that regard, and that’s the part that everyone should take such great pride in,” Greenberg said.

Employee Uncertainty

Greenberg acknowledged that employees are uneasy, some even angry, about the planned merger, and he vowed to provide answers to their questions as soon as the answers are known.

“It’s an awkward moment. It’s an awkward moment for people. It’s an unsettled moment,” he said.

“Moments like this create tremendous uncertainty,” he said. “They make people uneasy, and the one promise I can give you is to the extent I am in control of it, we will make decisions rapidly and that we’ll communicate and provide answers and clarity as we know it and as we’re allowed to provide it.”

He assured employees that there will be opportunities for most of them under the new structure and that the review of personnel for merging ACE and Chubb will start at the top with leadership.

“The integration is not going to be easy,” Greenberg told the webcast viewers. “I’m not going to sugar coat it. I’m not going to insult people by saying that, but the one thing I said to you twice already, and I’m going to say again, this is about growth. If this was simply about expense efficiency, than it makes no sense. It’s about growth, and it’s about efficiency, and it’s about improving our competitive profile, and it’s efficiency also that gives us a license and a flexibility to invest and grow and expand the combined organization.”