Aon sells Combined Insurance to ACE for US$2.4 billion in cash

Focussing more exclusively on the risk brokerage and consulting side of its business, Aon Corporation has signed a definitive agreement to sell 100% of the outstanding stock of Combined Insurance Company of America and certain of its subsidiaries to ACE Limited for US$2.4 billion in cash.
Combined Insurance Company of America, founded in 1919 and headquartered in Glenview, IL, is a leading underwriter and distributor of specialty individual accident and supplemental health insurance products that are targeted to middle-income consumers in the United States, Europe, Canada and Asia Pacific.
In addition, Aon is selling its Sterling Life Insurance unit to Munich Reinsurance Co. for US$352 million.
As reported by Reuters, the deals are part of a plan by Aon to simplify its business and to do less insurance underwriting, which has lower margins and is more capital intensive.
Combined serves more than 4 million policyholders worldwide.
“The acquisition of Combined is a significant milestone for ACE and represents both an opportunity for considerable growth and expense-related efficiencies,” said Evan G. Greenberg, the chairman and CEO of ACE Limited.
“The acquisition essentially doubles our already significant personal accident and supplemental health insurance franchise, which has been and remains an area of focus for our company.”
Greenberg said Combined’s sales force of nearly 7,000 agents would diversify ACE’s distribution for the health insurance class of business.
The transaction, which is subject to regulatory approvals and customary closing conditions, is expected to be completed by the end of 2008 Q2.