Chubb expects $460 million gain from sale of USI investment
Key Facts
Insurer Chubb expects to record a realized gain of $460 million upon completing the sale of an investment in USI to Aon, according to its quarterly earnings statement issued on October 20, 2026. It said Strategic Holdings, its investment partnership with KKR, had agreed to sell the investment, valued at $740 million. The announcement of the expected disposal gain coincided with quarterly core operating income of $2.98 billion. That income fell 2.2% from the same period a year earlier, according to the company's statement, which outlined its operating performance alongside its investments. Core operating income per share reached a quarterly record of $7.66.
Chief Executive Evan Greenberg expressed confidence in Chubb's statement that operating earnings and earnings per share would continue to grow, alongside "double-digit growth in tangible book value." Reported annual growth in tangible book value per share was 5.7%, compared with its level at the end of September a year earlier. Excluding accumulated other comprehensive income, annual growth in this measure rose to 15.4%, according to the company's calculations in its results. Book value was affected during the quarter by realized and unrealized investment losses of $4.48 billion after tax. Chubb linked these losses to higher interest rates during the period, while Greenberg maintained his confidence in the trajectory of earnings and tangible book value growth.
At the acquisition target, USI's annual revenue was about $3 billion in 2025, according to Aon's filing with the U.S. Securities and Exchange Commission. The company serves middle-market businesses through a range of insurance, employee benefits and retirement services. Its operations include property and casualty insurance, one of the areas Aon listed in its description of the company it intends to buy. USI also provides employee benefits, personal risk and retirement services as part of its business serving this customer segment. In its acquisition announcement, Aon estimated the U.S. middle-market opportunity targeted by the deal at more than $40 billion.
To finance the acquisition, net proceeds from Aon's bond offering totaled about $13,400,800,000, according to a financing disclosure the company filed with the U.S. Securities and Exchange Commission. These proceeds represent the amount remaining after deducting underwriting costs and estimated expenses borne by the bond issuers, according to the disclosure. Aon intends to use the funds as part of the financing for the USI purchase, alongside repayment of the target company's debt and transaction-related expenses. On integration, Aon is targeting an annual net impact of $395 million on adjusted earnings before interest, taxes, depreciation and amortization once fully implemented. It said in the deal announcement that this impact would come from revenue and cost synergies, through increased revenue and reduced business expenses.
Aon shares fell 6% in early trading on the day the acquisition was announced, according to a Reuters report dated August 31, 2026. The move accompanied the announcement of the USI purchase, before Chubb's quarterly statement that included the expected gain from selling the investment. Aon outlined the expected trajectory of the impact on its earnings in the acquisition presentation filed with the U.S. Securities and Exchange Commission. Aon expects the acquisition to reduce its adjusted earnings per share in 2027, according to the estimates it presented for the transaction. It then expects the acquisition to become accretive to adjusted earnings per share beginning in 2028 and in subsequent years, according to the same presentation, which set out the timing of the deal's expected financial impact.
Aon expects to complete the acquisition in the fourth quarter of 2026, according to the timetable announced in its deal presentation filed with the U.S. regulator. That timing is subject to satisfying regulatory requirements and customary closing conditions, the conditions on which the company based its expectation for completing the transaction. The merger agreement also sets June 1, 2027 as an initial contractual date allowing either party to terminate the agreement if closing has not occurred by then. The agreement permits an extension of that date if certain regulatory conditions remain unmet, according to Aon's disclosure of the merger terms. Under these provisions, the termination right is tied to reaching the contractual date without closing, while an extension remains possible in the regulatory circumstances specified in the agreement.