Treasury Today Country Profiles in association with Citi

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Chubb, Highly Commended, First Class Relationship Management

Mark Osborne, Chubb and Adam King, Bank of America Merrill Lynch

This project was smartly executed as it fell right in the middle of Chubb being acquired by ACE Ltd to create one of the largest propertycasualty insurance companies in the world. The project demonstrates the importance of a long-standing relationship with the chosen banking partner.

Photo of Mark Osborne, Chubb and Adam King, Bank of America Merrill Lynch.

Mark Osborne

Head of Treasury Operations

On 14th January 2016, ACE Limited acquired The Chubb Corporation, creating a global insurance leader operating under the renowned Chubb name. The company is the world’s largest publicly traded property and casualty insurer and operates in 54 countries, with approximately 30,000 employees serving a diverse group of clients worldwide. It is distinguished by its extensive product and service offerings, broad distribution capabilities, exceptional financial strength, underwriting excellence, superior claims handling expertise and local operations globally. With $154bn in assets and $37.4bn of gross premiums written in 2015 on a pro forma basis, Chubb’s core operating insurance companies maintain financial strength ratings of AA from Standard & Poor’s and A++ from A.M. Best.

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The challenge

Due to growing concerns over market withdrawals, The Chubb Corporation wanted to change its banking provider for European treasury management.

During the request for proposal (RFP) process though, The Chubb Corporation was being acquired by another leading insurance company, ACE Limited, creating one of the biggest property casualty insurance companies in the world, and adding to the need for the newly combined treasury team to establish strong banking relationships.

Chubb was keen to change provider quickly and adopt a cash management solution for its customers in EMEA that would continue to maintain its highly-regarded level of service. Given this focus on excellent service and the ongoing acquisition process, it was paramount that Chubb and ACE worked closely together and aligned their goals to provide an uninterrupted and consistent customer experience.

To do so, the two companies understood the need for a robust European treasury management structure and the need for a truly comprehensive solution from a bank to support these ambitions.

In addition, the timing of the Chubb RFP and the ACE/Chubb deal completion required some adaptability in the RFP process. This was as a result of starting with the scope for a host-to-host solution from Chubb and then adapting to consider the need to adopt the ACE treasury system architecture and a SWIFT solution instead.

The solution

The team moved forward with the RFP and the combined treasury team arrived at the decision to work with Bank of America Merrill Lynch (BoAML) as a single provider to implement a payments on behalf of (POBO) and receivables on behalf of (ROBO) solution.

As Mark Osborne, Head of Treasury Operations, Chubb, says: “We will use virtual account management (VAM) to aid automatic reconciliation and identify funds by specific country branches whilst maintaining bank accounts on a central basis.”

Given the legal considerations around any major acquisition of a nature similar to the Chubb/ACE merger, dialogue and information had to be managed carefully to avoid influencing any aspect of the transaction.

“BoAML, who had an existing relationship with The Chubb Corporation for disbursements in the US, was selected by the combined company to handle European treasury management,” says Osborne. “This was a milestone mandate for BoAML as it represents the start of the bank’s new relationship with Chubb, which the company is looking to expand globally.”

Best practice and innovation

Chubb has distinguished itself by successfully dealing with a number of coinciding challenges. The organisational and infrastructure changes driven by the merger with ACE and the exit of key providers was met with resilience and pragmatism.

The team embraced the task by seeking a provider who was dedicated to growing transaction banking capability, a bank that could provide advisory services for Chubb/ACE treasury post-merger and who had proven their commitment to the Chubb relationship.

BoAML had spent years building an intimate knowledge of Chubb and has demonstrated longevity in transaction banking as well as creating innovative client-focused solutions, echoing Chubb’s own client-first approach. Commitment was further established to Chubb by agreeing to tight timeliness and flawless execution of the solution.

“Once the acquisition announcement was made and the M&A activity was completed, the decision was simple – a relationship that was best for the company,” recalls Osborne.

Key benefits

  • Customer service levels maintained throughout project.

  • Minimal disruptions during acquisition.

  • Flexible and adaptable solution.

  • Centralised bank accounts.

  • The opportunity to expand the banking relationship globally.

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