Chubb Ltd.’s $23 billion takeover offer for Hartford Financial Services Group Inc. has prompted Germany’s Allianz SE to study the feasibility of a counteroffer, according to people familiar with the matter.

Europe’s biggest insurer is discussing its options with potential advisers, said the people, asking not to be identified because the discussions are private. While Allianz views Hartford as one of the remaining property and casualty insurance targets with scale in the U.S., it’s also reluctant to enter into a pricey bidding war with Chubb because of a lack of synergies between the two, the people said.

Deliberations are in an early stage and Allianz could likely decide against pursuing a deal, which would be transformational for the German financial giant that has mostly stayed away from mega transactions, the people said.

Representatives for Allianz and Hartford declined to comment on the story.

In spite of its dominance in Europe, Allianz has a relatively small footprint compared with Chubb or other peers in the world’s largest economy. A combination of Chubb and Hartford could further marginalize the German insurer in the U.S., which like other insurance companies, is battling low interest rates, slowing growth and Covid-related business costs.

Among other European insurers, Zurich Insurance Group AG isn’t currently considering such a deal, according to a person familiar with the matter. The Swiss insurer agreed in December to buy MetLife Inc.’s U.S. property and casualty business for $3.94 billion. A spokesperson for Zurich declined to comment.

Hartford rejected Chubb’s proposal earlier in the week, putting pressure on Evan Greenberg to sweeten the offer. A post-bid jump in its stock has pushed Hartford’s market value to $24 billion as of Friday’s close. Chubb has a market cap of $71.9 billion, while Allianz is worth 87.9 billion euros ($103.7 billion).

Mergers and acquisitions among property and casualty insurers have been active in recent years. It’s the biggest sector within insurance, and life coverage has fallen out of favor with many groups due to low interest rates and higher capital requirements.

Allianz’s Chief Executive Officer Oliver Baete has largely avoided major acquisitions since taking the helm. Still, he’s been seeking new avenues of growth, including a 2.5 billion euro deal in the past week to acquire Aviva Plc’s Polish life insurance business.

The German company did pursue a takeover of property and casualty insurer XL Group Ltd. in 2018 before losing out to France’s Axa SA, which paid over $15 billion for the asset.

U.S. Footprint

Allianz has a life-insurance business in the U.S. and is mainly serving large companies in the country in the property and casualty space. It also owns U.S. bond asset manager Pacific Investment Management Co. or Pimco. Buying Hartford could help expand the business with smaller corporations, and any deal could also help make consolidation easier in the future through synergies.

Among the financing options for such a deal include a capital increase, raising debt and offering stock. The insurer also has excess cash and could lower the amount of its annual dividend or buyback. In November, Allianz canceled a share buyback program that it had suspended earlier in the year as the hit from the Covid-19 pandemic continued to mount.

There’s also history with Hartford. The U.S. company turned to Allianz for capital in 2008, agreeing to pay 10% on $1.75 billion of debt as capital markets froze.

(Adds information on Zurich Insurance not considering a deal in sixth paragraph)

–With assistance from Katherine Chiglinsky.

Top Photo: Oliver Baete, chief executive officer of Allianz SE, pauses during a Bloomberg Television interview in London, U.K., on Wednesday, Feb. 26, 2020.