US-based property and casualty insurer Chubb Corp. is being acquired by Zurich-based peer ACE in a cash and stock transaction valued at $28.3bn (£18bn, €25.5bn).

As per the terms of the transaction, which has been approved by the boards of both companies, Chubb shareholders will receive $62.93 per share in cash and 0.6019 shares of ACE stock.

Upon closing of the transaction, ACE shareholders will own 70% of the combined company, and Chubb shareholders will own 30%.

"ACE and Chubb will create a global leader in commercial and personal property and casualty insurance, with enhanced growth and earning power, and an exceptional balance of products as a result of greater diversification and a product mix with reduced exposure to the P&C industry pricing cycle," Chubb said in a statement.

The combined company will have ample investment resources at its command. As of 31 December 2014, the combined company had total shareholder equity of nearly $46bn and cash, investments and other assets of $150bn.

"This transaction advances our strategy in a meaningful way and represents an outstanding opportunity to create significant value over a reasonable period of time for both ACE and Chubb shareholders," said Evan Greenberg, chairman and CEO of ACE.

"We are combining two great underwriting companies that are highly complementary. We will make each other better and create a unique company in a class of its own that has greater growth and earning power than the sum of the two companies separately."

Apart from its significant presence in the US, ACE operates in 54 countries as a commercial insurer, while Chubb is present in 25 countries.

The combined company will be led by Greenberg as chairman and CEO, while Chubb Chairman and CEO John Finnegan will serve as executive vice chairman for external affairs of North America.

The combined company will be headquartered in Switzerland, while Chubb will continue to operate under its name.

The transaction is expected to close during the first quarter of 2016, subject to approvals by ACE and Chubb shareholders, as well as regulators.