AIG announces sale of HSB Group to MUNICH RE
NEW YORK.- American International Group, Inc. (AIG) announced today an agreement to sell its wholly owned subsidiary HSB Group, Inc. (HSB), to the Munich Re Group. HSB, the parent company of The Hartford Steam Boiler Inspection and Insurance Company, is a leading worldwide provider of equipment breakdown and engineered lines insurance and reinsurance.
Under the terms of the transaction, Munich Re will acquire 100% of the outstanding shares of HSB Group for $742 million in cash and assume $76 million of outstanding HSB capital securities.
The transaction, which is expected to close at the end of the first quarter of 2009, is subject to satisfaction of certain conditions, including approvals by appropriate regulatory authorities.
“Munich Re offers HSB new opportunities to grow our business profitably and expand our offerings in North America and globally,” said Douglas G. Elliot, President and Chief Executive Officer of HSB Group, Inc. “With Munich Re’s outstanding financial strength behind us, we can offer our clients the reassurance that they’re looking for in today’s uncertain market environment,” he added.
Elliot and his senior management team will remain with HSB. He will report to Anthony J. Kuczinski, Chief Executive Officer of Munich Re America.
“We extend a warm welcome to the clients and employees of HSB,” Mr. Kuczinski said. “HSB has built a tremendous reputation for underwriting highly technical machinery and engineering risks. We believe the strong underwriting culture of HSB and the company’s exceptional client focus makes it an excellent fit for Munich Re. We believe Munich Re’s clients will greatly value the addition of HSB’s products and services.”
Paula R. Reynolds, Vice Chairman and Chief Restructuring Officer of AIG, said: “The sale of HSB signals that AIG’s restructuring effort is gaining momentum. HSB is a singular business with outstanding performance, and we are pleased to reach agreement with an industry leader in Munich Re. The transition in ownership should be seamless for HSB agents, customers and employees.”
“The acquisition of HSB is a perfect fit for our US strategy: It is another step in developing our position in high return specialized niche segments. This is one of the declared aims of our Changing Gear program for profitable growth,” said Peter Roder, Munich Re Board member responsible for US business.
“This is a very good opportunity for HSB, its clients, and employees,” said Richard H. Booth, chairman of HSB Group, Inc. “Munich’s strong global capabilities provide a solid growth platform for HSB’s products and services.”
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