Munich Re is expected to acquire 100% of the outstanding shares of HSB
American International Group, a provider of insurance and financial services, has entered into an agreement to sell its wholly owned subsidiary HSB Group to the Munich Re Group for $742 million in cash.
HSB, the parent company of The Hartford Steam Boiler Inspection and Insurance Company, is a 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 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.
Douglas Elliot, president and CEO of HSB Group, and his senior management team will remain with HSB. He will report to Anthony Kuczinski, CEO of
Munich Re America.
Mr Elliot, president and CEO of HSB Group, said: Munich Re offers HSB new opportunities to grow our business profitably and expand our offerings in North America and globally. 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.
Paula Reynolds, vice chairman and chief restructuring officer of American International Group (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 an agreement with an industry leader in Munich Re. The transition in ownership should be seamless for HSB agents, customers and employees.