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Daily Insurance Industry News
Tuesday 23rd of January 2018
December 22, 2008

Munich Re buys Hartford Steam Boiler

by David Masters

Story link: Munich Re buys Hartford Steam Boiler

Germany-based Munich Re today agreed terms to acquire AIG’s Hartford Steam Boiler Inspection (HSB) and Insurance Co unit.

The agreed purchase price for the 100% acquisition was $742 million (£497 million), funded entirely using Munich Re’s existing capital.

Connecticut-based HSB Group is a wholly owned subsidiary of struggling insurance giant American International Group (AIG).

It is the largest US-based insurer that specialises in engineering risks.

Last year, HSB reported post-tax profit of $158 million. The group’s average combined ratio since 2003 is a very strong 73.8%.

AIG has been forced to sell some of its units to fund the payback of a federal reserve $150 billion bailout package, paid to the company earlier this year when it was on the verge of collapse.

Because it needs to raise funds urgently, AIG is selling off units at cut price.

AIG purchased HSB for $1.2 billion in 2000, meaning that it has lost nearly $450 million selling the business to Munich Re.

The acquisition will complete in the first quarter of 2009, subject to regulatory approval.

 

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