Munich Re has bought Hartford Steam Boiler from AIG
Munich Re has confirmed it is to buy specialty insurer Hartford Steam Boiler from AIG for $742m (£497), losing AIG nearly $450m on the deal.
AIG bought the business for around $1.2bn in 2000 but has to sell assets around the world to pay off a £152bn government loan.
The core of the HSB Group is Hartford Steam Boiler Inspection and Insurance Company (HSB), one of the largest insurance and inspection companies specialising in engineering risks in the USA. In 2007, HSB posted an after-tax profit of $158m and the company’s average combined ratio since 2003 has been an outstanding 73.8% (both figures based on consolidated statutory financial statements).
The gross written premium income of HSB Group in 2007 amounted to $904m (based on US-GAAP). “The acquisition of HSB is a perfect fit for our US strategy: It is another step in developing our position in high return specialised niche segments. This is one of the declared aims of our Changing Gear programme for profitable growth,” said Peter Röder, Munich Re board member responsible for US business. He added that the specific business model offered by insurers such as HSB helps to reduce the volatility of traditional reinsurance business. Direct operating control of HSB will lie with Munich Re America after the acquisition.
Tony Kuczinski, chief executive officer (CEO) of Munich Re America: “We extend a warm welcome to the clients and employees of HSB. 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.”
CFO Jörg Schneider said: “With HSB, we are acquiring a company that has an exceptional track record of underwriting expertise and sustained profitability. Owing to our strong capital base, this acquisition will not affect our share buy-back programme or the planned dividend of €5.50 per share for the financial year 2008.”
Douglas Elliot, president and chief executive of HSB Group, welcomed the agreement with Munich Re. “Munich Re offers HSB new opportunities to grow our business profitably and expand our offerings in North America and globally,” said Elliot. “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.
Hosted by comedian and actor Tom Allen, 34 Gold, 23 Silver and 22 Bronze awards were handed out across an amazing 34 categories recognising brilliance and innovation right across the breadth of UK general insurance.
