Munich Re agrees to terms for acquisition of AIG subsidiary Hartford Steam Boiler

Munich Re has agreed to acquire specialty insurer HSB Group from AIG. The planned purchase is a further step in Munich Re’s strategy for the US insurance market, decided on last year. The agreed purchase price is US$ 742m (€531m), funded entirely from existing resources.

The HSB Group, headquartered in Hartford, Connecticut, is a wholly owned subsidiary of the American International Group (AIG). 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. HSB is a market leader in providing machinery/plant and equipment breakdown insurance, inspection, certification and engineering consulting services. In 2007, HSB posted an after-tax profit of US$ 158m (figure according to consolidated statutory financial statements). Its average combined ratio since 2003 was an outstanding 73.8% (figure according to consolidated statutory financial statements). The gross written premium income of HSB Group in 2007 amounted to US$ 904m (figure according to US-GAAP).

Munich Re is acquiring 100% of HSB for US$ 742m (€531m) in cash. Munich Re will finance the purchase price from internal resources. Completion of the transaction is subject to regulatory approval, which is expected to be completed at the end of the first quarter of 2009.

A.M. Best Company has assigned the financial strength rating A (Excellent) to the HSB Group, Inc.

Further details may be obtained from the press release.