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Munich Re to buy US insurer HSB Group

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Munich Re to buy US insurer HSB Group
Photo: DPA
10:01 CET+01:00
German reinsurance group Munich Re on Monday said it has agreed to buy the specialty insurer HSB Group from troubled US giant AIG for $742 million (€531 million).

It planned to fund the acquisition "entirely from existing resources," Munich Re said in a statement.

HSB's core activity is the insurance and inspection of engineering risks in the United States, and in 2007 the company posted an after-tax profit of $158 million, it added. The all-cash deal is subject to regulatory approval, "which is expected to be completed at the end of the first quarter of 2009," Munich Re said.

Munich Re has already acquired a number of profitable US insurance groups, among them The Midland Company in October 2007 for $1.3 billion and health-care insurer Sterling Life Insurance for $352 million in December 2007.

On Monday, Munich Re shares gained 0.33 percent to €106.72 in early Frankfurt trading, while the DAX index of leading shares was off by 1.0 percent overall.

"It shows there aren't only losers in the financial crisis," Dow Jones Newswires quoted a trader as saying.

American International Group (AIG), the world's largest insurer before the global credit crisis, was on the brink of collapse when the US government offered an $85-billion lifeline and took a stake in the firm in mid-September, at the time the biggest corporate bailout in history.

The government rescue, which has since ballooned to $152 billion, requires that AIG sell off assets in exchange for the loan.

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