Munich Re Completes Acquisition Of Hartford Steam Boiler
April 02, 2009
Munich Re said Wednesday that it has completed the acquisition of HSB Group, including Hartford Steam Boiler Inspection and Insurance Co., for $739 million in a deal that executives promised would not result in layoffs.
The sale gets Hartford Steam Boiler out from under the turmoil and uncertainty surrounding its ailing former parent, American International Group. AIG received financial bailouts from the federal government, which now owns a majority stake in that company.
AIG had acquired HSB Group, which specializes in equipment breakdown insurance, for $1.2 billion in 2000.
Officials of Munich Re, a German reinsurer, told Connecticut insurance regulators at a public hearing recently that they have no plans to move Hartford Steam Boiler out of Hartford or to cut jobs as a result of the acquisition.
Their promise, however, doesn't rule out future layoffs stemming from business needs, economic or other conditions.
Hartford Steam Boiler has 2,435 employees in total, including 402 in Connecticut — 389 of them in Hartford.
The company will continue to operate as a stand-alone business within Munich Re America.
"Our partnership with Munich Re will open new opportunities for HSB to create value for our clients and grow our business in the U.S. and around the globe," said Doug Elliot, president and chief executive of HSB Group. "With Munich Re's financial strength and added resources behind us, we look forward to continued profitable growth."
The sale of HSB was approved this week by Connecticut Insurance Commissioner Thomas R. Sullivan.
The decision notes that Munich Re and HSB executives have committed to maintain HSB's current level of community involvement and charitable contributions. HSB has been giving about $625,000 to $675,000 a year in Connecticut in recent years.
The commissioner's ruling says that every six months for two years, Munich Re must report to the Insurance Department on changes in HSB employment levels, offices and charitable giving.
Hartford Steam Boiler, founded in 1866, wrote $930 million of gross premiums last year and had $586 million of equity capital at the end of 2008, Munich Re said.
Munich Re, one of the world's largest reinsurers, has about 44,000 employees at more than 50 locations around the world.
Reprinted with permission of the Hartford Courant.
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