Munich Re to Purchase Hartford Steam Boiler

[HartfordTycoon]

Looks like RI's FM Global is looking to make a move on one of our historic corporations. Hopefully this will not affect Hartford in any adverse way.

Providence Journal

FM Global mulls purchase of AIG coverage sector

01:00 AM EST on Wednesday, December 3, 2008

By Andrew Frye and Erik Holm

Bloomberg News

FM Global, the Johnston-based property-casualty insurance carrier, may bid for the part of 142-year-old American International Group Inc. that sells coverage on equipment and power plants.

Weve had some indirect contact with AIG about a potential deal for Hartford Steam Boiler, FM Global chief financial officer Jeffrey Burchill said Monday in an interview in New York. We would take a look based on price and market share. FM Global is the operating name for Factory Mutual Insurance Co.

AIG chief executive officer Edward Liddy is dismantling what was once the worlds biggest insurer to repay loans tied to the companys $152.5-billion government rescue. New York-based AIG has put its airplane-leasing subsidiary and global life insurance businesses up for auction. AIG purchased Hartford Steam Boiler, the largest North American equipment-breakdown insurer, for $1.2 billion in stock in 2000.

This is a fire sale, Burchill said. They want two things: they want it quick and they want cash.

FM Global has about $1 billion available in cash and short-term securities such as three-month Treasurys, Burchill said. The insurer, owned by its policyholders, has no publicly traded stock or debt.

AIG advanced 22 cents, or 13 percent, to $1.87 in New York Stock Exchange composite trading. The shares have plummeted 97 percent this year.

AIG is seeking buyers for Hartford Steam Boiler, spokesman Joseph Norton said in an interview yesterday. Norton declined to comment on the status of the auction.

Hartford Steam Boiler, based in the Connecticut city of the same name, was founded in 1866 to help assure the safety of boilers used to generate industrial power, according to its Web site. The company will be easy to untangle from AIG because it wasnt fully integrated with the parent, Paul Newsome, an insurance analyst at Sandler ONeill & Partners in Chicago, said in October.

[The Voice of Reason]

Yeah, that news broke on 12-02 I thought I posted it but I guess I did not.

also you will see that XL is now up for sale as well

[HartfordTycoon]

I heard this morning on NPR that German Insurer Munich Re is looking into buying HSB. Obviously, that would be a much more comfortable situation for Hartford than having a RI based parent company. My fingers are crossed for a foreign buyer that will use Harford as their US base of operations.

[The Voice of Reason]

I heard this morning on NPR that German Insurer Munich Re is looking into buying HSB. Obviously, that would be a much more comfortable situation for Hartford than having a RI based parent company. My fingers are crossed for a foreign buyer that will use Harford as their US base of operations.

[HartfordTycoon]

I am right there with you.

Ideally, I would like to see the employees pull something together with a Greenwich buyout firm bringing the company firmly back to Hartford as an independent, but I am guessing the employees do not have the financial strength to do so.

so if the company can not return to being Hartford owned, I would prefer an international company that has little or no US presence at this time to set up US operations here in Hartford.

Ideally I would want someone like Allianz, but since they are in with "the Hartford" all ready, maybe another dutch company to strengthen our connection to Amsterdam

Aegon NV, owns Transamerica, and ING is here all ready, so I dont really know many others that could pull it off. Maybe looking at the greater Belelux region there are a few potentials.

Maybe somehow the troubled Fortis could do it, or KBC Groep NV.

the problem with Munich RE

is that they own Munich Reinsurance America (formerly American Re) based out of Princeton NJ

[The Voice of Reason]

According to the Financial Times on Thursday, AIG is close to selling its U.S. personal lines business, which products include car and home insurance. The unit, estimated to be valued between $5 billion and $6 billion, was said to have been looked at by New York-based MetLife Inc. and its Swiss rival Zurich.

American Life Insurance Co., a business valued at more than $10 billion that has large operations in Japan, and Hartford Steam Boiler, an AIG division that insures energy products and is valued between $1 billion and $2 billion, were also on the table, the Financial Times said.

This info comes from a confrence the CEO was at in Hong Kong.

It will be interesting as everything shakes out.

something else interesting is will Travelers and Aetna be participating in any of the buying?

[HartfordTycoon]

Don't know how this will ultimately affect us, but there could be a silver lining in that if they do in fact keep signifigant operations here in Hartford, it would be another global corporation to help globalize Greater Hartford's economy. This could even help the international service at Bradley. We'll just have to wait and see.

Hartford Courant

Courant.com

Munich Re Agrees To Buy Hartford Steam Boiler Inspection and Insurance Co.

The Hartford Courant

4:47 AM EST, December 22, 2008

Munich Re has agreed to buy the Hartford Steam Boiler Inspection and Insurance Co. from AIG for $742 million in cash, the German reinsurance company said on its web site early this morning.

The deal for the old-line Hartford specialty insurer is expected to close in the first quarter of 2009, Munich Re said. It would help American International Group Inc. repay some of the tens of billions of dollars in government loans made this year to bail out the insurance giant. AIG bought HSB for $1.2 billion in 2000.

Like HSB, which was founded in 1866, Munich Re was founded in the 19th century, and like HSB it has a significant engineering services business. Munich Re is one of the world's largest reinsurance companies

[HartfordTycoon]

OK, it looks like this deal may not be a bad thing for Hartford at this point. It's good to have a financially stable international company at the helm.

Hartford Courant

Courant.com

INSURANCE

Munich Re Promises To Keep HSB A Stand-Alone Company

By KENNETH R. GOSSELIN

December 23, 2008

Weeks of uncertainty over the sale of the Hartford Steam Boiler Inspection and Insurance Co. ended in relief Monday for employees and the city, as the company's next owners pledged to keep the specialty insurer as a stand-alone business and hold employment steady.

Munich Re, which announced plans Monday to buy the old-line insurer from American International Group for $742 million in cash and $72 million in HSB capital securities, said HSB would remain much as it is now with a corporate presence in downtown Hartford, where it has been based since it was founded in 1866.

"We are committed to the Hartford area and this business and we will do everything we can to make sure this company prospers," said Anthony J. Kuczinski, president and chief executive of Munich Re America. "At the end of the day, the management team is going to run it as they did before."

HSB, which sells equipment breakdown insurance, engineered lines insurance and reinsurance, has 377 employees in Hartford and 2,469 worldwide.

The companies said they hoped employment would grow in Hartford but couldn't make the promise given the difficult global economic climate that's fiercely competitive, even more so than a year ago.

HSB, technically owned by HSB Group, which Munich Re is acquiring, hasn't been independent since 2000 when it was bought by AIG for $1.2 billion. But the company continued to be run as though it were a separate company, with its own board.

The sale, if approved by regulators, would help AIG repay some of the tens of millions in government loans made this year to bail out the troubled insurance giant.

"HSB will be part of something different," said Douglas G. Elliot, HSB's president and chief executive. "But HSB is clearly something that is of great value to our customers and clients, and we intend to stay connected to that high quality brand identity."

[The Voice of Reason]

So I have been out of town for 3 weeks, and I really wanted to just throw a yay! on this one.

much better than the RI company as far as future prospects.

the big question for me will be where will the AIG based support employees end up working once this is completed. logic dictates that a certain ammount of the workforse was based in an AIG office outside of Hartford.