Best Sees No Rating Change for Munich Re from HSB Acquisition

December 29, 2008

A.M. Best Co. has commented that the financial strength rating (FSR) and issuer credit ratings (ICR) of Munich Reinsurance Company and its subsidiaries are unchanged following its agreement to acquire specialty insurer HSB Group, Inc. from the American International Group (See IJ web site –

Best also indicated that all of its debt ratings on Munich Re and its subsidiaries and the ICR of Munich Re America Corporation are unchanged. (See below for a detailed listing of the companies and ratings.

“The planned purchase of the HSB Group is a further step in Munich Re’s strategy for the U.S. insurance market, decided on last year,” Best explained. “The core of the HSB Group is The Hartford Steam Boiler Inspection and Insurance Company (HSB) (Hartford, CT), one of the largest insurance and inspection companies specializing in engineering risks in the U.S. HSB is a market leader in providing machinery/plant and equipment breakdown insurance, inspection, certification and engineering consulting services.”

The transaction is subject to regulatory approval in the U.S. Munich Re expects to complete the transaction by the end of the first quarter of 2009.

The FSR of A+ (Superior) and ICRs of “aa-” are unchanged for Munich Reinsurance Company and for the following core subsidiaries:
— American Alternative Insurance Corporation
— Great Lakes Reinsurance (UK) PLC
— Muenchener Rueck Italia S.p.A.
— Munich American Reassurance Company
— Munich Reinsurance America, Inc.
— Munich Reinsurance Company of Canada
— New Reinsurance Company
— The Princeton Excess & Surplus Lines Insurance Company

The following debt ratings are unchanged:
Munich Reinsurance Company—
— “a+” on £300 million ($441 million) 7.625 percent subordinated bonds, due 2028
— “a+” on €3 billion ($4.285 billion) 6.75 percent subordinated Eurobonds, due 2023
— “a+” on €1.5 billion ($2.14 billion) fixed/floating rate undated subordinated bonds

Munich Re America Corporation—
— “bbb+” on $500 million 7.45 percent senior unsecured notes, due 2026

The ICRs of “bbb+” are unchanged for Munich Re America Corporation.

Source: A.M. Best –

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