Giant German insurer Munich Re announced Monday it has agreed to pay $742 million (531 million euros) to buy a US insurance branch of the American International Group (AIG).
Munich Re is the world's largest reinsurer
The US firm has agreed to sell its technical and industrial risk insurance unit Hartford Steam Boiler (HSB) to Munich Re as part of a major restructuring of its operations.
The deal is to be completed at the end of March. AIG bought the Connecticut-based HSB eight years ago for $1.2 billion.
"The acquisition of HSB is a perfect fit for our US strategy," Peter Roeder, the Munich Re board member responsible for US business, said Monday on the company's Web site.
"It is another step in developing our position in high-return specialized niche segments. This is one of the declared aims of our Changing Gear program for profitable growth," he said.
The firm said the purchase was funded entirely from existing resources.
The purchase is still subject to regulatory approval, which Munich Re expects to be completed at the end of the first quarter, 2009.
AIG, which is the world's biggest insurance company, has emerged as a prominent victim of the global credit crunch.The US central bank agreed in September to bail out AIG with $85 billion in an unprecedented move aimed at propping up the influential company.