Exhibit 99.1
CONTACTS
Dennis Milewski, HSB
(860) 722-5567
Joe Norton, AIG
(212) 770-3144
FOR IMMEDIATE RELEASE
AIG TO ACQUIRE HSB GROUP, INC. FOR
COMMON STOCK VALUED AT APPROXIMATELY $1.2 BILLION
NEW YORK and HARTFORD, August 18, 2000 -- American International Group, Inc.
(NYSE: AIG) and HSB Group, Inc. (NYSE: HSB) have announced that they have
entered into a definitive agreement whereby AIG will acquire 100 percent of the
outstanding stock of HSB Group, Inc. HSB stockholders will receive AIG common
stock (or in certain circumstances at the option of AIG, AIG common stock and
cash) with a value equal to $41.00 for each share of HSB common stock. The total
value for the transaction is approximately $1.2 billion.
The transaction has been approved by the Boards of Directors of both companies,
and is subject to various regulatory approvals, as well as the approval of HSB
stockholders. The parties expect that the transaction will be able to close
later this year or early next year. In connection with the agreement, HSB has
issued to AIG an option to purchase up to 19.9 percent of its common stock under
certain conditions.
The transaction will be treated as a purchase for accounting purposes. It is
anticipated that the transaction will qualify as a tax-free reorganization for
federal income tax purposes.
Commenting on the agreement, AIG Chairman M. R. Greenberg said, "We are very
pleased to have reached this agreement to acquire HSB Group, a fine organization
that, through its subsidiary, The Hartford Steam Boiler Inspection and Insurance
Company, provides specialty insurance coverages that complement AIG's insurance
products. Hartford Steam Boiler is the largest insurance company in the United
States providing these specialty property coverages and has, over the years,
produced excellent underwriting results with an outstanding reputation for
product and service quality. Hartford Steam Boiler will operate as a stand-alone
company with its management team remaining in place.
"As part of AIG, Hartford Steam Boiler will be able to take advantage of AIG's
relationships and global network to build its business of specialized insurance
and inspection services. Overseas, AIG should be able to open significant new
opportunities for Hartford Steam Boiler. It is anticipated that it will be
slightly accretive to the earnings of AIG in 2001. We look forward to working
with HSB's management team in the future," said Mr. Greenberg.
"Our affiliation with AIG provides significant opportunities for HSB's people
and businesses. This transaction permits HSB to leverage the enormous financial
strength, market position and international reach of AIG," said Richard H.
Booth, HSB Chairman, President and Chief Executive Officer.
AIG is the leading U.S.-based international insurance and financial services
organization and the largest underwriter of commercial and industrial insurance
in the United States. Its member companies write a wide range of commercial and
personal insurance products through a variety of distribution channels in
approximately 130 countries and jurisdictions throughout the world. AIG's global
businesses also include financial services and asset management, including
aircraft leasing, financial products, trading and market making, consumer
finance, institutional, retail and direct investment fund asset management, real
estate investment management, and retirement savings products. American
International Group, Inc.'s common stock is listed on the New York Stock
Exchange, as well as the stock exchanges in London, Paris, Switzerland and
Tokyo.
HSB Group, Inc., the parent company of The Hartford Steam Boiler Inspection and
Insurance Company, is a global provider of specialty insurance products,
engineering services, and management consulting. The Hartford Steam Boiler
Inspection and Insurance Company was founded in 1866 to provide loss prevention
service and insurance to businesses, industries and institutions. For more
information about HSB, visit its web site at www.hsb.com.
Caution concerning forward-looking statements
This press release contains forward-looking statements. These forward-looking
statements are found in various places throughout this press release and
include, without limitation, statements concerning the financial conditions,
results of operations and businesses of AIG and HSB and, assuming the
consummation of the acquisition, the consolidation of HSB into AIG, as well as
the expected timing and benefits of the acquisition. While these forward-looking
statements represent our judgments and future expectations concerning the
development of our business and the timing and benefits of the acquisition, a
number of risks, uncertainties and other important factors could cause actual
developments and results to differ materially from our expectations. These
factors include, but are not limited to, those listed in AIG's 1999 Annual
Report on Form 10-K and HSB's 1999 Annual Report on Form 10-K, as well as the
failure of the HSB stockholders to approve the transaction; the risk that the
HSB business will not be successfully integrated into AIG; the costs related to
the transaction; the inability to obtain or meet conditions imposed for
governmental approvals for the transaction; the risk that anticipated synergies
will not be obtained or not obtained within the time anticipated; and other key
factors that we have indicated could adversely affect our businesses and
financial performance contained in our past and future filings and reports,
including those with the United States Securities and Exchange Commission (the
"SEC").
More detailed information about those factors is set forth in filings made by
AIG and HSB with the SEC. Neither AIG nor HSB is under any obligation to (and
expressly disclaims any such obligations to) update or alter its forward-looking
statements whether as a result of new information, future events or otherwise.
Further information about proxy materials
AIG and HSB will be filing a proxy statement/prospectus and other relevant
documents concerning the acquisition with the SEC. WE URGE INVESTORS TO READ THE
PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE
SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors will be able to
obtain the documents free of charge at the SEC's website, www.sec.gov. In
addition, documents filed with the SEC by AIG will be available free of charge
from AIG, 70 Pine Street, New York, New York 10270, Attention: Director of
Investor Relations. Documents filed with the SEC by HSB will be available free
of charge from HSB, One State Street, P.O. Box 5024, Hartford, Connecticut
06102, Attention: James C. Rowan, Jr.
HSB and its directors and executive officers may be deemed to be participants in
the solicitation of proxies from the security holders of HSB in favor of the
acquisition. The directors and executive officers of HSB include the following:
R.H. Booth, S.L. Basch, M.L. Downs, J.J. Kelley, W.A. Kerr, N. Mercier, R.K.
Price, W. Stockdale, R.C. Walker, W.B. Ellis, E.J. Ferland, H.H. Fore, C.G.
Campbell, S.W. Leathes, J.B. Alvord, R.G. Dooley and L.D. Rice. Collectively, as
of March 10, 2000, the directors and executive officers of HSB may be deemed to
beneficially own approximately 5.5 percent of the outstanding shares of HSB
common stock. Security holders of HSB may obtain additional information
regarding the interests of such participants by reading the proxy
statement/prospectus when it becomes available.