Remember how the AIG bailout was supposed to work: The firm got a high interest bridge loan so it could have enough time to liquidate itself and pay the money back. Somewhere along the way, that got changed so that the loan became an investment, and AIG stopped caring too much about liquidation.
Well the company has made its first big divestiture: It’s dumping its Hartford Steam Boiler to Munich Re for $742 million. That’s a major haircut, since AIG paid $1.2 billion for it a few years ago. What does Hartford Steam Boiler do?
WSJ: Founded in 1866 in Hartford, Conn., HSB is considered one of the world’s leading specialty insurers and reinsurers. It insures steam boilers, along with mechanical and electrical equipment for customers around the world. It also offers inspection services and engineering consulting.
Interesting. It sounds like a real, tangible business, which will probably be around in 2066 and 2166. Sure, it doesn’t sound as sexy as insuring against defaults or providing shares for your clients to short as part of some big risk management scheme. But when a boiler blows up, it doesn’t ruin your whole business.