Germany's Hannover Re AG said Wednesday it is selling its U.S.-based specialty insurer Praetorian Financial Group to Australia's QBE Insurance Group Ltd. for US$800 million (euro604.05 million).
"This successful sale demonstrates that it was the right decision to carve out our U.S. primary specialty business into Praetorian," said Hannover Chief Executive Wilhlem Zeller.
The deal, which is subject to regulatory approval, and expected to be completed by June 2007, is part of the Hanover-based reinsurer's commitment to focus on its core markets. Praetorian provides insurance on what the industry calls niche products, such as art collections, cell phones, jewelry businesses and even pet insurance.
Praetorian CEO Rod Fox said the company would continue to focus on specialty markets.
The combination with QBE will allow the company "to offer a broader range of products and maintain continuity in client relationships," he said.
Earlier this year, Hannover transferred its specialty insurance business from the Clarendon brand to the newly established New York-based Praetorian.
Zeller said Hannover, one of the four biggest reinsurers in the world, would use the proceeds from the sale to beef up its property and casualty and life and health reinsurance businesses.
Reinsurance companies sell backup coverage to other insurers, spreading risk so the system can handle losses from major disasters.
Shares of Hannover Re rose nearly 1 percent to euro34.05 (US$45.10) in Frankfurt trading after the deal was announced.