(By Balaseshan) Enstar Group Ltd. (NASDAQ:ESGR) said it has agreed to acquire the U.S. and Canadian closed-life insurance business of HSBC Finance Corp., a subsidiary of HSBC Holdings plc (NYSE:HBC), for a base price of $181 million.
Enstar will buy all shares of Household Life Insurance Company of Delaware and HSBC Insurance Company of Delaware from Household Insurance Group Holding Co., an affiliate of HSBC Holdings.
The companies to be acquired have written various U.S. and Canadian life insurance, including credit insurance, term life insurance, assumed reinsurance, corporate owned life insurance, and annuities.
The life insurance business comprises the 100% interest held by Household Insurance Group Holding in each of HSBC Insurance Company of Delaware and Household Life Insurance Company of Delaware, which provide a variety of insurance products to customers of HSBC Group companies in North America.
The base purchase price of $181 million will roll forward under the terms of the stock purchase agreement based upon changes to the capital and surplus of the acquired entities arising from the operation of the business prior to closing.
Enstar expects to finance the purchase price through a combination of cash on hand and a drawing under its revolving credit facility. The transaction is expected to close by the end of the first quarter of 2013.
The transaction represents further progress in the execution of the HSBC Group strategy. HSBC Group companies in North America will continue to support client needs and offers creditor and life insurance products to their customers through third party providers.
ESGR is trading up 0.47% at $94.27 on Thursday, while HBC trades up 2.83% at $44.30.