Nochi Dankner sells US insurance business to Warren Buffett
Clal Insurance has sold Guard Insurance Group to Berkshire Hathaway unit National Indemnity Company for $221 million.
In April, Clal Insurance opened talks for the sale of Guard Insurance at a value of $270 million, but as "Globes" reported in June, the prospective buyer asked for a reduction in the price.
"There is an impression that foreign potential buyers read the Israeli press, and felt that Clal Insurance and IDB were under pressure, and that they could buy Guard at a substantially lower price than it is worth," sources at Clal Insurance said.
Clal Insurance CEO Shy Talmon said, "Clal Insurance has completed a period of several years of successful investment in Guard. Five years ago, Clal Insurance invested $107 million in Guard, and it is now selling the company for $221 million. We see interest by a well-known buyer such as Berkshire Hathaway as proof of our success in managing Guard. Clal will now focus on building its business in Israel."
Guard Insurance's core business is selling insurance policies in the US covering workers' severance pay. Clal Insurance acquired Guard for $112 million in May 2007, invested an additional $8 million in the company and injected $10 million capital into it. In May 2010, Clal Insurance paid an additional $25 million to Guard's previous owners. Altogether, Clal Insurance invested $155 million in Guard.
The sale of Guard to National Indemnity Company is scheduled to be closed within a few months, subject to US regulatory approval.
Published by Globes [online], Israel business news - www.globes-online.com - on August 19, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012
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