Kemper and Hartford Steam Boiler Working on Boiler and Machinery Deal

The Hartford Steam Boiler Inspection and Insurance Company (HSB) and Kemper Insurance Companies announced they have signed a letter of intent for HSB to acquire Kemper's monoline boiler and machinery business and to reinsure boiler and machinery coverage written as part of Kemper's commercial package policies. The purchase price was not disclosed.

In 1997, Kemper reported boiler and machinery premiums of $79.4 million.

Under the anticipated arrangements, projected effective July 1, 1998, HSB will assume responsibility for providing jurisdictional inspections, loss prevention and claim services to Kemper's boiler and machinery policyholders.

In addition, HSB will purchase Kemper's ASME inspection service business. This fee-based engineering service certifies that boilers and pressure vessels are manufactured in compliance with codes and standards of the American Society of Mechanical Engineers. Kemper reported receiving $7.5 million in engineering service fees for such inspections in 1997.

HSB anticipates offering employment to Kemper employees who underwrite equipment breakdown business or provide related loss prevention and inspection service.

"We selected Hartford Steam Boiler as a partner to assure that our agents, brokers and customers continue to receive superb coverage and engineering service," says David Mathis, Kemper chairman and CEO. "This partnership will provide Kemper an attractive way to continue offering our valued producers and customers boiler and machinery coverage in existing, as well as newly designed, commercial package policies."

"Kemper is a first class organization with a reputation for quality and creativity; their skills and resources complement our own," says Gordon Kreh, president and CEO of HSB. "We are committed to continuing the tradition of excellence which has characterized Kemper's client service capabilities."

HSB and Kemper expect to execute a definitive agreement by the end of May and consummate the transaction one month later. The agreement will be subject to customary closing conditions, including regulatory approval.