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KKR weighs sale of unit
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July 31, 1996: 7:46 a.m. ET
Buyout firm reportedly in talks to sell its American Re unit for up to $3.4 billion
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NEW YORK (CNNfn) -- Kohlberg, Kravis Roberts & Co. is reportedly discussing the sale of its American Re Corp. reinsurance unit with at least two potential buyers.
The Wall Street Journal said Wednesday that units of General Electric Co. and Germany's Munich Reinsurance Co. have approached KKR about selling American Re.
KKR, a New York buyout firm, bought Princeton, N.J.-based American Re in 1992 for $1.4 billion. KKR currently holds a 64 percent stake in the company valued at $1.6 billion.
If a deal is reached, the newspaper said it would be one of the largest transactions in the reinsurance industry. Analysts speculated to deal could be worth up to $3.4 billion, a 38 percent premium on American Re's current market value. Others believe $2.9 billion is a more realistic sale price.
Reinsurance companies, which sell insurance to insurance companies, have been consolidating recently following five years of impressive growth and profits. Increased competition has dented prices and profit margins.
Market watchers have paid close attention to American Re since General Re Corp. agreed to pay $940 million to acquire National Re Corp. in July. That deal boosted General Re's market standing as the nation's largest reinsurer, the newspaper said. American Re, the No. 3 reinsurer, is now believed to be under more pressure to find new ways to remain competitive. 
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