Allianz pays funds to HIH
Allianz Australia agreed last month to pay A$120mn to the creditors of HIH, the Australian insurer which collapsed in 2001 with debts of around A$6bn.
The Australian subsidiary of Allianz – one of the world’s largest insurance groups – persuaded HIH to enter into a fire sale in September 2000 which saw much of its prime general insurance business transferred into a joint venture between the two companies.
Under the terms, HIH received A$200mn in consideration for handing over a 51 percent share. In addition, Allianz had a call option to purchase the remaining holding for between A$125mn and A$500mn over the next five years. Struggling to stay afloat, HIH exercised the option and sold the business on 7 March for $125mn. It wasn’t sufficient and, a week later on 15 March 2001, the company called in the administrators.
The Royal Commissioner Mr Justice Neville Owen described the agreement as the “harbinger of doom”, starving HIH of vital cash flow from one of its few solid insurance enterprises. The money from Allianz was the remaining share from the deal between the two companies and was sanctioned by the New South Wales Court on 31 January.