AIG is to buy Bermuda-based re/insurer Validus for $5.56bn in its first major acquisition under the leadership of Brian Duperreault.
The US insurer said the transaction enhances its general insurance business by adding a reinsurance platform with $1.1bn of annual premiums (Validus Re), an insurance-linked securities asset manager (AlphaCat) with $3.2bn under management and a meaningful presence at Lloyd's via Talbot, which had $921m in premiums in 2017.
The deal also adds complementary capabilities in the US crop (Crop Risk Services, $549m of annual premiums) and excess and surplus markets (Western World ($387m in premiums).
Duperreault, who was appointed president and chief executive officer of AIG in May 2017, said: "Validus is an excellent strategic fit for AIG, bringing new businesses and capabilities to our general insurance operation, expanding the bench of our management team and deepening our underwriting expertise."
Validus chairman and chief executive officer Ed Noonan said: "We believe this transaction offers compelling value for our shareholders and reflects the strength of the business we've built together with our talented global team. Joining AIG and becoming part of a larger, more diversified organisation immediately opens new opportunities for our people and our franchise."
Validus shareholders will receive $68 per share, valuing the deal at $5.56bn. This represents a 46% premium to Validus's closing share price on 19 January.
The transaction has been unanimously recommended by the boards of directors of AIG and Validus. The transaction is expected to close mid-2018, subject to approval by Validus shareholders, regulators and other customary closing conditions.
