AIG Strikes $5.56 Billion Deal To Acquire a Bermuda Insurer

By Leslie ScismFeaturesDow Jones Newswires

American International Group Inc. is acquiring a Bermuda-based insurer and reinsurer for $5.56 billion, as its new chief executive makes good on a promise to reverse nearly a decade of shrinkage stemming from its near collapse in 2008.

The global insurance conglomerate said Monday it signed a definitive agreement to acquire Validus Holdings Ltd. in an all-cash deal. AIG said the acquisition would immediately add to its earnings.

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Reinsurance is an arrangement in which insurers take on the risk of policies that primary insurers sell to businesses and individuals. A big product line for Validus is property-catastrophe reinsurance for hurricanes and other disasters.

The company also has other operations, including a Lloyd's syndicate, crop insurance, and a unit that insures small U.S. companies. They overlap minimally with existing businesses at AIG, a leader in insuring multinational corporations and other large businesses and a large U.S. life insurer..

At $68 a share, the deal represents a 46% premium to Validus's closing share price Friday, and a 16% premium to its 52-week high.

(END) Dow Jones Newswires

January 22, 2018 07:13 ET (12:13 GMT)