American International Group (AIG) has agreed to acquire Validus, a reinsurance, primary insurance and asset management services provider, for $5.6bn.

Validus offers reinsurance, insurance, and asset management services, delivering its solutions via four operating companies.

The transaction is expected to be closed in the first half of this year, subject to approvals from Validus shareholders and regulatory authority.

The deal will enhance AIG’s general insurance capabilities, adding a reinsurance underwriter, an operation at Lloyd’s, an improved offering in the US domestic market, and an insurance-linked securities asset manager.

Treaty reinsurer Validus Re focuses on property catastrophe, marine and specialty. It will benefit from being part of a more diversified business, along with the additional size and strength of AIG’s balance sheet.

AlphaCat, which manages $3.2bn on behalf of clients by investing in insurance-linked securities products, will use the underwriting expertise within Validus Re and offer better risk management flexibility.

Talbot, a Lloyd’s of London syndicate focused on short-tail specialty lines, will expand AIG’s technical underwriting expertise and provide access to distribution in the largest specialty insurance market in the world. 

Besides AlphaCat and Talbot, AIG will also have access to Western World, a property and casualty underwriter that focuses on commercial Excess & Surplus (E&S) and admitted markets.

AIG president and CEO Brian Duperreault 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.

“With our global scale and the strength of our balance sheet, I am confident that Validus will thrive within AIG and strengthen our ability to deliver profitable growth for our shareholders as we strategically position AIG for the future.”

Validus chairman and CEO Ed Noonan said: "Joining AIG and becoming part of a larger, more diversified organization immediately opens new opportunities for our people and our franchise. Validus will be able to serve clients and brokers in new and exciting ways, which will enhance our ability to grow profitably.”

Image: AIG Towers in Los Angeles. Photo: Courtesy of HanSangYoon/