American International Group (AIG) has agreed to sell some of its Latin America, Central and Eastern businesses to Fairfax Financial for $240m in cash to streamline its global insurance operations.

In countries like Argentina, Chile, Colombia, Turkey, Uruguay and Venezuela, the insurance giant will sell its commercial and consumer business to Canada based property and casualty insurer and reinsurer.

In another agreement between the two companies, Fairfax will purchase renewal rights for a portfolio of business written by AIG’s Central and Eastern European (CEE) unit in Bulgaria, Czech Republic, Hungary, Romania, Slovakia and Poland. Additionally, it will also get AIG’s CEE operating assets as well as its employees.

AIG president and CEO Peter Hancock called the partnership as an important step in achieving the strategic priorities of both AIG and Fairfax.

Hancock also said: “We look forward to expanding our multinational network partner relationship with Fairfax to provide seamless world-class capabilities and outstanding service to our global clients in these key countries.

“We also remain committed to those markets that hold the greatest potential for AIG to sell its insurance products competitively and where we can profitably serve our clients.”

All the transactions are subject to regulatory approvals.

As per Fairfax Financial chairman and CEO Prem Watsa, Fairfax’s footprint in Latin America will significantly expand following the acquisition of the LATAM (Latin American) companies of AIG.

Watsa also said: “The acquisition of the CEE operations follows on our recent expansion in Eastern Europe through our previously announced QBE transaction and will accelerate our plans for long-term growth in the region.”

Through the acquisitions, Fairfax is set to become a strategic partner of AIG, serving the latter’s global clients in all the countries it has committed to as per the agreements.

AIG will provide Fairfax with expertise, claims handling and also reinsurance capabilities.

In September this year, AIG had agreed to sell its interest in Ascot to Canada Pension Plan Investment Board (CPPIB) for $1.1bn.

Earlier in August, the company had sold its interest in United Guaranty (UGC) to Arch Capital Group, a Bermuda-based writer of specialty lines of property and casualty insurance company for $3.4bn.

Image: AIG will offload some of its business assets to Fairfax Financial for $240m. Photo : courtesy of HanSangYoon and Wikipedia.