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AIG to acquire Validus Holdings for $5.56 billion

22nd January 2018 - Author: Luke Gallin

It’s been announced that American International Group, Inc. (AIG) will acquire all the outstanding common shares of Validus Holdings, Ltd. for an aggregate transaction value of $5.56 billion, in cash.

mergers and acquisitions reinsuranceThe deal represents progress in AIG’s profitable growth strategy, enhancing the firm’s general insurance capabilities, while adding a robust reinsurance underwriter (Validus Re), a Lloyd’s operation (Talbot), as well as an insurance-linked securities (ILS) asset manager (AlphaCat) and a U.S. specialty property and casualty underwriter focused on the small commercial E&S and admitted markets (Western World).

AIG expects the transaction to be immediately accretive to its earnings and return on equity (ROE), while enhancing its offering in the U.S. domestic market.

Holders of Validus common shares will receive a cash consideration of $68 per share, which results in an aggregate transaction value of $5.56 billion, funded by cash on hand.

Brian Duperreault, President and Chief Executive Officer (CEO) of AIG, commented; “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.”

Ed Noonan, Validus Chairman and CEO, 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 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.”

While Peter Zaffino, AIG’s CEO of General Insurance, added; “I have worked with and admired Validus since its formation and have the utmost respect for what the management team has achieved. They have built a business that is highly compatible with AIG’s General Insurance business. Brokers and customers of both companies will benefit from this acquisition, and I look forward to all that we will be able to accomplish by bringing Validus into AIG.”

The acquisition will see the well-respected Validus management and underwriting teams enhance AIG’s global insurance and reinsurance footprint, supporting its strategic growth aims as it looks to deliver profitable growth.

The deal has been unanimously recommended by the boards of directors of both companies, and is expected to close in mid-2018, subject to regulatory approvals.

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