AIG to acquire Validus

Lloyd Doyle
January 22, 2018

Shares of Bermuda-based Validus were trading close to the offer price before the bell.

Leading global insurer AIG announced a $5.6 billion deal Monday to purchase Validus Holdings, expanding its portfolio of insurance services.

AIG has offered Validus investors $68.00 per share in cash, which is nearly 46 percent more than Friday's $46.72 closing share price.

The company also has other operations, including a Lloyd's syndicate, crop insurance, and a unit that insures small USA companies.

Validus chair Ed Noonan said the offer represented "compelling value" for shareholders.

"Joining AIG and becoming part of a larger, more diversified organisation immediately opens new opportunities for our people and our franchise".


"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". "I particularly like the reinsurance business as additive to what we do", he said. They have built a business that is highly compatible with AIG's General Insurance business.

The deal, which is expected to be finalised in mid-2018, is part of AIG's strategy to deliver profitable growth and is predicted to be immediately accretive to AIG's earnings per share and return on equity.

Validus operates in Lloyd's through subsidiary Talbot Underwriting.

"We would be buyers (of AIG) as we focus on the accretion from this transaction, the strong underlying margins VR brings and the fact that AIG will still have excess capital after this deal is done", Wells Fargo Securities analyst Elyse Greenspan said in a note but added that the company's shares may initially trade down on the reinsurance exposure.

A deal for Validus would bring AIG a reinsurer, Lloyd's business.

Meanwhile Talbot will, "broaden AIG's technical underwriting expertise and provide access to distribution in the largest specialty insurance market in the world".

Other reports by Iphone Fresh

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