AIG stumps up $5.6bn to buy the owner of Lloyd's stalwart Talbot Underwriting


The deal is expected to complete in mid-2018, AIG said (Source: Getty)

US insurance behemoth AIG today announced its first deal under boss Brian Duperreault.

The firm bought Lloyd's of London insurer Validus for $5.56bn (£4bn) in a deal AIG hopes will also bolster its presence in the iconic London market and its reinsurance business.

Validus operates in Lloyd's through subsidiary Talbot Underwriting.

Duperreault took over from London-born Peter Hancock in May 2017 as AIG's president and chief executive. He was drafted in to oversee a restructuring of the insurer in order to halt a series of quarterly losses and appease activist investors. 

Today's deal, due to close in mid-2018, will lead to bumper returns for Validus shareholders – it represents more than a 45 per cent premium to Friday's closing stock market valuation.

AIG said the takeover would broaden its Lloyd's "technical underwriting expertise and provide access to distribution in the largest specialty insurance market in the world", adding:

Talbot’s brokers and clients will benefit from the complete suite of capabilities that have made AIG a global leader, along with access to solutions both within and outside of the Lloyd’s market.

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"Excellent strategic fit"

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

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

AIG general insurance boss Peter Zaffino added: "I have worked with and admired Validus since its formation and have the utmost respect for what the management team has achieved."

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Tags: Insurance