American International Group Inc. is selling its local commercial and consumer insurance operations in Argentina, Chile, Colombia, Uruguay, Venezuela and Turkey to property/casualty insurer Fairfax Financial Holdings Ltd.
AIG is also selling Fairfax the renewal rights for the portfolio of local business written by AIG’s Central and Eastern European (CEE) operations in Bulgaria, Czech Republic, Hungary, Poland, Romania, and Slovakia. Toronto-based Fairfax will assume AIG’s CEE operating assets and employees.
Total cash consideration is approximately $240 million. Each transaction is subject to relevant regulatory approvals.
AIG is also entering into a strategic partnership with Fairfax to support multinational clients. Fairfax will become AIG’s main strategic multinational network partner to serve AIG’s global clients in these countries, backed by AIG’s claims handling and reinsurance capabilities.
According to Peter Hancock, AIG president and chief executive officer, the divestiture furthers AIG’s strategic goal of focusing on major economies that it believes offer the greatest potential for profitable growth and the opportunity for AIG’s commercial or consumer insurance divisions to achieve and maintain scale. At the same time, AIG said it is committed to maintaining multinational capabilities for individuals and companies that operate globally.
“This partnership marks a significant step forward in achieving the strategic priorities of AIG, as well as Fairfax,” said Hancock.
Prem Watsa, Fairfax chairman and chief executive officer, said AIG’s Latin American companies are “well established in their respective markets with experienced management teams and a disciplined approach to underwriting, and they will significantly expand Fairfax’s footprint in Latin America.”
The acquisition of the CEE operations follows on Fairfax’s expansion in Eastern Europe through its 2015 acquisition of QBE’s insurance operations in Ukraine.
Watsa said the AIG deal will accelerate his company’s plans for long-term growth in the region.
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