American International Group Inc. has agreed to sell some of its Latin American and European property-and-casualty insurance operations to Fairfax Financial Holdings Ltd., as the global insurer continues a campaign to narrow its focus and boost financial results.

The deal, which was first reported by The Wall Street Journal and confirmed by the companies Tuesday morning, marks the latest international acquisition by the Toronto-based holding company founded in 1985 by businessman Prem Watsa, one of Canada's most prominent investors.

Under the pact, AIG will sell commercial- and consumer-insurance operations in Argentina, Chile, Colombia, Uruguay, Venezuela and Turkey. Fairfax also will assume AIG's operating assets in Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia.

Total cash consideration is about $240 million. The transactions are subject to regulatory approvals.

AIG has been under pressure since last fall to improve its performance, when activist investors Carl Icahn and John Paulson called on the company to break itself into parts. AIG Chief Executive Peter Hancock resisted such a split as not in shareholders' best interests, and has pledged a variety of alternative measures instead, including selected divestitures, cost-cutting and aggressive share buybacks.

A leading seller of insurance to multinational corporations, AIG will continue serving clients with operations in the countries that are part of the Fairfax pact through a partnership with the Canadian company. AIG, long one of the U.S.'s most global companies, will focus on investments in countries where it sees good opportunities for scale and strong growth.

Fairfax has a variety of holdings in the insurance, travel and restaurant sectors, among other investments. Mr. Watsa has been compared often with U.S. investor Warren Buffett, chairman of wide-ranging conglomerate and insurance giant Berkshire Hathaway Inc.

Fairfax, with reported total assets of $27.8 billion in 2015, has been building its property-and-casualty operations by buying assets from global insurers that are retreating from smaller markets.

In July, it agreed to acquire the South African and Botswana insurance operations from Zurich Insurance Co. Ltd., and in 2015 it acquired the Ukrainian division of QBE Management (Ireland) Ltd.

The pact with AIG will provide Fairfax with well-established businesses with experienced management teams. The deal will significantly expand Fairfax's footprint in Latin America.

At AIG, Mr. Paulson and a lieutenant to Mr. Icahn now sit on AIG's board. Among other streamlining moves this year, AIG in August agreed to sell its mortgage-insurance unit for about $3.4 billion to Arch Capital Group Ltd.

Write to Jacquie McNish at Jacquie.McNish@wsj.com and Leslie Scism at leslie.scism@wsj.com

 

(END) Dow Jones Newswires

October 18, 2016 08:45 ET (12:45 GMT)

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