AIG to Sell Some Latin American and European Operations to Fairfax
October 18 2016 - 8:29AM
Dow Jones News
By Jacquie McNish and Leslie Scism
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., according to people
familiar with the matter, as the global insurer continues a
campaign to narrow its focus and boost financial results.
The deal 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, which is expected to be announced Tuesday
morning, AIG will sell commercial- and consumer-insurance
operations in Argentina, Chile, Colombia, Uruguay, Venezuela and
Turkey, the people said. Fairfax also will assume AIG's operating
assets in Bulgaria, Czech Republic, Hungary, Poland, Romania and
Slovakia.
Total cash consideration is approximately $240 million, the
people said. 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, the people said. 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, the people
said.
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 people said. 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 08:14 ET (12:14 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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