AIG (AIG) to Sell Certain LatAm Commercial, Consumer Insurance Ops to Fairfax Financial

October 18, 2016 8:12 AM EDT

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American International Group, Inc. (NYSE: AIG) announced that it has entered into several agreements with Fairfax Financial Holdings Limited, a leading global property and casualty insurer and reinsurer, as part of a strategic partnership that will further focus and streamline AIG’s global insurance operations.

As part of these agreements, AIG will sell to Fairfax its local commercial and consumer insurance operations in Argentina, Chile, Colombia, Uruguay, Venezuela, and Turkey. Fairfax will also acquire 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, and assume AIG’s CEE operating assets and employees. Total cash consideration is approximately $240 million. Each transaction is subject to relevant regulatory approvals.

Fairfax will become the main strategic multinational network partner that will serve AIG’s global clients in these countries, backed by AIG’s expertise, claims handling, and reinsurance capabilities.

The divestiture furthers AIG’s strategic goal of focusing its geographic footprint and investment in major economies that 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 is committed to maintaining and enhancing 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 Peter Hancock, President and Chief Executive Officer, AIG. “We look forward to expanding our multinational network partner relationship with Fairfax to provide seamless world-class capabilities and outstanding service to our global clients in these key countries. We also remain committed to those markets that hold the greatest potential for AIG to sell its insurance products competitively and where we can profitably serve our clients.”

“We are very excited to partner with AIG and to have the LATAM group of companies and operations in CEE and Turkey join the Fairfax family,” said Prem Watsa, Chairman and Chief Executive Officer, Fairfax. “The LATAM 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 our recent expansion in Eastern Europe through our previously announced QBE transaction and will accelerate our plans for long-term growth in the region.”

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