AlphaCat part of AIG's $5.6bn bid for Validus

Business Bermuda TC Jan 22 2018

Wynn Resorts, Limited (WYNN) Reaches $179.64 52-Week High; Validus Holdings Limited (VR) SI Decreased By 24.96%

Validus Holdings, Ltd. provides reinsurance coverage, insurance coverage, and insurance linked securities management services worldwide. Deutsche Bank downgraded Validus Holdings, Ltd. (NYSE:VR) on Monday, February 6 to "Hold" rating.

More notable recent Validus Holdings, Ltd. (NYSE:VR) news were published by: Nasdaq.com which released: "Financial Sector Update for 01/22/2018: AIG, AMTD, BOH" on January 22, 2018, also Thestreet.com with their article: "Dow, S&P 500 and Nasdaq Shake Off Government Shutdown to Trade Higher" published on January 22, 2018, Businesswire.com published: "Validus Holdings, Ltd".

The transaction has been unanimously recommended by the boards of directors of AIG and Validus.

AIG's $68-per-share offer represents a 45.5 percent premium to Validus' Friday close.

Validus "brings us skills we don't have", Duperreault, 70, said Monday on a call with analysts.

"It's an important strategic asset to any general-insurance company", Duperreault said of the London operations, adding that there's nearly no overlap between the two insurers. This business will represent 1 percent of AIG's total general insurance franchise after the deal. "Brokers and customers of both companies will benefit from this acquisition, and I look forward to all that we will be able to accomplish by bringing Validus into AIG". The company wrote that Validus is a "consistent source of global underwriting profits" in its presentation, noting that Validus has generated an underwriting profit in 10 out of the last 11 years.

AIG expects the deal to be immediately accretive to the company's earnings per share and return on equity, but it's notable that AIG is paying roughly 1.5 times book value for Validus while its own shares trade for as little as 0.8 times book value.

"We have a lot of white space", Duperreault said. "And I particularly like the reinsurance business as additive to what we do".

Paragon Capital Management Ltd bought 3,810 shares as the company's stock rose 5.26% with the market. About 15.10 million shares traded or 1964.57% up from the average. "AIG will still have excess capital after this deal is done".

Acquiring Validus gives AIG access to new lines, as Validus is engaged in reinsurance, crop insurance, and owns the 11th-largest syndicate in the Lloyd's of London insurance market.

North American insurers have been expanding in specialty business lines to counter tougher pricing competition on consumer and traditional property coverage.

Prem Watsa's Fairfax Financial Holdings Ltd agreed in late 2016 to buy Allied World Assurance Co, and Boston-based Liberty Mutual Holding Co completed the purchase a year ago of Ironshore Inc from Fosun International Ltd for about $3bn.

"There are still things I would like to add to the company to balance it out that would be great strategic fits", Duperreault said on the call with analysts.

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