AIG to Sell Lloyd's Insurance Operations to Canada Pension Fund

American International Group Inc. agreed to sell insurance operations connected with Lloyd's of London to Canada's biggest pension fund, receiving about $240 million in cash.

The Canada Pension Plan Investment Board will acquire AIG's 20% stake in specialty insurance underwriter Ascot Underwriting Holdings Ltd., which manages a Lloyd's syndicate for which AIG provides the capital, and a related reinsurance company based in Bermuda. Ascot focuses on property insurance, marine insurance, and reinsurance.

The Wall Street Journal had reported the groups were in talks in August.

AIG valued the deal at $1.1 billion when factoring in CPPIB's recapitalization of Syndicate 1414's Funds at Lloyd's capital requirements. The syndicate provides insurance to cover marine hulls and cargo, and fine art; and protects against shipping liabilities, political risks, and terrorism, among other specialties.

The deal is part of the New York insurer's efforts to improve its results by narrowing its focus and returning more than $25 billion in capital to shareholders. It also marks the Canadian fund's latest move to establish itself as a significant player in the global insurance industry.

AIG will maintain a partnership with Ascot Underwriting Bermuda Ltd., a wholly-owned subsidiary of Ascot. AIG, CPPIB, and Ascot plan to "expand a collective commercial relationship in Bermuda, and for AIG to be a preferred reinsurer to Syndicate 1414."

Write to Anne Steele at [e-mail]

(END) Dow Jones Newswires

September 16, 2016 09:45 ET (13:45 GMT)

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