AIG will buy Bermuda-based Validus Holdings for $US5.56 billion ($6.9 billion), in a deal it says will enhance its insurance capabilities and immediately lift earnings.

“Validus is an excellent strategic fit for AIG, bringing new businesses and capabilities to our general insurance operation, expanding the bench of our management team and deepening our underwriting expertise,” President and CEO Brian Duperreault said.

Validus’ businesses includes Talbot, a Lloyd’s of London syndicate that has a global network of offices, including in Sydney. Other operations are Validus Re, insurance-linked securities asset manager AlphaCat and US underwriter Western World.

The deal is expected to close in the mid-year, subject to approval by Validus shareholders and regulators.