Toronto-based Fairfax Financial Holdings is acquiring Swiss (re)insurer Allied World in a cash and stock deal for $US4.9 billion ($6.45 billion).

The transaction is expected to close in the second quarter.

Fairfax says the purchase will bolster its global insurance empire, which has been expanding rapidly in the past two years through significant acquisitions including AIG’s business in Latin America and Turkey.

“Allied World’s growing international reach is highly complementary to Fairfax’s… worldwide operations, and the acquisition further diversifies Fairfax’s group risk portfolio,” the Canadian financial holding company says.

“In addition, Allied World will be able to leverage Fairfax’s expertise in Canada, the [US] and international insurance and reinsurance markets, thus enhancing Allied World’s global product offering and providing it with expanded underwriting opportunities and support.”