AIG Agrees to Sell Off Reinsurance Business for $3 Billion (1)

American International Group Inc. said it will sell virtually its entire reinsurance business to RenaissanceRe Holdings Ltd. in a deal worth roughly $3 billion as Chief Executive Officer Peter Zaffino continues his effort to streamline the New York-based firm.

RenaissanceRe will pay $2.74 billion in cash and $250 million of common shares for AIG’s Validus Re unit as well as the AlphaCat and the Talbot Treaty reinsurance business, AIG said Monday in a statement.

The insurer said the transaction will free up $400 million in capital. AIG will hold onto Talbot Underwriting Ltd. as well as Western World. Earlier this ...