American International Group’s newly announced plan to pay nearly $5.6 billion for Validus Holdings is likely just the beginning of the insurer’s acquisition goals in the coming months.

AIG President and CEO Brian Duperreault was coy about the details during a Jan. 22 conference call held to discuss the M&A deal, but he suggested that the insurer is keeping its eye out for more acquisition targets.

“We will continue to see what is out there but [the Validus deal] is the one we are doing right now, and it’s got all of our attention.”

The goal is to close the acquisition by mid-2018, and Duperreault said AIG is “very interested in making sure it goes to completion.”

Pressed on the matter, Duperreault acknowledged the insurer will keep looking for complementary acquisitions over time.

“There are still things that I would like to add to the company to balance it out, that would be great strategic fits,” Duperreault said in response to one of many related questions on future acquisition targets. “Over time, I hope I can do that. There are other things we would be interested in over time.”

Fits Like a Glove

In buying Validus, AIG gets a number of divisions including Validus Re, AlphaCat (an investor in insurance-linked securities), Lloyd’s of London syndicate Talbot, and Western World, a U.S. specialty property/casualty underwriter focused on the small commercial E&S and admitted markets. Western World also includes crop insurer Crop Risk Services.

Duperreault was asked during the call why AIG wants to buy Validus rather than an admitted line P/C insurer or life insurer, and he explained that the purchase brings AIG skills it doesn’t currently have.

Dupererault noted that the insurer isn’t currently in the reinsurance business, doesn’t have a Lloyd’s platform, and doesn’t currently have a crop insurance business, and Validus will change all of that.

“There are just a lot of pieces to this company that fit us like a glove, and that is why I chose it,” Duperreault said. “It is a great company, too. The people in it our terrific underwriters and managers and executives, and so they [will] make us better.”

Validus Won’t See ‘Wholesale integration’ Into AIG

Peter Zaffino, AIG CEO, General Insurance, said during the call that Validus will not be subjected to “a wholesale integration” into its own operations.

“We want to ensure that the Validus team maintains their momentum and preserves the innovative culture that has served them so well over the years,” Zaffino said. He cited Validus’s 84 combined ratio over the past decade—prior to natural catastrophe hits in late 2017—as an example of its stellar performance, as well as a positive underwriting performance since 2007.

Zaffino added that AIG will “do everything possible” to make sure Validus can capitalize on being part of AIG, and that General Insurance, which has struggled in recent years, will keeping focusing “on improving our own strategic and financial and operational performance.”

Business unit leaders at Validus will remain in place after the acquisition, Zaffino said, and Validus will become a U.S. taxpayer as part of the deal, he said. A Validus spokesperson confirmed that Noonan will help to facilitate the acquisition and then leave afterwards.

About 56,000 people work for AIG and another 1,000 are based at Validus; cuts and corporate synergy moves are not expected to be a focus because Validus brings so many new elements to AIG.

Meanwhile, Standard & Poor’s affirmed its ratings on Validus Holdings Ltd. in the wake of the sale. Those include an ‘A’ counterparty credit and financial strength rating, as well as a ‘BBB+’ issuer credit rating for Validus Holding Company. However, S&P revised its outlook for Validus to negative. (AIG’s ratings were unaffected, S&P said, which include a negative outlook for the insurer.)

S&P: Strategically Important but Not ‘Core’

“We will likely view Validus as a strategically important entity within the AIG group because, among other things, it constitutes expansion into new business platforms and adds strong catastrophe modeling and research capabilities to the AIG enterprise,” S&P said.

At the same time, Standard & Poors said it doesn’t believe Validus “will be core to the AIG Group” and so an upgrade is unlikely in the next two years.

“We also consider that structural changes in the global reinsurance sector stemming from excess capital are a secular trend, despite some pricing firming expected for 2018,” Standard & Poor’s explained. “This will limit upside competitive opportunities for global reinsurers, including Validus.”

Validus, under Noonan, has been an aggressive acquirer of companies. The insurer grabbed monoline property-casualty reinsurer IPC Re via a hostile takeover bid in 2009. In 2012, Validus acquired Flagstone Reinsurance, a fellow member of the Bermuda “Class of 2005” startups. In January 2017, Validus bought up Crop Risk Services from Archer Daniels Midland Company for $127.5 million in cash.