American International Group on Monday said it would buy property and casualty reinsurer Validus Holdings for $5.56 billion in cash to strengthen its general insurance business.

AIG's offer of $68 per share represents a 45.5 percent premium to Validus' Friday close.

Validus' shares were up nearly 16 percent at $54 before the bell.

The deal, part of Chief Executive Brian Duperreault's turnaround plan, is expected to immediately add to AIG's earnings per share and return on equity.

The deal, expected to close in mid-2018, will also boost AIG's talent and underwriting business apart from general insurance, the company said.

Citigroup Global Markets Inc, Perella Weinberg Partners LP and Debevoise & Plimpton LLP advised AIG on the transaction, while Validus was advised by J.P. Morgan Securities LLC and Skadden, Arps, Slate, Meagher & Flom LLP.