AIG reaches pact with Expedia to provide travel insurance

By Suzanne Barlyn

(Reuters) - Insurer American International Group Inc (AIG.N) on Friday said that it has struck a deal with online travel services provider Brand Expedia Group (EXPE.O) to sell travel insurance to the company's global customers.

The move is part of a strategy by AIG Chief Executive Officer Brian Duperreault to grow the insurance giant and expand its global reach.

AIG's agreement with Expedia marks its second travel insurance deal in five months. In October, the insurer said it had reached an agreement to sell travel insurance to United Airlines (UAL.N) customers.

Terms of the deal were not disclosed.

In January, AIG said it would buy reinsurer Validus Holdings Ltd (VR.N) for $5.56 billion in cash, ending a long period of retrenchment for the insurer, which had dramatically shrunk since its near-death experience during the 2008 financial crisis.

Travel insurance is seen by industry sources as a low-risk business and steady revenue generator. But insurers need scale for it to significantly boost their bottom lines, said Sandler O'Neill analyst Paul Newsome.

"It's almost certainly not a material change, but it's a really nice feather in (AIG's) cap," Newsome said of the Expedia deal. "It's nice to have a high-profile transaction that maybe adds some confidence to people looking at AIG."

The latest deal gives U.S. Expedia customers the option to buy AIG travel insurance when booking flights, hotels, travel packages and cruises on Expedia sites, including Expedia.com, CheapTickets, Orbitz and Travelocity.

The companies plan to expand the offering worldwide.

A travel services business line of broker Aon Plc (AON.N) will continue to handle U.S. customer claims, the companies said.

(Reporting by Suzanne Barlyn; Editing by Jonathan Oatis)