Aon Corp. said Friday that its board has approved its bid to buy the London independent reinsurance intermediary Benfield Group Ltd. for $1.75 billion.

The Chicago insurer would pay $6.55 a share in cash and assume $170 million of Benfield debt. A closing date has not been announced.

Aon plans to merge its reinsurance business, Aon Red Global, with Benfield to create Aon Benfield Re.

Both Aon and Benfield plan to expand their reinsurance business by adding customers in Asia, Central and Eastern Europe, Africa, and Latin America.

Aon said the acquisition is expected to generate about $122 million of savings primarily from shared administrative and support services.

Benfield has more than 50 offices globally. Aon provides risk management services, insurance and reinsurance brokerage, human capital, and management consulting.

"The acquisition is expected to enhance Aon's capabilities in the significant Florida and Southeast U.S. property-catastrophe markets, as well as in the rapidly growing Asia-Pacific and Latin American regions," the companies said in a filing with the London Stock Exchange. "In addition, the combination offers the opportunity to capitalize on the significant investment both businesses have made in risk modeling and analytics to create a global market leading capability in this key area."

Aon said it would fund the acquisition with existing cash resources.

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