* Deal for $5.56 bln in cash
* Offer represents 45.5 pct premium to Validus' last close
* Deal to immediately add to AIG's EPS and ROE (Recasts, adds details about Duperreualt's experience with Bermuda insurance industry, context about financial crisis)
Jan 22 (Reuters) - American International Group on Monday said it would buy reinsurer Validus Holdings for $5.56 billion in cash, snapping a long period of retrenchment for AIG as new Chief Executive Brian Duperreault plots an expansionist path.
Duperreault initiated the deal for Bermuda-based Validus, which comes four months after U.S. regulators said that AIG, which has radically shrunk after its near-death experience during the financial crisis, was no longer "too big to fail."
Bermuda's insurance industry is familiar turf for Duperreault, who was born there and founded and ran the Bermuda-based Hamilton Insurance Group Ltd before heading to AIG.
The deal marks AIG's reentry into the Lloyds of London insurance market, strengthens its reinsurance operations and adds new areas, including crop insurance, at a time when AIG, like rivals, is facing stiff pricing pressure.
"I particularly like the reinsurance business as additive to what we do. There are a lot pieces to this company that fit us like a glove," Duperreault said on a conference call with analysts.
Reinsurers play an important role in the financial industry by assuming risks that are either too large or too unpredictable for their insurance clients to take on their own.
AIG's $68 per share offer represents a 45.5 percent premium to Validus' Friday close.
Shares of Bermuda-based Validus were trading close to the offer price in early trade. AIG shares were down 1 percent.
AIG said the deal would boost AIG's earnings per share and return on equity but did not provide any details on cost cuts or projected returns.
"We would be buyers (of AIG) as we focus on the accretion from this transaction, the strong underlying margins VR brings and the fact that AIG will still have excess capital after this deal is done," Wells Fargo Securities analyst Elyse Greenspan said in a note.
AIG has been struggling to grow its top line over the past few years. Revenue fell in three of the last four quarters and the company has been plagued by losses related to prior-year accident claims.
The acquisition is AIG's largest since the 2008 financial crisis, when the insurer received a $182 billion U.S. government bailout. It repaid the money in full at the end of 2012.
Duperreault, who replaced Peter Hancock last year, is seen as a turnaround expert and has promised to streamline AIG's operations and boost profitability.
As his first major restructuring action since taking over, Duperreault reorganized AIG into three new units. The new structure is expected to reflect in the company's fourth-quarter results on Feb. 8.
The Validus deal is expected to close in mid 2018.
Citigroup Global Markets Inc, Perella Weinberg Partners LP and Debevoise & Plimpton LLP advised AIG. Validus was advised by J.P. Morgan Securities LLC and Skadden, Arps, Slate, Meagher & Flom LLP.
(Reporting by Nikhil Subba and Sweta Singh in Bengaluru; Additional reporting by Suzanne Barlyn in New York; Editing by Supriya Kurane, Sayantani Ghosh and Frances Kerry)