(Adds details of deal)
Dec 18 (Reuters) - Toronto-based insurance group Fairfax Financial Holdings Ltd FFH.TO has agreed to buy Swiss insurer Allied World Assurance Company Holdings AG AWH.N for $4.9 billion in cash and stock, the companies said on Sunday.
Fairfax will pay owners of Allied World $54 per share - $10 in cash and $44 in Fairfax stock. The offer amounts to an 18 percent premium above Allied World's Friday closing price of $45.77, their news release said.
The merger would create a leader in property and casualty insurance, reinsurance and investments, the release said. Boards of directors of both companies approved the deal.
Allied World would operate "on a decentralized basis" within the Fairfax group, Prem Watsa, chief executive of Fairfax, said in the release.
Fairfax said it expected to close the deal in the second quarter of 2017.