London, Aug 23: Aon Corp., the world's biggest insurance broker, said on Friday it has agreed to buy Britain's Benfield Group Ltd. for almost US$1.6 billion in cash.

Chicago-based Aon said combining Benfield, a leading independent reinsurance intermediary, with its existing reinsurance operations would create a global, diverse franchise.

Under the deal, Aon will pay 3.50 pounds (US$6.55) per share in cash for each Benfield share, a 29 percent premium over Benfield's closing price on Thursday.

It will also assume 91 million pounds (US$170 million) of Benfield net debt in the deal, boosting the overall value of the transaction to about 935 million pounds (US$1.75 billion).

Benfield's share price shot up 30 percent after the announcement, pushing the stock to 352.75 pence (US$6.56) midmorning and above the offered price.

``The acquisition is expected to enhance Aon's capabilities in the significant Florida and South East US property-catastrophe markets as well as in the rapidly growing Asia-Pacific and Latin American regions,'' the companies said in a statement to 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,'' they added.

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

Aon shares rose US$1.22, or 2.6 percent, to US$47.92 on Friday.