Ace Ltd., the property and casualty insurer based in Hamilton, Bermuda, made public that an agreement to buy Combined Insurance Co. of America from Aon Corp. has been reached. Ace Ltd. will pay Aon Corp., which is the world's second-largest insurance broker, $2.4 billion in cash for its unit.

The purchasing process will probably be completed by the end of the second quarter, Ace said today in a statement on Business Wire. Besides the Glenview, Illinois-based accident, health, and life insurance unit, which has 4 million policyholders and almost 7,000 sales agents, Aon Corp. is also selling the Bellingham, Washington- based health-care insurer Sterling Life Insurance Co. to Munich Re MUVGN.DE, the world's second-biggest re-insurer, for $352 million.

“The acquisition of Combined is a significant milestone for Ace and represents both an opportunity for considerable growth and expense-related efficiencies,'' Ace CEO Evan G. Greenberg said in the statement.

ACE plans to use the amount of cash obtained from the selling of Combined Insurance Co. and Sterling Life Insurance Co. to increase its stock buyback plan. The sale of the two firms is part of the company’s plan to simplify its business and to do less insurance underwriting.

"Our core assets will now be more strategically aligned as we expand our capabilities to better serve our risk brokerage and consulting clients," Greg Case, president and chief executive, said in a statement.

The Aon top officials said they expect the company to get a one-time cash dividend of $325 million from Combined Insurance before the deal closes.

ACE shares closed at $59.51 on the New York Stock Exchange on Friday, while Aon’s at $48.94.