(Bloomberg) -- HC2 Holdings Inc. agreed to buy two units from American Financial Group Inc. as Chairman and Chief Executive Officer Philip Falcone pushes into insurance in his latest venture.

The target companies have a portfolio of about $1.2 billion that Falcone’s company can invest, according to a statement Tuesday from Herndon, Virginia-based HC2. The buyer will make an initial payment of $7 million, and the price could be adjusted based on the units’ results.

Falcone is resuming his dealmaker role at HC2 after stepping down from HRG Group Inc. and reaching a 2013 settlement with regulators that forced him to liquidate his hedge funds. HRG, previously known as Harbinger Group Inc. expanded in insurance under Falcone, adding Fidelity & Guaranty Life, which boosted investment yields by betting on assets such as mortgage- backed securities.

“Given my prior role and experience investing in the insurance space, I believe this transaction specifically -- and the sector more broadly -- could be a big value driver for HC2,” Falcone said in the statement.


--With assistance from Sonali Basak and Saijel Kishan in New York.

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