American International Group, Inc. (AIG) and Zurich Financial Services Group announced an agreement to sell 21st Century Insurance Group, AIG’s auto insurance business, to Farmers Group, Inc., a Zurich subsidiary. The deal makes Farmers the third-largest auto insurer in the U.S. behind State Farm and Allstate.
Under the terms of the transaction, Farmers will pay AIG $1.9 billion, consisting of $1.5 billion in cash and $400 million in face amount of subordinated, euro-denominated capital notes backed by Zurich. Farmers will also assume 21st Century’s outstanding debt of $100 million. The transaction is subject to approvals by appropriate regulatory authorities.
21st Century, based in Wilmington, Delaware, includes the former AIG Direct business and Agency Auto business. The company operates in 49 states and Washington, D.C. In 2008, 21st Century reported total premiums of $3.6 billion, including $2.7 billion in direct sales and $900 million through independent agents.
The transaction excludes AIG’s Private Client Group, which provides property and casualty insurance to high net worth individuals.
For more information, visit www.farmers.com.
