Zurich Financial share drop after AIG deal

 

Friday, Apr 17,2009, 9:37:04 PM   Click:

ZURICH - Shares in Zurich Financial Services Group fell about 4 percent in morning trading after the company announced it will buy American International Group Inc. 's unit of auto insurance, 21st Century Insurance, for $ 1.9 billion.

The share price fell 4.2 percent to 190.40 Swiss francs ($ 166.22) on the Zurich exchange after the announcement of the night that the Swiss-based insurer purchased the unit from New York, AIG, the sale of operations to help repay the $ 182.5 billion of U.S. government support.

The transaction is the largest since the sale by AIG began to receive U.S. funds in September.

Analysts considered the price at the upper end of the pre-sale speculation, but still positive for the company based in Zurich.

21st century, based in Wilmington, Delaware, operates in 49 states and Washington, DC

Zurich sought to develop its automobile insurance business of the United States because it is a stable operation that can balance the more volatile sectors, Zurich's CEO James Schiro said.

He said that financial discipline has enabled the company to take advantage of the opportunity to buy the U.S. unit.

Zurich Financial has suffered losses from the collapse of financial services companies Lehman Brothers, Washington Mutual Finance Corp. and Sigma, but did better than some of its competitors and still reported a profit of $ 205 million for fourth quarter of 2008.