Zurich Financial to buy AIG U.S. unit for $ 1.9b

 

Friday, Apr 17,2009, 9:40:26 PM   Click:

CHARLOTTE, NC - Insurer American International Group Inc. announced Thursday it will sell its unit of auto insurance, 21st Century Insurance, Zurich Financial Services Group for $ 1.9 billion.

New York-based AIG has received $ 182.5 billion in financial support from the government since September. The company is selling a number of business units to repay a portion of the loan.

Under the agreement, Farmers Group will pay $ 1.5 billion in cash and $ 400 million in subordinated capital euro-dominated by notes of Zurich Insurance Company, AIG said. Farmers will also assume 21st century, outstanding debt of $ 100 million.

21st century, based in Wilmington, Del., includes the former AIG Direct business and the Agency Auto business. The company operates in 49 states and Washington, DC In 2008, the 21st Century reported a total premium of $ 3.6 billion, including $ 2.7 billion in direct sales and $ 900 million by means of independent agents.

The transaction excludes AIG Private Client Group, which provides property and casualty insurance for high net worth individuals.

The transaction strengthens the hand of Zurich in the U.S. auto insurance. Zurich owns Los Angeles-based insurer Farmers Group Inc

AIG Chairman and Chief Executive Edward Liddy said in a statement that AIG is "to move forward with discussions for several other operations."

Meanwhile, AIG announced Thursday it has completed the sale of part of its management of AIG Private Bank Ltd. in Aabar Investments PJSC of Abu Dhabi.

Under the agreement, the United Arab Emirates-based investment company paid about $ 253 million and took about $ 55 million of intra-company loans outstanding at AIG Private Bank.

The agreement, announced in December, is the fourth of AIG closed down over the past three weeks and one of 10 agreements for the sale of assets has reached in recent months.

Shares of AIG rose 10 cents, or 6.2 percent, to $ 1.70 in exchange for the afternoon Thursday.