Farmers Acquires 21st Century Insurance

Tuesday, Apr 21,2009, 5:07:08 PM Click:

Apr. 17--American International Group bailed out of the auto insurance business on Thursday, selling Woodland Hills-based 21st Century Insurance to Farmers Insurance Group for $1.9 billion. Los Angeles based-Farmers, a subsidiary of Zurich Financial Services Group, will keep the 21st Century brand.

The deal will make Farmers the nation's third-biggest auto insurer behind State Farm and Allstate and the biggest in California, the company said.

"We're excited about what this can do for us in the future," Farmers CEO Robert Woudstra said in a conference call.

He noted that the operations will be complementary, as 21st Century sells its products online and over the phone while Farmers has a network of agents.

"Research clearly shows that more and more insurance consumers are shopping, quoting and purchasing insurance products online," Woudstra said.

"What this transaction really does is put us in position... to sell additional products that customers have needs for but 21st Century doesn't sell."

Farmers insures autos, homes, businesses, specialty products, people and offers financial services.

The deal is expected to close in the third quarter and includes Farmers assuming $100 million 21st Century's outstanding debt.

21st Century includes the former AIG Direct business and Agency Auto business. It operates in 49 states and Washington, D.C., and has more than 2.4 million customers and insures more than 4 million vehicles across the country.

The deal also gives Farmers a geographically broader and more diverse market presence across the country, including the eastern seaboard -- a key target market for future growth.

AIG, which recently trimmed 500 21st Century jobs, is selling off a number of businesses to help repay $182.5 billion in federal bailout funds it has received since last December.

Woudstra said that 21st Century will continue to operate from its headquarters in Warner Center. The companies have different operating infrastructures so it is too soon to say how many more jobs could be lost.

"They've gone through a lot of those employee reductions" already, Woudstra said.

The transaction does not include AIG's Private Client Group.

"This is an excellent fit and we look forward to a smooth integration that will be seamless to our customers," Anthony J. DeSantis, president and chief executive officer of 21st Century, said in a statement.

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