Farmers Group Buys 21st Century Car Insurance Unit from AIG

Farmers Group Inc., the Los Angeles subsidiary of Swiss insurance conglomerate Zurich Financial Services Group, announced Thursday that it acquired auto insurer 21st Century Insurance.

Under the $1.9 billion deal, Farmers Group will buy AIG's personal auto insurance group, which includes Woodland Hills-based 21st Century, from the struggling New York insurance giant.

The deal, expected to close in the third quarter, would make Farmers Group the nation's third-largest personal lines insurer, which includes homeowners, auto and personal umbrella insurance.

"This will dramatically transform the insurance landscape by positioning Farmers as the leading multi-line, multi-channel insurer in the United States," said Farmers Chief Executive Robert Woudstra in a statement.

The deal will help AIG repay part of the $100 billion in government aid it has received in recent months after suffering massive losses as the result of bad bets made on residential mortgage-backed securities. The company is currently attempting to sell other businesses, including Los Angeles aircraft leasing company International Lease Finance Corp.