AIG Closes $1.9B Sale Of US Auto-Insurance Ops To Zurich
By Kevin Kingsbury
Dow Jones Newswires
July 1, 2009
American International Group Inc. (AIG) completed the $1.9 billion sale of its U.S. auto-insurance business to rival Zurich Financial Services AG (ZFSVY) for $1.9 billion, making it the largest sale of an AIG business as the insurer divests assets under U.S. government pressure.
The acquisition, announced in April, makes the Farmers network of insurance exchanges, which a Zurich unit manages but doesn't own, the third-largest U.S. personal-lines insurer. It already has a strong presence in many Western states.
It also marks a notable step in AIG's streamlining efforts as the companies looks to raise capital to cover some of its nearly $175 billion aid package from the federal government. The government owns 80% of AIG.
Zurich bought the AIG unit, which uses the trade name 21st Century insurance, in a two-step deal. In the first step, Zurich will pay $1.9 billion for the division. It will then sell 21st Century's regulated insurance businesses to the exchanges for $1.4 billion.
The acquired companies, which operate in 49 states and Washington, D.C., have more than 2.4 million customers and insure more than 4 million vehicles in the U.S. Farmers already counted 10.5 million U.S. households as customers.
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