American International Group, Inc. (AIG) has closed the sale of 21st Century Insurance Group, the wholly owned subsidiaries of AIG’s U.S. personal auto insurance business, to Farmers Group, Inc. (FGI), a subsidiary of Zurich for $1.9 billion.
The $1.9 billion price consists of $1.7 billion in cash and $200 million in face amount of subordinated, Euro-denominated capital notes backed by Zurich Insurance Co., Zurich’s principal operating unit.
Farmers Group also assumed 21st Century’s outstanding debt of $100 million.
The deal includes 18 insurance companies and 10 related non-insurance entities.
The transaction excludes the Private Client Group, which continues to provide property/casualty insurance to high-net-worth individuals under the AIU Holdings name.
In connection with the closing of the sale of 21st Century to Farmers, AIU Holdings sold its interest in 21st Century for $1.7 billion plus $200 million in notes backed by Zurich.
The AIG-Farmers deal went through a number of regulatory approvals.
The National Association of Insurance Commissioners (NAIC) noted that nine of its member states approved the purchase.
“The successful and efficient nature of this transaction is a testament to the value of state collaboration,” said Steve Poizner, California Insurance Commissioner and lead regulator on the purchase.
“The overriding goal of this transaction was to ensure that policyholders would not be adversely impacted,” said Pennsylvania Insurance Commissioner Joel Ario. “This is evidenced by the subgroup’s commitment to a thorough and comprehensive review of the terms of the purchase agreement.”
Originally announced on April 16, 2009, the sale affects AIG’s personal auto lines in companies located in the following nine states: California, Colorado, Delaware, Hawaii, Minnesota, New Jersey, New York, Pennsylvania and Texas.
Was this article valuable?
Here are more articles you may enjoy.