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American International Group, Inc. (AIG) and Zurich Financial ServicesGroup (Zurich) announced today an agreement to sell 21st CenturyInsurance Group, the wholly owned subsidiaries comprising AIG's U.S.personal auto insurance business, to Farmers Group, Inc. (FGI), asubsidiary of Zurich. Under the terms of the transaction, FGI will payAIG $1.9 billion, consisting of $1.5 billion in cash and $400 million inface amount of subordinated, euro-denominated capital notes backed byZurich Insurance Company, Zurich's principal operating unit. FGI willalso assume 21st Century's outstanding debt of $100 million. Thetransaction is subject to satisfaction of certain conditions, includingapprovals by appropriate regulatory authorities.
21st Century, based in Wilmington, Delaware, includes the former AIGDirect business and Agency Auto business. The company operates in 49states and Washington, D.C. In 2008, 21st Century reported totalpremiums of $3.6 billion, including $2.7 billion in direct sales and$900 million through independent agents.
The transaction excludes AIG's Private Client Group, which providesproperty and casualty insurance to high net worth individuals.
"We are very pleased to reach agreement on a $2 billion transaction,especially in this market environment," said Edward Liddy, AIG'schairman and chief executive officer. "In addition, we are movingforward with discussions for several other transactions, and we continueto evaluate how best to assure the continued strength and success of allof AIG's businesses."
Anthony J. DeSantis, president and chief executive officer of 21stCentury, said, "Both 21st Century and Farmers are strong companies,providing policyholders with exceptional levels of service andpersonalized coverage. This is an excellent fit and we look forward to asmooth integration that will be seamless to our customers."
Banc of America Securities LLC acted as financial advisor and SidleyAustin LLP acted as legal counsel to AIG on this transaction. BlackstoneAdvisory Services provided financial advice to AIG in connection withAIG's global restructuring program.
American International Group, Inc. (AIG), a world leader in insuranceand financial services, is the leading international insuranceorganization with operations in more than 130 countries andjurisdictions. AIG companies serve commercial, institutional andindividual customers through the most extensive worldwideproperty-casualty and life insurance networks of any insurer. Inaddition, AIG companies are leading providers of retirement services,financial services and asset management around the world. AIG's commonstock is listed on the New York Stock Exchange, as well as the stockexchanges in Ireland and Tokyo.
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