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Zurich to Buy AIG's Personal Auto Business

Zurich Financial Services is buying American International Group Inc.'s direct and independent agent personal auto business. The $2 billion deal is the largest asset sale...
April 21, 2009

Zurich Financial Services is buying American International Group Inc.'s direct and independent agent personal auto business. The $2 billion deal is the largest asset sale since AIG was rescued by a massive federal loan in September. Once granted regulatory approval, Farmers will sell the regulated insurance businesses downstream for $1.4 billion to the Farmers Exchanges, which are managed, but not owned, by Zurich.

The fate of AIG's auto business conducted through independent agents is less clear. California Insurance Commissioner Steve Poizner, the domestic regulator for Los Angeles-based Farmers, said Farmers intends to maintain the 21st Century brand for its direct business, which would file rates separately from Farmers' own agent-written business, and the two products could be considered competitors. He said 21st Century reported $2.7 billion in direct sales premium and $900 million in premium sold through independent agents. Poizner also expressed hope the difference in operation would help limit job losses.

Farmers CEO F. Robert Woudstra said in a statement he expected the company's agent force would appreciate the opportunity to cross-sell homeowners, motorcycle, motor home, small business and life policies to the 1.5 million customers with auto insurance through 21st Century, a monoline auto writer.  "It'll put them in a position to have access to these customers, because we own those customers directly as an enterprise and can make those leads available to our agency force distribution system," Woudstra said.

$2B AIG Deal to Make Farmers Third-Largest U.S. Auto Writer (BestWire 4/16/09)

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