The combination would make Zurich, including Farmers, the largest auto insurer in California. Zurich, the fourth-largest European insurer, has said it was on the lookout for deals that will bolster its North American personal lines and global life insurance businesses. AIG, once the world's biggest insurer by market value, averted bankruptcy in September with an $85 billion federal bailout. The rescue later swelled to about $185 billion.
Acquiring 21st Century, according to Farmers, adds approximately 1.5 million direct auto customers, plus an estimated 500,000 new customers per year to Farmers’ personal lines operations. AIG’s U.S. Personal Auto Group in 2008 had gross written premiums of $3.6 billion. AIG acquired part of 21st Century in 1994 and got a majority stake in 1998. It bought the remaining portion in 2007 for $22 a share, valuing the entire company at $1.9 billion. The unit was renamed aigdirect.com, then reverted to 21st Century.21st Century has offices in Woodland Hills, CA, with national headquarters in Delaware. It sells auto policies online and over the phone. Presently Zurich’s Farmers unit and rivals including Allstate and Travelers, rely on agents for most of their sales. Direct-to-consumer personal auto insurance sales are on the increase. Insurers project that online sales, as relied on by Berkshire Hathaway’s Geico unit and E-surance---owned by a Bermuda-based financial services company which has grown coverage from four states in 1999 to 30 now---will increase over the next 10 years. Jay Fishman, Travelers’ CEO, said last November that insurers need to plan for changes in customer behavior,
Previously AIG announced it will turn over its two largest non- U.S. life insurance units to government trusts. AIG said it owes about $46 billion of a $60 billion federal credit line as of April 2. Last week AIG CEO Edward Liddy said AIG had reached agreements to sell 10 businesses, "despite the most challenging market environment in memory."