AIG agrees sale of 21st Century Insurance Group to Zurich.

American International Group (AIG) has announced the sale of insurance arm 21st Century Insurance Group, to Farmers Group Inc (FGI) a subsidiary of Zurich Financial Services Group (Zurich).

21st Century Insurance Group comprises of AIG’s US personal car insurance business, and the deal, worth an estimated $1.9 billion (£1.27bn) means FGI will also assume an outstanding debt of $100 million (£67m).

However, the arrangement excludes AIG’s Private Client Group, a provider of property and casualty insurance to high net worth individuals.

Edward Liddy, AIG’s Chairman and Chief Executive Officer commented: “We are very pleased to reach agreement on a $2 billion transaction, especially in this market environment.

“In addition, we are moving forward with discussions for several other transactions, and we continue to evaluate how best to assure the continued strength and success of all of AIG’s businesses.”

AIG is a world leader in insurance and financial services and hit the headlines in 2008, when it received an $85bn (£48bn) rescue package from the US Federal Reserve to save it from bankruptcy. More recently, 20 staff quit the 370-strong UK division following public outrage at the news that staff were to receive bonus payments of more than $165m (£112m).

The deal is still subject to satisfaction of certain conditions, including approvals by appropriate regulatory authorities.

By Nicki Green