AIG Sells 21st Century Insurance Group to Farmers Group for $1.9 Billion

Strategic Insights -

American International Group (AIG), a leading provider of insurance and financial services, has signed a definitive agreement to sell 21st Century Insurance Group, an insurance holding company, to Farmers Group, Inc. (FGI). The transaction, valued at $1.9 billion, marks a significant move for AIG as it continues to restructure its global operations.

Key Takeaways:

  • AIG has sold 21st Century Insurance Group to Farmers Group, Inc. for $1.9 billion, which includes $1.5 billion in cash and $400 million in subordinated capital notes.
  • The transaction excludes AIG's Private Client Group, which provides property and casualty insurance to high net worth individuals.
  • FGI will assume 21st Century's outstanding debt of $100 million as part of the deal.
  • Banc of America Securities LLC and Citigroup, Inc. are acting as financial advisors to AIG, while Sidley Austin LLP is serving as legal counsel.
  • The transaction is expected to close by the third quarter of 2009.
  • AIG's 21st Century Insurance business has been reported to be valued at around $2 billion, above the actual sale price of $1.9 billion.
  • This sale marks a significant move by AIG to restructure its global operations and exit non-core businesses.

Statistics:

  • Transaction value: $1.9 billion
  • Cash consideration: $1.5 billion
  • Subordinated capital notes: $400 million
  • Outstanding debt assumed by FGI: $100 million
  • Expected closing date: Third quarter of 2009
  • 21st Century Insurance business valuation: Around $2 billion

Sources:

  • Datamonitor Financial Deals Tracker via COMTEX
  • Reuters (February 10, 2009)
  • Banc of America Securities LLC
  • Citigroup, Inc.
  • Sidley Austin LLP
  • Blackstone Advisory Services L.P.
  • UBS Investment Bank