Business NEWS
American International Group plans sale of U.S. auto business, 21st Century Insurance, to Zurich Financial Services
By Amarendra Bhushan for CEOWORLD Magazine Updated:April 16, 2009
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US taxpayer-bailed out insurance giant American International Group Inc. (AIG) is in advanced talks to sell its US personal lines insurance business, 21st Century Insurance, to Zurich Financial Services for about $2bn.
Selling the unit, which includes car, bike and commercial vehicle insurance, to the Swiss group would help AIG repay $100bn in US federal aid.
The two parties have been in talks for months and could finalise a deal within days, transaction involving New York-based AIG’s 21st Century Insurance unit may be valued at more than $1.5 billion and could be announced as early as April 16.
The price tag for 21st Century Insurance could fall within a range of $1.5 billion to $2 billion, the Wall Street Journal reports.
The federal government has pumped some 180 billion dollars into the coffers of AIG, now nearly 80 percent owned by the government under the bailout.
AIG also is trying to sell off other units, including International Lease Finance, its aircraft leasing business, for which a second round of bids are due late this month, the Journal reports.
If a sale does happen, it would be the largest for the insurer since its rescue by the US government in September. AIG chief executive Edward Liddy has previously said that the private client division is not being sold.
Last week Mr Liddy said AIG had reached agreements to sell 10 businesses, “despite the most challenging market environment in memory.”
These include the sale of HSB Group to German reinsurer Munich Re for $US742 million and its Canadian life insurance unit to Bank of Montreal for about C$US375 million.
The company is trying to sell off assets in a bid to pay back the government. US insurer MetLife was also said to have shown an interest in AIG’s unit.
The negotiations between AIG and ZFS, the subject of much speculation in the economic press for the past two months, “could still fall apart” but “a deal could be announced in the next few days,” the British newspaper reported.
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