Zurich may buy AIG auto unit

by David Masters

Story link: Zurich may buy AIG auto unit

AIG may sell its motor insurance business to Zurich following reports that the two companies are engaged in advanced merger talks.

AIG’s values its US motor insurance business, 21st Century, at $2 billion (£1.4 billion).

Zurich would pay for the purchase using mostly non-cash assets. This needs special permission from the Federal Reserve, which requires at least 90% of asset-sale prices to be paid for in cash.

Until September 2008, AIG was the world’s largest insurer.

However, the credit crisis sent the group to the verge of collapse, and it had to be rescued with a federal bailout package that now totals $152 billion.

AIG is selling off non-core businesses to pay back the government loan.

If the acquisition goes ahead, it would make Zurich the largest auto insurer in California, and give the group additional customers in New Jersey, Florida, and Pennsylvania.

AIG and Zurich both declined to comment.