AIG Sells 21st Century Insurance to Farmers in Effort to Pay Government Back
The much despised AIG has exited the auto insurance industry. AIG sold 21st Century Insurance to Farmers to raise money to pay back the federal government.
The bailout of AIG is the one thing our fractured country seems united on. We all think it is horrific and despise AIG. The company has received hundreds of billions in bailout money. Although it was thought to be impossible, AIG has managed to become a bigger pariah than even Enron.
The bailout may make us all fuming mad, but the good news is it did come with some hooks in it. The federal government may own a huge chunk of AIG, but it also put its own board and CEO in power. Their directive? Sell off parts of the company and pay us all back. That is exactly what is happening here.
AIG has sold 21st Century Insurance to Farmers for $1.9 billion. Farmers has also agreed to assume $100 million in debt carried by 21st Century. The deal makes Farmers’ owner, Zurich Financial Services Group, incredibly happy because it turns Farmers into an absolute behemoth. The deal makes Farmers the third biggest auto insurance company.
More importantly, the deal gives Farmers major traction in the industry. Why? Farmers writes policies through a network of agents. It is a face-to-face approach. Farmers has no phone or internet presence to speak of. Guess what 21st Century specializes in? Yep, phone and internet.
AIG has been given so much money in the bailout that I’ve reached the point where $1.9 billion really doesn’t seem like that much money. How strange is that perspective? Well, it may be a drop in the bucket compared to what has been given to AIG, but at least we are starting to see AIG assets being sold off and money coming back to us.