ProgramBusiness
 
  


  1. News Articles
  2. Related News Articles
  3. Comments
News Article Details

AIG in Talks to Sell Auto Unit to Zurich Financial


Posted on 11 Feb 2009

Facebook LinkedIn Twitter Google

Sources familiar with the situation say that American International Group Inc. (AIG) is in talks to sell its U.S. auto business to Zurich Financial Services AG.

The sale of 21st Century Insurance, which one person said would be valued at about $2 billion, would be AIG’s biggest divestiture since its government bailout in September. The companies are still working on a formal agreement, said the people, who declined to be identified because talks are private.

Paula Reynolds, AIG’s restructuring chief, is seeking to unload as much as two-thirds of the company and has struck deals worth $2.3 billion. Once the world’s biggest insurer, AIG was overwhelmed by bad bets tied to U.S. housing and has posted about $43 billion in net losses over four quarters. It had tapped $38.9 billion of a $60 billion government credit line as of year-end.

“This will certainly be one of the bigger contributors for AIG to get to their goal,” David Bradford, an executive vice president of consultant Advisen Ltd., said today in a phone interview. “21st Century is a well-regarded company and to the extent Zurich wants to expand their footprint in auto insurance, it’s a strong acquisition for them.”

A significant portion of the purchase price may be paid in non-cash considerations, one of the people said. That would require special permission from the Federal Reserve, whose arrangement with AIG requires at least 90 percent of asset-sale prices be paid in cash.

Both AIG and Zurich declined to comment.


Comments

Post a Comment
If you are a Storefront / Tradingfloor user, click here to login.
Note: As a guest user, please fill out the form below to post a comment.
Post your comments here.
Name :
Email Address :
Captcha :
Comments :
Character left : 2000