American International Group, Inc. (AIG) has taken the first step to position the rebranding of its insurance units as an independent entity, AIU Holdings. AIG has transgered the company to a special purpose vehicle (SPV) in preparation for the potential sale of a minority stake in the business, which ultimately may include a public offering of shares, depending on market conditions.
This is the first step in the process that was announced on March 2 that will result in AIU Holdings’ having a board of directors, management team and brand distinct from AIG. AIU Holdings will serve as the holding company for AIG’s Commercial Insurance, Foreign General Insurance and Private Client Group units.
AIG also intends to purchase from AIU Holdings its equity interests in International Lease Finance Corp., United Guaranty Corp., and Transatlantic Holdings, Inc. The sale of these interests to AIG further separates the property/ casualty operations from AIG and its other affiliates.
Los Angeles-based the Farmers Insurance Group of Companies is buying American International Group’s (AIG’s) Personal Auto Group, which includes 21st Century Insurance Co., for $1.9 billion.
Under the agreement, 21st Century Insurance Group, the wholly owned subsidiaries comprising AIG’s U.S. personal auto insurance business, will be sold to Farmers Group Inc., a subsidiary of Zurich Financial Services Group. Farmers Group Inc. will sell the underlying insurance entities to the Farmers Exchanges, which Farmers Group Inc. manages, but does not own.
FGI will pay AIG $1.5 billion in cash and $400 million in face amount of subordinated, euro-denominated capital notes backed by Zurich Insurance Co. FGI will also assume 21st Century’s outstanding debt of $100 million.
The acquisition is expected to close no later than by the third quarter of 2009 pending customary regulatory approvals. This acquisition by the Farmers Exchanges will position Farmers as the third-largest overall, personal lines insurer in the U.S. and as the largest auto insurer in several states, including California.
21st Century, which includes the former AIG Direct business and Agency Auto business, operates in 49 states and Washington, D.C. 21st Century has more than 2.4 million customers and insures more than 4 million vehicles across the country.
Pawtucket, Rhode Island-based Narragansett Bay Insurance Co. said it’s been granted a license to write property and casualty insurance in New Jersey.
New Jersey would be the fourth state where the company can write coverage — including Rhode Island, Massachusetts and New York. News of the expansion into New Jersey follows statements last year by company execs of plans to expand Narragansett’s presence on the Atlantic Seaboard.
Over the last few months, Narragansett has added several new execs, including a former Massachusetts insurance commissioner who the company said could help it navigate its expansion efforts. Last year, Narragansett received a $200 million injection of private equity funding to fund its growth. The company plans to begin underwriting in the state by July 1.
The Gowrie Group
Westbrook, Connecticut-based insurance, employee benefits and finance company The Gowrie Group as officially rebranded itself. The company says it will no longer use its former name, Gowrie, Barden & Brett, effective immediately.
Gowrie, which has offices in Connecticut and Rhode Island, is making the name change, along with a new logo and message, to reflect the consolidation of the increasing number of services it offers.
Over the years, as its services have grown, so had the names and identities of Gowrie’s linked companies and programs: Gowrie Barden & Brett, Gowrie Brett & Young, Fisher & Fisher Associates, Brewer Preferred Insurance, The Burgee Program and Customer One Financial.