Zurich completes AIG motor buy

Zurich Financial Services’s US subsidiary Farmers Group has completed the acquisition of 100% of AIG’s US Personal Auto Group, which includes 21st Century Insurance. The transaction elevates Farmers to become the third largest traditional direct writer of insurance in the US and the third largest US personal lines insurer overall. Farmers paid US$1.9bn for the business, of which $1.7bn was paid in cash and $0.2bn in Euro denominated capital notes. As part of the transaction, Farmers immediately sold the portion of the acquired business that was comprised of regulated insurance businesses to the Farmers Exchanges, which Zurich manages but does not own, for approximately $1.4bn in cash, resulting in a net purchase price for Zurich of approximately $0.5bn. Zurich has provided increased underwriting capacity to the Farmers Exchanges through an increase of the existing quota share reinsurance from the Farmers Exchanges from 25% to 37.5%.