21st Century (AIG) Bought by Farmers

djs · 04-16-2009, 10:15 PM

Looks like Farmers is trying to grow, anyway they can. They are buying 21st Century from AIG

Farmers Insurance Group :: Farmers Insurance Announces Acquisition of AIG's Personal Auto Insurance Group, Which Includes 21st Century

AIG Sells Unit to Zurich, Biggest Deal Since Bailout (Update2) - Bloomberg.com

I wonder if they are looking at buying the life business as well? Actually, I thought AIG wanted to keep both the life and auto insurance parts, as the areas they are making money. I guess things change....

Dan

InsuranceRus · 04-17-2009, 02:04 AM

Dan, I am a 245 lbs man, yet I managed to do a back flip today when I read that email!!! Best news I've heard here in Vegas in a long time!!!

Recruiter1 · 04-17-2009, 01:39 PM

They are definitely trying to grow any way they can, but this purchase does come with some baggage. The 100 million in debt that 21st Century currently has also came with the deal. It will be interesting how this unfolds. I remember Daimler buying Chrysler with similar conditions...we all know how that unfolded.

djs · 04-17-2009, 02:20 PM

The $100 million in debt, which I assume is included in the $1.9B purchase price isn't a big deal.

The $1.9B purchase price may be a bit high, if I'm running the numbers correctly, that equates to $475 / item (policy).

Now if I listen to the ads, if I get a quote through 21st Century, I can save $335 on my insurance, so, does that mean they are really paying $475 - $335?

Dan

***Melmunch3*** · 04-21-2009, 06:51 AM

How long is the typical policy retained on the books? That price sounds like margin for several years at least...

djs · 04-21-2009, 09:58 AM

These are auto only policies, I don't know the average retention for 21st Century, but nationally, across carriers, auto only policies are on the books less than 3 years.

I also don't know what the combined ratio is for 21st Century. I'm assuming it's not that great, but I really don't know.

Farmers, I'm assuming, is after the book of business, hoping to cross sell other products. Not sure how they will do this.

Dan

Gulliver · 06-03-2009, 10:22 PM

Farmers/Zurich now has Bristol West, Foremost and the former AIG Agency Auto in the independent channel. They are now going to combine the three lines into Foremost Auto. This will take a while but is already being planned.

Gulliver