AIG Finalizes 21st Century Deal

New York - In the latest insurance company merger, American International Group, Inc. (AIG) and 21st Century Insurance Group announced they have entered into a definitive merger agreement by which AIG would acquire the 21st Century shares it does not currently own at a price of $22.00 per share in cash, for a total purchase price of approximately $813 million.  Last week, INN reported that Liberty Mutual Group is acquiring Ohio Casualty Corp. for $44 per share in a transaction valued at about $2.7 billion. Ohio Casualty Generated $1.4 billion in net written premium in 2006 and had pre-tax income of $300 million. With combined net written premium exceeding $7.3 billion after the transaction, the newly formed company will be the largest regional provider of property and casualty products distributed through independent agents in the United States, said a Liberty Mutual representative. The AIG and 21^st Century deal is expected to enable AIG to expand its existing direct-to-consumer auto insurance business, an area in which 21st Century is has shown strong results in California. Martin Sullivan, President and Chief Executive Officer of AIG, said, "We are pleased to enter into this transaction, which we view as a win for all parties. It allows us to combine our expertise and resources to grow this business and it allows 21st Century shareholders to monetize their investment at a compelling value." New York-based AIG already owns, through its subsidiaries, approximately 60.8% of the outstanding shares of 21st Century, Woodland Hills, Calif. Upon completion of the transaction, 21st Century will become a wholly owned subsidiary of AIG. The 21st Century board of directors unanimously approved the merger agreement following the recommendation and approval of a special committee comprised of directors of 21st Century who are independent of AIG. The $22.00 per share price represents a 32.6% premium over 21st Century's closing price on January 24, 2007, the last trading day before the public announcement of AIG's proposal to acquire the publicly held shares of 21st Century and a 39.8% premium to 21st Century's average closing price for the twelve months prior to January 24, 2007. The AIG-21^st Century merger, expected to be completed in the third quarter of calendar year 2007, is subject to customary conditions and approvals. The exact timing is dependent on the review and clearance of necessary filings with the Securities and Exchange Commission. The transaction is subject to the affirmative vote of the holders of a majority of the outstanding shares of 21st Century. AIG has agreed to vote or cause to be voted all of its and its subsidiaries' 21st Century shares in favor of the merger. Sources: AIG, Associated Press, INN archives