Farmers Group Inc. takes over AIG auto insurance business in Delaware
Delaware State Insurance Commissioner Karen Weldin Stewart, CIR-ML, announced she has issued an order approving the sale of 21st Century (American International Insurance Co. of Delaware) to Farmers Group Inc., a wholly owned subsidiary of Zurich Financial Services Ltd., and the subsequent sale to the Farmers Exchanges which Farmers Group Inc. manages but does not own.
This approval, following public hearings conducted June 25 and June 29, allows the transfer of the personal lines automobile insurance business of American International Group Inc. (AIG) to Farmers. “Farmers has satisfied me that they are committed to maintaining their Delaware presence and the jobs that employ over 700 Delawareans while growing their business here,” said Stewart.
“Farmers is financially sound and has a strong record of being a good corporate citizen. We are certain that Farmers will be extremely successful in Delaware, while we at the Department of Insurance will continue to build on our regulatory expertise to ensure that Delaware’s consumers are protected.”
Although several other state insurance departments reviewed the sale of AIG Insurance Companies domiciled in their states as part of the overall transaction, Delaware was the only state to conduct public hearings as part of its approval process. Stewart emphasized she will remain vigilant to ensure policyholders continue to be protected from the financial deterioration of AIG Inc., the noninsurance company parent of the AIG Insurance Companies.
“I am satisfied the record demonstrates the rigorous financial review necessary to assure that the policyholders of the transferred companies have been protected by this transaction,” said Stewart. “In late 2008, AIG Inc., which is not regulated by state insurance commissioners, became financially troubled as a result of imprudent financial guarantees.”
Stewart has committed she will not allow assets in the insurance companies that are necessary for the protection of policyholders to be used to satisfy the obligations of the nonregulated companies.
Stewart approved the transaction in which American International Insurance Co. (AIIC) of Delaware is one of 18 AIG affiliate insurance companies that are to be sold to Farmers. along with 10 noninsurance AIG affiliate companies. Of the Personal Auto Group insurers, AIIC-Delaware is the only one domiciled in Delaware. Stewart approved the sale because, in part, she was satisfied that AIIC-Delaware would remain headquartered in Delaware and would continue to operate substantially as it has in the past.
“I am satisfied that this transaction is clearly in the interest of policyholders, and Farmers’ commitment to maintain AIIC-Delaware’s operations in Delaware is beneficial to the state and all its citizens,” said Stewart.
According to Farmers, the acquisition of the Personal Auto Group business accelerates its existing plans to enter the direct market and will propel Farmers into a U.S. leadership position as a multiline, all-channel insurer. The addition of the Personal Auto Group business fosters Farmers’ expansion in the eastern United States from its traditional concentration in the western United States and will spread its personal lines risk more evenly.
