New York Insurance

The American International Group, one of the most profitable insurance companies and a leader in the field of insurance companies, is a sign of a great expansion in the personal auto insurance in the context of an alliance announced yesterday, with 20th Century Industries, once a thriving car of the California Insurance companies has been reduced by losses caused by earthquake in Los Angeles earlier this year.

The Alliance calls for American International to invest up to $ 432 million Century 20 and the two companies to cooperate as a holder in new insurance companies in the insurance business outside sell Century 20, home market of California. American International is no stranger to low cost of auto insurance, AIG sold by the marketing, a little known, but rapdily growing Delaware subsidiary that specializes in direct marketing by e-mail personal automobile insurance.

Myron Piccoult, an insurance analyst at Oppenheimer & Company, said the joint ventures’ Open the door to very rapid expansion in the private car market, it could be a material part of AIG’s business. Some American families have spent about $ 90 billion for auto insurance last year, more than four times what is spent for homeowners. ”

Analyses emphasize that the American International, which has earned a profit of $ 1.94 billion during the last year, was one of the few insurance companies on their financial strength to exploit the opportunities that exist in a sector in which many large companies are marode. Earlier this year, American International invested $ 200 million in Alexander & Alexander, an insurance broker, strengthening its ability to distribute insurance products business.

The contract with 20th Century American International could be up 43 percent from insurers in California and the right to choose two of the 11 company directors in, if it exercises warrants.

News of the Alliance was very good resonance with investors and analysts, insurance start from the premise that American International financial support, combined with 20th Century’s management and business plan, the company could be the CA to repeat its success in other countries.

In serious trade yesterday, 20 century, the action rose to $ 1625 near the New York Stock Exchange at $ 11 Before the earthquake acted on its part of some $ 27. American International 25 cents per share has dropped to $ 89.75.

“Sometimes, good things of adversity, and that is, as I take this opportunity, AIG,” said Neil H. Ashley, Chief Executive at the 20th Century, which have money for advertising next year.

Until early this year, earthquakes, resulting in losses amounting to $ 815 million, Century 20 was one of the most profitable and fastest growing insurers in California. With direct sales to consumers, 20 Century eliminate costly network of agents by other companies, and has led, among industrialized countries average premium of more than 10 per cent.

With costs up to only 10.4 percent premium over the past five years, compared to an average of the industry by nearly 26 percent, 20 Century was able to win gains averaged nearly 25 per cent of the capital well above the industry average of 10.6 per cent.