21st Century Insurance Group and American International Group, Inc Agree to Merger

WOODLAND HILLS, California - May 15, 2007 - 21st Century Insurance Group ("21st Century") (NYSE:TW) and American International Group, Inc. ("AIG") (NYSE:AIG) today announced they have entered into a definitive merger agreement providing for the acquisition by AIG of all of the outstanding shares of common stock of 21st Century not currently owned by AIG for $22.00 per share in cash. AIG currently owns approximately 60.8% of the outstanding shares of 21st Century. Upon completion of the transaction, 21st Century will become a wholly owned subsidiary of AIG.

Bruce Marlow, President and Chief Executive Officer of 21st Century, will lead AIG's direct private passenger auto operations, which will be comprised of 21st Century and AIG Direct. Combined, the two organizations had $2.9 billion of premium written in the 12 months ended December 31, 2006.

Yesterday evening, 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 transaction represents a 32.6% premium over 21st Century's closing price on January 24, 2007, the day of AIG's unsolicited merger proposal, and an 11.4% premium over AIG's original proposal price of $19.75 per share.

"The Special Committee carefully reviewed the transaction in consultation with our financial and legal advisors, and the merger agreement was the result of this examination and extensive negotiations between the parties. We believe the merger is in the best interests of 21st Century's minority stockholders," said John B. DeNault III, Chairman of the Special Committee. The Special Committee was advised by Lehman Brothers Inc. and Skadden, Arps, Slate, Meagher & Flom LLP.

Martin J. 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."

The merger is expected to be completed in the third quarter of calendar year 2007, 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 ("SEC"). The transaction is subject to the affirmative vote of the holders of a majority of the outstanding shares of 21st Century. However, AIG has agreed to vote all of its 21st Century shares in favor of the merger, thereby assuring that approval will be obtained at the 21st Century stockholders' meeting relating to the merger.

Source : Equity Bulls

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