AIG, 21st Century Merger Means 600 Layoffs

American International Group Inc. said yesterday that its acquisition of 21st Century Insurance Group will result in the layoff of 600 people through the elimination of duplicate positions.

The insurer said the cuts would affect about 11 percent of the combined work force, which amounts to 5,500 people. AIG said the merged organization will be named aigdirect.com.SM, and will be based in Wilmington, Del., and Woodland Hills, Calif.

Bruce Marlow, chief executive officer of 21st Century, will serve as president, and Tony DeSantis, president of AIG Marketing, will serve as chief operating officer, AIG said.

Robert M. Sandler, AIG executive vice president, domestic personal lines, said, "The combination of AIG's direct personal auto business with that of 21st Century will create the scale and sophistication to permit us to respond more effectively to the marketplace."

The company said it plans an "aggressive IT integration process" to be completed in three years.

AIG said the duplicate positions to be eliminated are located in both the home office/corporate functions and in the field organization.

Positions to be eliminated, as well as the locations scheduled for closing over the next two years have been identified, the company said.

"We regret the necessity of eliminating positions as a result of the merger. Combining two separate insurance companies naturally results in some duplication, necessitating these difficult integration decisions, which we are implementing as quickly as possible," said Mr. Sandler in a statement.

According to the company, employees affected by the merger have been briefed concerning the job actions and timing, severance arrangements, and the availability of positions within the organization. AIG has operations in more than 130 countries and jurisdictions.

AIG said that, wherever possible, employees slated to lose their jobs have been encouraged to apply for open positions in other parts of the organization.

The merger involved a subsidiary of AIG with 21st Century. AIG acquired the 39.3 percent of the 21st Century shares it did not previously own.