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Pact Puts AIG in Command of 20th Century

Insurance: Changes in board of Woodland Hills firm gives majority control to New York giant.

September 04, 1998|LIZ PULLIAM | TIMES STAFF WRITER

Insurance giant American International Group Inc. has taken control of the board of Woodland Hills auto insurer 20th Century Industries, completing a coup started earlier this summer.

New York-based AIG, which boosted its ownership of 20th Century to more than 50% last month, in an Aug. 10 letter had demanded a special shareholder meeting to oust the smaller company's board. Analysts said the financial services powerhouse was frustrated with 20th Century's slow growth.

20th Century initially resisted the move, saying the issue could be resolved without a meeting and that it wanted to protect the interests of minority shareholders.

Thursday's agreement preserves most of the board while giving AIG majority control. AIG Chairman Maurice "Hank" R. Greenberg will take over as chairman of 20th Century, replacing John B. De Nault, who resigned. De Nault, 79, helped launch 20th Century in 1958.

Greenberg will be joined by four AIG executives, an AIG consultant and former California Insurance Commissioner Roxani M. Gillespie. Six current directors remain, including 20th Century Chief Executive William L. Mellick and R. Scott Foster, the ophthalmologist son of 20th Century's late founder, Louis W. Foster. Rachford Harris, another early investor, also resigned.

AIG, the U.S.' largest financial services firm, rescued 20th Century with a capital infusion in 1994, after 20th Century nearly foundered on $1 billion in Northridge earthquake damage losses. The losses prompted 20th Century to drop most of its homeowners insurance business and concentrate instead on its auto coverage.

20th Century shares rose 69 cents to close at $24.88 and AIG shares slipped $1 to $79.81 on the New York Stock Exchange.

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