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Farmers Insurance to gut workforce at 21st Century unit in Woodland Hills

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Another blow to the San Fernando Valley economy: Jobs will be slashed at the Woodland Hills office of low-cost auto insurer 21st Century as the company’s operations are consolidated with its new parent, L.A.-based Farmers Insurance Group.

Farmers says it expects to cut 554 of 979 jobs at the Woodland Hills location by the end of this year, and 200 more by the end of 2010, my colleague Marc Lifsher reports.

American International Group, the federally bailed-out insurance giant, sold 21st Century to Farmers for $1.9 billion last month. AIG has been seeking to raise cash to gets its operations back on track after its near-collapse last year, and to begin repaying $180 billion in federal aid.

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Farmers Chief Executive Robert Woudstra has called 21st Century ‘the perfect strategic fit’ for 81-year-old Farmers, because it allows the company to harness 21st Century’s business model of marketing auto insurance directly to customers via the Internet and by phone.

Farmers, by contrast, sells insurance via a huge network of agents.

21st Century was founded in L.A. by insurance agent Louis Foster in 1958. Woodland Hills has been the company’s main California office since 1980.

AIG took a minority stake in 21st Century in 1994 and bought the remaining shares in September 2007. AIG was in the process of rebranding the company as Aigdirect.com when the financial-system meltdown struck last year. AIG then decided to keep the 21st Century brand name, but in April opted to sell the entire operation.

Ironically, 21st Century workers now may be wishing they were still part of AIG: The company’s new CEO, Robert Benmosche, told the Wall Street Journal today that he wants to take a go-slow approach in selling other operations to repay bailout funds.

From the Journal:

He’s willing to wait up to three years, he said, to offer stakes in two multibillion-dollar foreign units that the insurer had been racing to spin off. ‘It’s not a question of if, but when,’ Mr. Benmosche said. ‘Once the market gives us a price that I think is fair, we can go forward.... If we sell too soon, everyone loses.’

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Benmosche took over as AIG’s CEO on Aug. 10. AIG shares have rocketed this summer, including a 27% surge today, as the company’s finances have stabilized and speculators have bet on what might be left for shareholders after the firm repays Uncle Sam.

-- Tom Petruno

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