Embattled insurance giant American International Group Inc. is selling 21st Century Insurance Group to Farmers Group Inc., a subsidiary of Zurich Financial Services Group, in a $2 billion deal.

Los Angeles-based Farmer’s will pay $1.5 billion in cash, plus $400 million in capital notes backed by Zurich for Woodland Hills, Calif.-based 21st Century. Farmer’s also will assume 21st Century’s $100 million in outstanding debt. The transaction is expected to close in the third quarter.

Farmers Insurance Group, a unit of Farmers Group, is the largest employer in Olathe, with about 3,000 agents and employees combined, a spokeswoman for Vince Donofrio, vice president of Farmers Insurance Group’s HelpPoint Operations in Olathe, said Friday. It’s too soon to know how the acquisition will affect Farmers Insurance’s Kansas City-area operations, she said.

To increase the capital at Farmers, Zurich is expected to raise $1.1 billion in a stock offering to institutional investors.

“Both 21st Century and Farmers are strong companies, providing policyholders with exceptional levels of service and personalized coverage,” Anthony DeSantis, CEO of 21st Century, said in a statement. “This is an excellent fit and we look forward to a smooth integration that will be seamless to our customers.”

AIG (NYSE: AIG) is based in New York City.