NEW YORK (Bloomberg) - American International Group Inc., the world's largest insurer, said it will eliminate about 600 jobs as it combines its auto unit with newly acquired 21st Century Insurance Group.

Call centre staff, claims handlers and administrative workers are among employees from the two companies who will lose their jobs, said Chris Winans, spokesman for New York-based AIG.

The combined unit, which has 5,500 employees before the cuts, will be called aigdirect.com, AIG said at the end of last week in a statement.

"We have notified the people who will be directly affected by this," Winans said in an interview.

Insurers are vying for a bigger slice of the $164 billion a year in premiums generated by auto insurance.

The deal will give AIG a larger presence selling policies over the Internet and telephone, the model used by Geico Corp., which is owned by Warren Buffett's Berkshire Hathaway Inc.

Bruce Marlow, CEO of 21st Century, will be president of the new AIG subsidiary.

Marlow was chief operating officer at Mayfield Village, Ohio-based Progressive Corp., the third-largest US auto insurer, from 1988 until 1996. Tony DeSantis, president of AIG Marketing, will be chief operating officer.

The deal was valued at $813 million on May 15, when AIG raised its offer for the Woodland Hills, California-based car insurer by 11 percent to $22 a share.

AIG, which has owned a stake in 21st Century since 1994, today acquired the 39 percent of shares it did not already have.

The job cuts were announced after the close of regular trading.

AIG shares fell six cents to $67.47 in New York Stock Exchange composite trading. The stock has lost 5.9 percent this year.