Shareholders of 21st Century Insurance Group sued to block a proposed $690 million buyout Tuesday by insurance giant American International Group Inc.

In a compliant filed in Los Angeles Superior Court Jan. 26, minority investors said that AIG’s proposal was purposefully timed to “squeeze out” minority holders without paying an adequate or fair price, for the Woodland Hills-based insurer.

The lawsuit, which seeks class-action status, asks the court to block the buyout until 21st Century sets up a process to guarantee the highest possible price. AIG, a New York-based insurance holding company that owns about 62 percent of 21st Century, offered $19.75 per share in cash, a 19 percent premium on the Jan. 24 closing price. The stock closed on Tuesday at $21.34 after hitting a 52-week high of $21.46 during trading. Shares in 21st Century have gained 31 percent since the bid was announced.

The minority investors recommended in the complaint that 21st Century’s hire “truly” independent advisers and appoint a “truly” independent committee to protect their interests. 21st Century said on Jan. 25 that it formed a special committee of directors to evaluate AIG’s bid and hired Lehman Brothers Inc. and Skadden Arps Slate Meagher & Flom as financial and legal advisers.

Officials at 21st Century could not be reached for comment.

Shares in 21st Century finished up 1.5 percent, gaining 31 cents to $21.34.