The Penn Central merger was consumated on Feburary 1, 1968, between the Pennsylvania Railroad and the New York Central Railroad. At the end of 1968, the New York New Haven & Hartford Railroad was merged into PC by order of the Interstate Commerce Commission.
Financial problems plagued the PC during its first couple years. Even though the merger had been planned for 10 years (on and off) before its inception, many problems faced the combined companies, such as incompatible computer systems and signalling systems.
Penn Central also invested in other companies, such as real estate, pipelines, and other ventures. The idea was to create a conglomerate corporation, with the railroad as one part of it. This diversification program, even 20 years later, is a point of debate over the fall of the PC, as some people say funds that were invested in other companies could have been used to run the railroad.
The end came on Sunday, June 21, 1970, when the Penn Central filed for bankruptcy under Section 77 of the Bankruptcy Act. Because of the Section 77 filing, PC was protected from its creditors, and trains continued to run, while the financial losses continued to pile up.
Meanwhile, the U.S. Government created the United States Railway Association to develop a way to save rail services in the East, as the Erie Lackawanna, Jersey Central, Lehigh Valley, Reading, and Pennsylvania-Reading Seashore Lines were all in bankruptcy in addition to PC. The result was Conrail, which took over the above lines on April 1, 1976.
And what happened to the Penn Central Company? When Conrail was formed, the government bought PC's rail assets from the company, so the Penn Central Company (the former holding company for the PC railroad) still existed. PC entered into other non-railroad businesses, such as real estate and insurance. Some of these businesses were some of the original diversification investments made before the bankruptcy. On March 25, 1994, Penn Central Corporation changed its name to American Premier Underwriters (APU). APU was purchased by American Financial Group (AFG) in 1995, and remains a wholly-owned subsidiary of AFG to this day. In addition to its insurance business, APU still owns Grand Central Terminal in New York City, which is currently under a 110-year lease to New York Metropolitan Transit Agency.