American International Group Inc. (AIG) is a large multinational insurance company offering life insurance, property-casualty insurance, retirement products, and other financial services in more than 80 countries. AIG was at the center of the financial crisis storm in 2008, receiving a $182 billion government bailout when the Treasury Department designated it as too big to fail. AIG repaid the government in full with a nearly $23 billion profit in 2012. After several years of restructuring and selling off assets, AIG has recovered its reputation and its position as a solid global provider of insurance products.
As a global provider of insurance products and services, AIG is organized under two primary divisions: General Insurance and Life and Retirement. General Insurance consists of two operating segments: North America and International. Life and Retirement consist of four operating segments: Individual Retirement, Group Retirement, Life Insurance, and Institutional Markets. Since May of 2017, AIG has operated under the leadership of President and CEO Brian Duperreault. The company's executive leadership team also includes CEO of General Insurance and Global Chief Operating Officer Peter Zaffino, EVP and Chief Executive Officer of Life and Retirement Kevin Hogan, EVP and Chie Investment Officer Douglas A. Dachille and EVP and Chief Auditor Naohiro Mouri.
In the final quarter of 2018, AIG saw after-tax catastrophe losses of about $630 million as a result of an uptick in catastrophe reports. The company also reported unfavorable previous-year loss reserve development. At the same time, though, the company's General Insurance branch showed improvement, and Life and Retirement also remained stable as a source of earnings.
AIG's Revenue Growth
In February of 2019, AIG released its Form 10-K for the year 2018. In it, the company highlighted its efforts in 2018 to "deliver long-term, profitable growth by improving underwriting capabilities, mitigating risk and volatility by repositioning reinsurance structures and risk limits," and more.
Many of the dozens of companies under the AIG umbrella operate as subsidiaries of subsidiaries in a vast conglomeration that extends to many countries around the globe. For 2018, AIG reported total revenue of $47.39 billion. This is down slightly from the $49.52 billion in revenue reported for 2017. The company reported dividends declared per common share of $1.28 for both 2017 and 2018.
Below, we'll take a look at five of AIG's most important subsidiaries and affiliates.
1. AIG American General Life Insurance Company
American General Life Insurance Company is AIG's primary life insurance carrier operating in the United States as well as the second-largest provider of life insurance plans in the U.S. The company distributes a wide range of term and permanent life insurance products through local agencies, insurance brokers and AIG Direct. The company was affirmed in 2016 by rating agency A.M. Best for an A-Excellent rating with a stable outlook.
American General Insurance Company was incorporated in 1926. After AG's assets quadrupled as a result of a massive acquisition spree throughout the 1980s, AIG purchased the company in 2001 for roughly $23 billion.
2. The Variable Annuity Life Insurance Company
The Variable Annuity Life Insurance Company (VALIC) offers a full spectrum of financial products, including life insurance, annuities, qualified retirement plans, mutual funds, and brokerage services. Today, VALIC is one of the largest life insurance companies in the United States. VALIC subsidiaries include VALIC Financial Advisors Inc. and VALIC Retirement Services Company.
VALIC was founded in 1955 in Texas and provides employer-sponsored retirement plans to more than 2 million people working in public schools, higher education, government, healthcare, and non-profit institutions. In 1967, American General Corporation acquired a majority stake in VALIC for an undisclosed amount.
3. AIG Life and Retirement Company
The AIG Life and Retirement Company is the rebranded name for SunAmerica Life Assurance Company, which AIG acquired in 1998 for an undisclosed amount. Based in Los Angeles, SunAmerica was known as one of the fastest-growing providers of deferred and variable annuities. AIG changed the name of SunAmerica in 2012 to capitalize on AIG's superior name recognition and presence in foreign markets.
4. AIG Property Casualty
AIG Property Casualty Inc. is a multinational provider of property and casualty insurance products and services. Its offerings include corporate risk management solutions, workers' compensations, commercial umbrella, and excess casualty solutions, surety and risk financing programs, and travel insurance. The company is also a conglomeration of specialty property and casualty companies operating in the United States and abroad.
Two of its larger subsidiary companies are American Home Assurance Company Inc. and National Union Fire Insurance Company. American Home offers a wide range of catastrophic risk-transfer solutions to small and mid-sized businesses. It is also a major provider of extended services contract programs for electronics, appliance, and computer retailers. National Union offers accident insurance solutions for individuals and businesses. AIU Insurance is a property and casualty insurance company that operates in several countries, such as Japan and Indonesia. AIG Property Casualty was formerly known as Chartis since its founding in 2002, though it changed its name in April of 2013.
5. AIG Global Real Estate
AIG Global Real Estate is one of a handful of non-insurance companies owned by AIG. The company was founded in 1987 as a conglomeration of AIG companies that invest in, develop and manage real estate for AIG member companies throughout the world. In the United States, the company is involved in residential, commercial, hospitality and retail projects. It is heavily involved in commercial markets in Eastern Europe and mixed-use projects in several parts of Asia. The company includes AIG Affordable Housing, which manages nearly 100,000 multifamily units in the United States, and Stowe Mountain Resort. Today, AIG Global Real Estate manages and invests in about $20.2 billion of real estate.
Recent Acquisitions and Acquisition Strategy
In 2018, AIG made several notable acquisitions to complement its product and service offerings. These include Validus, a reinsurance platform, Glatfelter Insurance, providing specialty programs, and Ellipse, a company offering income protection, group life, and critical illness insurance products. According to AIG's 10-K for 2018, the company has set as a top priority for 2019 the goal of shifting its business mix in order to best facilitate the growth of its top lines of business. Although the company does not specifically mention mergers and acquisitions as a tool to accomplish this goal, it seems reasonable to expect that AIG will continue to explore this possibility into the future.