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38 chhavi sharma american international group
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American International Group
American International Group, Inc. (AIG) is a leading global insurance company. Founded
in 1919, today we provide a wide range of property casualty insurance, life insurance, retirement
products, mortgage insurance and other financial services to customers in more than 130 countries. Our
diverse offerings include products and services that help businesses and individuals protect their assets,
manage risks and provide for retirement security. AIG common stock is listed on the New York Stock
Exchange and the Tokyo Stock Exchange.
AIG’s Board of Directors include eminent personalities like:
Arthur C. Martinez Chief Executive Officer Sears, Roebuck and Co.
Morris W. Offit, Former Chief Executive Officer OFFITBANK,
Suzzane Nora Johnson, Former Vice Chairman The Goldman Sachs Group, Inc.
Douglas M. Steenland, Former President and Chief Executive Officer Northwest Airline
Corporation etc.
AIG’s key strengths include:
World class insurance franchises that are leaders in their categories and are improving their
operating performance.
A diverse mix of businesses with a presence in most international markets.
Effective capital management of the largest shareholders’ equity of any insurance company in
the world, supported by enhanced risk management.
Execution of strategic objectives, such as the recent divestiture of non-core businesses and
fulfillment of our commitment to repay the U.S. taxpayers.
Improved profitability, as demonstrated by three consecutive years of full-year profit.
Management of AIG
Nominating & Corporate Governance Committee: 1) Identifies individuals qualified to become
Board members, consistent with the criteria approved by the Board, and recommends
individuals to the Board for nomination, election, or appointment as members of the Board and
its committees. 2) Advises the Board on corporate governance matters. 3) Oversees the
evaluation of the Board of AIG and its committees.
Compensation & Management Resources Committee: 1) oversees the administration of AIG’s
compensation programs. 2) Approves the compensation of other senior executives under its
purview. 3) Makes recommendations with respect to the compensation programs applicable to
senior executives and other employee compensation.
Finance Committee: 1) assists the Board in its oversight responsibilities by reviewing and
making recommendations to the Board with respect to AIG’s financial and investment policies.
2) Approves certain issuances, investments, dispositions and other transactions and matters
Audit Committee: 1) Assists the Board in its oversight of the integrity of AIG’s financial
statements and AIG’s compliance with legal and regulatory requirements. 2) The qualifications,
independence and performance of AIG’s independent auditors. 3) The performance of AIG’s
internal audit function.
Public Policy & Social Responsibility Committee: Responsible for reviewing the position and
policies of AIG that relate to current emerging corporate social responsibility and political and
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public policy issues of significance to AIG, that may affect AIG’s business operations,
performance or corporate reputation.
Regulatory, Compliance & Legal Committee: Assists the Board in its oversight of AIG’s handling
of legal, regulatory and compliance matters.
AIG’s Commercial and Consumer products are
AIG Property Casualty operating segments are organized into Commercial Insurance and
Consumer Insurance. Run-off lines of business and operations not attributable to these operating
segments are included in other operations category.
Percent of 2012 Net premiums by operating segment.
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Evolution of AIG:
1919: Vander Starr established a general insurance agency, American
Asiatic Underwriters (AAU), in Shanghai
1939: Mr. Starr moved his headquarters from Shanghai, China, to New
York City.
1952: Mr. Starr acquired Globe & Rutgers Fire Insurance Company and
its subsidiary, American Home Fire Assurance Company. 1960, C.V. Starr
hired Maurice R. Greenberg to develop an international accident and
health business. Greenberg promoted selling insurance through
independent brokers rather than agents to eliminate agent salaries
1967, American International Group, Inc. (AIG) was incorporated as a
unifying umbrella organization for most of C.V. Starr’s general and life
insurance businesses.
The company went public in 1969. 1984 AIG listed its shares on the New
York Stock Exchange (NYSE).
1990s, AIG developed new sources of income through diverse
investments, including the acquisition of International Lease Finance
Corporation (ILFC), a provider of leased aircraft to the airline industry.
1992, AIG received the first foreign insurance license granted in over 40
years by the Chinese government. AIG acquired Sun America Inc. a
retirement savings company, in 1999
Early 2000’s saw a marked period of growth as AIG acquired American
General Corporation, a leading domestic life insurance and annuities
provider, and AIG entered new markets including India.
Greenberg was ousted amid an accounting scandal in February 2005.
Greenberg was succeeded as CEO by Martin J. Sullivan. 2008, after
disclosure of financial losses and falling stock price, Sullivan resigned and
was replaced by Robert B. Willumstad. He was forced by the US
government to step down and was replaced by Edward M. Liddy on
September 17, 2008. AIG's board of directors named Robert Benmosche
CEO on August 3, 2009 to replace Mr. Liddy, who earlier in the year
announced his retirement. Currently Bob Benmosche is the president and
chief executive officer of AIG.
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Dimensions
1) Dimension of Management
Purpose: The primary purpose of any business is economic surplus.
AIG’s purpose of existence is to build a better future, whether for a growing company or for a
family of four. For example, Tata AIG has developed innovative microinsurance programs to help
farmers in rural India track 350,000 head of cattle – and protect their owners’ livelihoods.
We promise our customers that we will be there for the unexpected. When tornadoes
destroyed schools in Kentucky in March 2012, we were there within days to give the Kentucky
School Boards Insurance Trust a $5 million check to help schools start rebuilding.
Mission:
Coupled with a refreshed logo and brand promise encouraging employees, clients, and partners
to bring on the challenges of tomorrow, AIG is truly are looking to the future.
Bring on tomorrow
As AIG’s brand promise, these words are more than window dressing to go along with their
refreshed logo. They are a call to action, a rallying cry for their employees. AIG is revitalized, one
team of approximately 63,000 people helping clients in more than 130 countries, with the drive
and ambition to solve the problems and innovate for the future that their partners and
customers will face.
Bring on one AIG
Bring on One AIG
AIG has reunited their businesses under the AIG name because AIG believe that together they re
stronger. They are one AIG, and working together across company and partners. AIG’s network
of unparalleled data and experience around the globe mean that they can offer their customers
solutions that no one else can.
Bring on teamwork
We know that even when the odds are against you, when the right people come together, with
the right Values and a lot of hard work, even the toughest challenges can be overcome. We
found these values echoed in the tenacity, integrity, and international community surrounding
rugby. Now we’re partnering with USA Rugby to sponsor the Junior and Collegiate All-American
teams, and we’re sponsoring the New Zealand Rugby Union and its legendary All Blacks – one of
the most successful teams in sporting history.
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Financial statements of last 3 years:
AIG balance sheet had a strong result in 2012 because of the issuance of unsecured notes and
monetization of non-core assets –including our agreement to sell our largest non-core asset,
International Lease Finance Corporation, our leading aircraft leasing business, and the sale of
our remaining shares of AIA Group Limited.
A good Board of Directors should empower people to stretch and expand the limits of what is
possible, and AIG has continued to work hard to help AIG reach its full potential.
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2) People Dimension/ Work Dimension/ Achievement Dimension
AIG believes that only by reenergizing and empowering the people of AIG will they be able to
envision a future worth working toward.
AIG has adhered to comprehensive pay for-performance processes and standards for three
years – ensuring that their people are motivated and appropriately rewarded for their efforts to
properly balance profit, growth, and risk.
AIG’s new Volunteer Time Off program encourages employees to take their talents out of the
office and into the community.
AIG employees are passionate people– passionate about their work but also about their
communities. AIG want to help their people give to causes and organizations that matter – to
them. To assist employees in supporting the causes they care most about, AIG launched a bigger
and better Matching Grants Program in 2012.
AIG is investing in its employees through a competitive benefits program as well as training and
development
AIG is providing employee diversity training to increase awareness of the benefits of a diverse
working environment. We are also increasing the products that serve diverse communities as
well as the diversity of suppliers.
Robert S. Miller, Non Executive Chairman of the board said:
We have a past, we have a present, and – with thanks to AIG’s
employees and America’s support – now we have a future.
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3) Social Dimension
AIG’s new Volunteer Time Off program encourages employees to take their talents out of the
office and into the community.
AIG employees are passionate people– passionate about their work but also about their
communities. AIG want to help their people give to causes and organizations that matter – to
them. To assist employees in supporting the causes they care most about, AIG launched a bigger
and better Matching Grants Program in 2012.
For the past 24 years, AIG has held its Winter Summit, combining business sessions led by AIG
Property Casualty with ski and snowboarding races. Since 2011, the event has also raised more
than $1.5 million for Disabled Sports USA,
AIG’s operations around the world are subjected to regulation by many different types of
regulatory authorities, including banking, insurance, securities and investment advisory
regulators in the United States and abroad. The insurance and financial services industries
generally have been subject to heightened regulatory scrutiny and supervision in recent years.
AIG adhere to all these regulations.
AIG develop new insurance products that address client needs related to alternative energy and
limiting carbon emissions, as well as products that support the growing carbon market. AIG was
the first U.S. insurance organization to issue a policy statement that publicly recognizes the
impact of climate change, and to call for federal legislation to reduce greenhouse gas emissions.
AIG Investments is building on its robust due diligence process to integrate environmental,
social and governance considerations into investment analysis.
Environmental Responsibility: AIG is focusing on the environment by increasing our energy
efficiency, advocating for climate change legislation and helping clients improve their
environmental stewardship.
AIG is investing in its employees through a competitive benefits program as well as training and
development.
AIG provides property, casualty and marine insurance to a wide range of operations— including
hydro, solar, geothermal, wind, waste-to-energy, biomass, landfill gas, IGCC, and biofuel
facilities worldwide. Our products can support facilities from construction through operation.
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4) Time Dimension
AIG’s Business strategy is to:
Business Mix Shift: Grow in higher value lines of business and geographies.
Underwriting Excellence: Enhance pricing and risk-selection tools through
investments in data mining, science and technology.
Claims Best Practices : Reduce loss costs through new claims technology, a more
efficient and effective operating model and the use of data tools to better
manage the economic drivers of losses.
Operating Expense Discipline: Decrease recurring operating expenses by leveraging
AIG’s scale and driving increased standardization.
Capital Management: Efficiently allocate capital through the use of risk adjusted
profit metrics, optimization of reinsurance and legal entity restructuring.
AIG is putting its global strength in insurance and financial services behind ensuring
the long-term sustainability of its business. For doing so, they are allocating
resources to effectively manage the risks and capture the opportunities presented
by emerging social, environmental and governance concerns. AIG believe that
sustainability initiatives will help grow their business and produce strong financial
results well into the future.
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5) Administration
Administration is all about managing effectiveness and efficiency across different
departments. Effectiveness is the measure of are we doing the right thing whereas
efficiency is “Are we doing the things right?”.
Marketing Department
Effectiveness Efficiency
1) AIG is coming up with new policies and
new products for the right customers
1) Because of sensitivity to customer needs
the market cap of AIG is $68.71B.
2) AIG has direct agents and right
distribution channels. In India it has a Joint
venture with TATA AIG(76:24).
2) Efficiency of distribution channel is
measured by channel to direct sales.
3) AIG invests a considerable amount on its
advertisement.
3) Their share of advertisement as
percentage of sales is low.
Finance Department
Effectiveness Efficiency
1) AIG has a strong backup from American
govt, right investors and sources of funds.
1) With Net Income of US $3438 million and
featuring in Fortune 500 companies, AIG is
going strong on its financial aspects. Profit,
ROI and ROA aspects of AIG are pretty
strong for this insurance company.
HR Department
Effectiveness Efficiency
1) AIG is focusing on employee diversity so
as to retain the best talent.
1) Because of this right mix attrition rate is
not as high as in other companies in Tata
AIG..
2) AIG believes in investing in its employees
through a competitive benefits program as
well as training and development
2) Because of a good training model in place
for AIG no of training days/year is pretty
good for AIG
3) AIG has an effective appraisal policy and
transparency in place.
3) Because of transperancy in appraisal
policy job satisfaction index is high in AIG
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6) Entrepreneurship
AIG is providing a valuable opportunity for local entrepreneurs.
In an effort to promote entrepreneurship in Oman, the American International Group (AIG) will
provided 12 scholarships to Omani citizens in AMIDEAST's 'Starting a Business' course, being
offered in partnership with Cisco Entrepreneur Institute in May 2013.
AIG is putting its global strength in insurance and financial services behind ensuring the long-
term sustainability of its business. For doing so, they are allocating resources to effectively
manage the risks and capture the opportunities presented by emerging social, environmental
and governance concerns. AIG believe that sustainability initiatives will help grow their business
and produce strong financial results well into the future.
AIG develop new insurance products that address client needs related to alternative energy and
limiting carbon emissions, as well as products that support the growing carbon market. AIG was
the first U.S. insurance organization to issue a policy statement that publicly recognizes the
impact of climate change, and to call for federal legislation to reduce greenhouse gas emissions.
In 2007, AIG developed a new strategy of investing in institutions that make microloans to small
business owners. These initiatives will help build wealth in the communities where we do
business, and facilitate our expansion in key emerging markets as microentrepreneurs grow
local economies
AIG is building a diverse workforce, client base and supply chain so as to foster innovation. It
enhances the ability to attract and retain top talent and maximize opportunities to expand
customer base and utilize certified diverse suppliers.
Business Mix Shift: Grow in higher value lines of business and geographies.
