Bailed-out insurer American International Group Inc (NYSE:AIG) will merge the employee benefit businesses of two of its operating companies, creating a much larger player in that sector under the AIG brand name.
After more than three years of trying to save itself following a near-collapse during the financial crisis, AIG has emerged on a firmer footing and is now pushing its name more aggressively in the market.
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Last week the company said its life insurance unit, Matrix Direct, saw a double-digit spike in business when it ran a limited trial advertising itself as AIG Direct instead.
The company is also looking for efficiencies -- like combining elements from its life and its property businesses, which it had not done before, running them instead in largely separate silos.
AIG said on Tuesday that property insurance unit Chartis and life insurance business American General would combine their employee benefits businesses into AIG Benefit Solutions.
It will offer group and individual benefits to U.S. employers as well as to affinity groups, ranging from life insurance and disability programs to business travel coverage.
Curtis Olson, who previously ran the U.S. employee benefits business of Dutch financial services group ING Groep NV , will be chief executive of the new AIG unit.
In an interview, Olson said the new unit would have about $1 billion in revenue and was aiming for a top-10 place in the industry within three to five years.
"We're not looking for a lot of expense saves here; we're trying to build an organization," Olson said. He added that the major integration work should be completed by the third quarter, though some back-office work may continue into 2013.
Employee benefits is a key segment for a number of insurance companies, and AIG said the integration would let it compete more effectively in that market.
AIG shares fell 0.5 percent to $25.31 in afternoon trading. After being the worst performer in the Standard & Poor's insurance index last year, the stock has rallied this year, rising 8.4 percent, against a rise of 5.3 percent for the index and 4.3 percent for the broader S&P 500.