It's not that people don't want to save for retirement, it's because they can't afford to.
American International Group Inc. has started advertising term life insurance using the AIG name, representing the first time in the United States since the financial crisis of 2008 that it's marketing insurance directly to consumers under the AIG brand.
Matrix Direct, the direct-to-consumer marketing arm of American General Life Insurance, a unit of AIG, is marketing the products under the brand "AIG Direct." The company started this as "a very small pilot" on Sept. 12, said Mark Herr, a spokesman for AIG.
AIG (NYSE: AIG) was in danger of failing in September 2008 when the U.S. government first stepped in to provide the insurer with an emergency loan. The available bailout grew as high as $182 billion, but AIG said it never borrowed the full amount it was offered. Since then, it's been selling noncore assets to pay back what it owes to the federal government (Best's News Service, Aug. 19. 2011).
Herr said the marketing uses television, emails to people who have expressed an interest and Matrix Direct's website. "It's very early but we're pleased with the initial results." In addition to term life, AIG Direct is giving people an opportunity to buy accident, accidental death and dismemberment, and health insurance, he said.
Kelly O'Keefe, a professor at Virginia Commonwealth University's Brand Center, said he thinks it's smart for AIG to try to revive the brand by using the AIG name.
Long before its near-failure, AIG "had a record of excellent performance," O'Keefe said. "I think it's wise to introduce the AIG brand to their audience to say, 'we've come back.' Audiences, he said, "are forgiving of companies that are trying to do the right thing."
For example, Chrysler Corp. went bankrupt during the financial crisis of 2008, and survived yet again, "coming back strongly," O'Keefe said. It reintroduced the brand with a Super Bowl 2011 commercial featuring Eminem, he said. The advertisement, which carried the slogan, "Imported from Detroit," advertised its Chrysler 200.
Herr stressed that it's a pilot. "We have not made any broad-reaching decisions about the brand, and we're not going to speculate about next steps if any," he said. "We're going to review the data when the pilot is done."
Experts have agreed something needed to be done with the AIG brand. Some believed the insurer could rebrand itself over time under its current name. Others viewed the once highly regarded brand as "dead." (Best's News Service, Sept. 14, 2009).
AIG's second-quarter earnings swung to the plus column after suffering losses for the same period in 2010. AIG reported net income of $1.8 billion and operating income after taxes of nearly $1.3 billion, he said (Best's News Service, Aug. 5, 2011).
Jason Dodd, senior director of creative services at H20, the creative division of Peppercom, a communications and marketing agency, said it's a good move to use the name from a brand and business perspective. "If they are too big to fail as a corporation, then they need to prove they can succeed to the American market," he said in an email. "This is one of many new steps they are taking to do so."
In the summer of 2009, AIG moved forward with plans to establish its property/casualty and general insurance businesses under an independently managed company, renaming it Chartis and establishing a special purpose vehicle to hold its equity. AIG initially created AIU Holdings to hold the Commercial Insurance, Foreign General Insurance, and Private Client groups that now make up Chartis (Best's News Service, July 27, 2009).
Around that time, AIG also launched SunAmerica Financial Group, a financial services enterprise that combined its domestic life and retirement services companies. These were American General Life; American General Life & Accident Insurance Co.; Variable Annuity Life Insurance Co.; Western National Life Insurance Co. -- formerly known as AIG Annuity; SunAmerica Retirement Markets; SunAmerica Asset Management; and Advisor Group, comprised of FSC, Royal Alliance and SagePoint Financial (Best's News Service, Aug. 19, 2011).
Back in early 2007, AIG's American General Life acquired Matrix Direct from Protective Life Corp. Matrix Direct became part of the domestic life insurance operations of AIG, which were to operate under the marketing name "AIG American General." (Best's News Service, March 1, 2007)
American General Life Insurance Co., a member of SunAmerica Financial Group, currently has a Best Financial Strength Rating of A (Excellent).
Shares of AIG were trading the morning of Sept. 19 at $24.08 -- down 5.35% from the previous close.
(By Fran Matso Lysiak, senior associate editor, BestWeek: firstname.lastname@example.org)