AIG Rides Annuity Sales To Financial Success

Nearly a decade after American International Group almost collapsed, the New York-based insurance giant has re-invented itself as the top seller of fixed and variable annuities.

In the first half of the year, AIG finished in the No. 1 spot with $9.78 billion worth of individual fixed and variable annuity sales. Jackson National Life was second with $9.35 billion in sales, according to LIMRA data.

Last year, AIG was second with fixed and variable annuity sales of $19.9 billion.

“Our No. 1 position in the first half of 2016 in individual annuity sales reflects the strength and diversity of AIG’s retirement products in meeting our clients’ needs,” said Jana Greer, president and CEO of individual and group retirement.

In the years succeeding the 2008 financial crisis, when a government bailout saved the company from going under, the company managed to remain in the top six for individual annuity sales. In 2012, the company sold $12 billion worth of individual fixed and variable annuities.

This year, AIG is expected to come close to $20 billion in sales.

AIG sells fixed, immediate and deferred annuities under the American Pathway brand, and sells variable annuities under the Polaris brand.

AIG also sells fixed indexed annuities under the AG Choice Index, Power Index Plus and Power Index Plus Income annuities. The company was the No. 4 seller of fixed indexed annuities last year, according to Wink’s Sales and Market Report.

Two years ago, after the U.S. Treasury authorized investing 401(k)s and individual retirement accounts into longevity annuities, AIG was the first company to release a deferred-income annuity meeting the Treasury Department’s guidelines.

The annuity was a qualified longevity annuity contract, or QLAC, version of its American Pathway deferred-income annuity.

Resisting Pressure

AIG CEO Peter Hancock has been under pressure for months from investor Carl Icahn, who wants to see the company buy back shares, exit lower-performing businesses and sell some life insurance assets.

Earlier this month, the company sold its mortgage guarantor business United Guaranty Corporation for $3.4 billion.

Last fall, the company also announced it would sell the AIG Financial Network, its independent broker-dealer network.

Icahn and other activist investors want AIG, which was and continues to be anchored in the commercial property-casualty business, to be split into three companies.

That no longer seems likely, particularly as senior company executives don’t seem too concerned with the U.S. government’s designation of AIG as a systemically important financial institution, or SIFI.

AIG executives feel the company is worth more as a whole than the sum of its parts and breaking up the global insurance giant would simply “detract from shareholder value,” the company said in a call with investors earlier this year.

Hancock also said this month that he would steer clear of “aggressive exits” from the life insurance business while still seeking to sell older portfolios of insurance policies, according to Bloomberg.

AIG Beats 2Q Earnings

On Aug. 2, the company reported second-quarter net income of $1.91 billion on revenue of $13.13 billion.

Earnings, adjusted for nonrecurring gains, came to 98 cents per share, surpassing analysts’ expectations.

The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of 91 cents per share.

“We have executed more quickly and smoothly than expected and our confidence in reaching our 2017 financial targets is high as our earnings become more sustainable,” said Hancock in a second quarter earnings news release.

AIG stock has declined about 4 percent this year and trades for less than book value, a measure of assets minus liabilities, according to Bloomberg.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.