Posted on 29 Jun 2012 by Neilson
Three years after American International Group Inc. (AIG) renamed its insurance businesses to distance them from its controversial U.S. bailout, the company will revert to its AIG brand as it prepares to emerge from majority government ownership.
AIG Chief Executive Robert Benmosche told employees in a memo Thursday that the New York company's global property- and-casualty insurance business, currently called Chartis, will be known as AIG starting this fall. Its domestic life insurance and retirement services division, SunAmerica Financial Group, will be rebranded AIG Life and Retirement, while other units will add AIG to their logos.
The changes show how far AIG has come since the depths of the financial crisis, when its brand became an object of derision. The company's record $182.3 billion federal bailout and its subsequent payouts of bonuses to employees of a derivatives unit sparked public outrage across the country, leading AIG units to erase the logo from signs, employee identification cards and marketing materials. In the wake of the September 2008 bailout, AIG renamed various units as the parent company's financial condition deteriorated.
The rebranding exercises didn't come cheap. The name Chartis, a Greek word for map, and its logo depicting a compass were developed in 2009 with the help of a brand strategy and design firm. That firm, Lippincott, said on its website that research with AIG's customers and other groups had established the AIG brand "was damaged beyond repair" and a new brand was needed for the property and casualty insurance business, which has operations in 160 countries.
Over the past two years, AIG has repaid the bulk of its bailout with proceeds from asset sales and returned to profitability. Mr. Benmosche has predicted that U.S. taxpayers will ultimately reap a profit on the rescue after the government finishes selling its remaining 60% stake in the company over the next year or so. AIG shares currently trades at $30.84, above the government's break-even price.
In an interview Thursday, Mr. Benmosche said AIG's latest rebranding effort will commence in the fall as the company makes more progress toward exiting U.S. ownership. In the coming months, AIG could raise billions of dollars from selling its remaining stake in pan-Asian life insurer AIA Group Ltd. (1299.HK) and listing its aircraft leasing unit, International Lease Finance Corp., in an initial public offering. It plans to use the proceeds of these sales to buy back a large amount of shares that the U.S. government will sell.
Mr. Benmosche said the Federal Reserve should earn $3 billion to $8 billion in profits from sales of mortgage securities previously linked to AIG, and after Treasury sells all its AIG shares, the U.S. government could collect about a $10 billion profit.
"We will live up to our promises and we feel that by the fall, we should be in a very good position and make progress to the point where there's no doubt in our future and strength," Mr. Benmosche said. "That's what this [rebranding] is about."
In Thursday's memo, Mr. Benmosche said the company continues to make "significant progress restoring our reputation," and said research shows the AIG name has regained respect among the company's partners and customers.
"This is a momentous and strategic investment for us as a company," he said, adding that AIG will assess whether the Chartis name should be kept for any product line or niche business.
Maurice R. "Hank" Greenberg, who ran AIG for decades and left before its bailout, opposed the rebranding effort for Chartis in 2009. "I thought it was a terrible idea to change the name then," he said on Thursday. "I think AIG is a great name with a long history and it's a wise decision to go back to it."