AIG Is Ready To Use Its Own Name Again For P&C Business

AIG: American International Group logo
American International Group

AIG (NYSE:AIG) intends to use the AIG brand name for its its property and casualty unit Chartis. [1] This is a symbolic indication of the firm’s recovery and a recovery in the company’s brand image, which took a beating after the $180 billion bailout in 2008.

AIG had suffered huge losses on credit default swaps and was forced to seek the government’s help to avoid bankruptcy. The Chartis name was established in July 2009, replacing AIU Holdings LLC after the company decided that the unit’s brand name needed distinction from the parent company. The company has been repurchasing shares from the U.S. Treasury Department, reducing the government’s stake from more than 90% to 61% and believes that it is ready to once again use and promote the AIG brand.

Check out our complete coverage of AIG here

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A Disgrace No More

AIG was dismissed in 2009 as “wounded and disgraced” by then CEO, Edward Liddy, but has recovered remarkably since. Last year, it started using the AIG Direct platform to sell life insurance in the U.S. This was the first time since the bailout that the company used the name while advertising. U.S Life Insurance and U.S. Retirement solutions are currently marketed under the name SunAmerica and have been performing strongly over the past few years.

Disasters Turn to Profit

Chartis suffered significant losses last year, primarily due to a high number of natural calamities worldwide such as Hurricane Irene and the Japan earthquake. Disasters throughout the world have subsided so far this year, which has seen the division perform strongly in the first quarter of 2012 (See AIG Earnings Climb Due To Fewer Disasters This Year).

We expect property and casualty insurers such as The Travelers Companies (NYSE:TRV), MetLife (NYSE: MET) and Hartford Financial (NYSE: HIG) to perform well this year, as more customers are inclined to opt for insurance to cover losses in case of a catastrophe. Uncertain climatic conditions have been prevalent over the past few years, and prudence dictates that people insure their belongings to minimize losses due to unforeseen events.

We believe that AIG’s stock is fairly valued at our price estimate of $30.41, which is in line with the current market price.

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  1. Benmosche Says Chartis May Use AIG Name as Brand Improves, Bloomberg, June 5th, 2012 []