AIG 2014 Annual Report Download - page 83

ITEM 2 / EXECUTIVE OVERVIEW
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Life
Populations are living longer and have increased needs for financial protection for beneficiaries, estate planning and wealth
creation. The Life operating segment addresses these needs with a broad spectrum of products, ranging from the pure
protection focus of term life to investment-oriented products such as indexed and variable universal life.
U.S. life insurance industry sales declined in 2014, driven by lower term and universal life sales partially offset by small gains
in whole life markets. Market factors, primarily low interest rates and regulatory changes, have caused the universal life
market to shift its focus from guaranteed universal life to indexed universal life products that offer attractive cash accumulation
and increased living benefit options.
Personal Insurance
The overall rate level has improved in the Japanese and certain U.S. markets for auto, personal property, and accident and
health products compared to prior years. In Japan, car and home sales increased in 2014 prior to the increase in the
consumption tax, but prospectively, sales are expected to return to normal levels. In the U.S., overall rate level changes for
auto and personal property products are expected to be positive but slow, with sales increasing as the economy continues to
recover. Our Personal Insurance operating segment expects to increase its investment in growth economy nations that have a
higher growth outlook for personal insurance products.
Strategic Initiatives
Customer
We intend to expand relationships with key distribution partners to fully realize the benefits of our diverse product offerings
across multiple channels. Our focus on ease of doing business for consumers and producers includes enhancements to our
platforms and services, as well as initiatives to improve the recruitment, training and productivity of our affiliated and non-
affiliated distribution partners.
Information-driven Strategy
We intend to continue to strengthen our direct marketing capabilities through the use of analytics, stronger platforms and tools,
an enhanced product portfolio and expanded relationships allowing us to bring more product solutions to our target markets.
We intend to achieve rate adequacy through implementation of global underwriting practices and enhanced tools and
analytics. We intend to optimize the value of our business lines through product and portfolio management and refined
technical pricing. We intend to continue to enhance the customer experience and efficiency through claim best practices, and
to deploy enhanced operating structures and standardized processes and systems, while managing claim-handling efficiency.
Focused Growth
Retirement Income Solutions intends to continue capitalizing on the opportunity to meet consumer demand for guaranteed
income by maintaining competitive variable annuity product offerings while managing risk, using innovative product design and
well-developed economic hedging capabilities. De-risking features of its variable annuity product design include variable rider
fees indexed to an equity market volatility index, required minimum allocations to fixed accounts, and the utilization of volatility
control funds. Retirement Income Solutions has a dynamic risk management hedging program and continues to invest in
market risk management. Strategies to diversify the Retirement Income Solutions product portfolio include growing sales of
fixed index annuities with guarantee features, which provide additional income solutions for consumers approaching
retirement, and introducing new investment-focused variable annuities, which offer alternative asset classes and tax benefits to
investors seeking higher returns without guaranteed lifetime income.