AIG 2015 Annual Report Download - page 69

ITEM 7 / EXECUTIVE OVERVIEW

69
Drive Efficiency
Narrow geographic footprint while continuing to maintain and improve multinational capabilities
Commercial Insurance, along with our other businesses, continues to evaluate the markets and geographies that provide the
greatest opportunities, while maintaining the global footprint that our multinational clients greatly value. Additionally, we will
continue to leverage our various off-shore centers, taking advantage of opportunities to centralize and standardize processes
and platforms. We believe there is great opportunity to further streamline our operating model.
Expand and optimize the use of reinsurance and other risk mitigating strategies
Commercial Insurance continues to execute capital management initiatives by enhancing broad-based risk tolerance
guidelines for its operating units, implementing underwriting strategies to increase ROE by line of business and reducing
exposure to businesses with inadequate pricing and increased loss trends. Commercial Insurance remains focused on
enhancing its global reinsurance strategy to improve overall capital efficiency, although this strategy may lead to periodic
income statement volatility.
Accelerate micro-segmentation of risks using internal and external data
Property Casualty continues to improve decision-making, risk acceptance and pricing based on its ongoing efforts to refine
segmentation by customer, industry and geography. For example, after enhancing the segmentation of workers’ compensation,
Property Casualty has observed different experience and trends, which helps inform its risk appetite, pricing and loss
mitigation decisions.
Invest to Grow
Grow most profitable lines
As part of our strategic goal of diversifying product offerings and providing customers with greater access to unique insurance
programs, on March 31, 2015, we paid approximately $239 million to acquire a controlling stake in NSM Insurance Group
(NSM), a leading U.S. managing general agent and insurance program administrator. NSM is known for its unique
development and implementation of programs for a broad range of niche customer segments. We expect the acquisition of
NSM to facilitate closer strategic coordination and provide us with access to new, attractive markets including programs,
specialty small commercial insurance solutions, and complementary distribution networks.
Mortgage Guaranty expects to continue as a leading provider of mortgage insurance and seeks to differentiate itself from its
competitors by utilizing its proprietary risk-based pricing strategy. This pricing strategy provides Mortgage Guaranty’s
customers with mortgage insurance products that are priced commensurate with the underwriting risk, which we believe will
result in an appropriately priced, high-quality book of business. As announced on January 26, 2016, we plan to conduct an
initial public offering of up to 19.9 percent of Mortgage Guaranty, subject to regulatory and GSE approval, as a first step
towards a full separation.
Institutional Markets is expected to continue growing the structured settlement business and continue contributing to growth in
assets under management with stable value wraps and utilizing a disciplined approach to growth and diversification of our
business by pursuing select opportunities in areas such as the pension buyout business.