AIG 2006 Annual Report Download - page 30

strategy aligns dedicated management personnel with three distinct
segments: major, corporate and small-to-medium enterprises. For
decades, the AIG companies have been clear leaders serving the
insurance needs of companies in the maritime and energy industries.
In 2006, the AIG Global Marine and Energy Division was formed so
that all of AIG’s onshore and offshore marine and energy activities
are managed through one dedicated operation, intensifying the com-
pany’s market presence across product, service and geographic lines.
With an average tenure at AIG of 20 years, the senior manage-
ment of Foreign General is among the most experienced in interna-
tional property-casualty insurance. They lead a global operation
whose culture has long emphasized strategies focused on product
innovation as well as disciplined underwriting; an emphasis that is
reflected in the 2006 combined ratio of 83.68, among the best in
the industry.
While Foreign General’s largest operations are in Japan and the
United Kingdom,other regions are expected to be significant contrib-
utors to growth in the years ahead. Throughout Asia and Europe,
where Foreign General companies are frequently the leading U.S.-
based insurers, their overall market share is still relatively small, leav-
ing plenty of room to grow.
In Japan, AIU Insurance Company (AIUI) achieved good results
through strategies focused on expansion in the larger commercial
customer segment, where the emphasis has traditionally been on
serving small to medium-sized businesses. American Home Japan’s
success was driven by growth in its accident and health (A&H) port-
folio. A&H has become an area of strategic focus as Japan’s direct
auto insurance market, long an American Home stronghold, contin-
ues to experience strong competition.
In mainland China, AIU differentiates itself in the marketplace
by focusing on product innovation and developing new markets.
Between the middle of 2004 and the end of 2006, the A&H Division
launched 36 new products. In 2006, the Commercial Lines Division
also introduced several new products and many enhancements,
including “China D&O” coverage. AIU’s relationship with PICC Property
and Casualty Company Limited, the largest property-casualty insurer
in China, continues to increase the number of jointly developed A&H
products for the local market. These products are currently being
offered to customers throughout the distribution network of 4,500
sales offices.
Operations in India continue to grow through AIG’s joint venture
Tata AIG General Insurance Company Limited (Tata AIG). Tata AIG is
one of the most profitable companies in the private sector,consis-
tently reporting strong premium growth.Tata AIG’s growth strategies
include the expansion of distribution via the Internet and other
direct channels.
In Southeast Asia, AIU received an expanded property-casualty
license in Vietnam which allows the company to sell to Vietnamese
consumers.AIU has begun building an agency force in the country
with 300 fully trained agents serving customers by the end of 2006.
AIU is the largest general insurer in Southeast Asia and during 2006
it continued to expand upon its leadership position. Through the
acquisition of Central Insurance Co., Ltd., AIG’s companies in Taiwan
became one of the largest general insurance businesses in that mar-
ket, ranking third in gross premiums written. In 2006, many acco-
lades were bestowed upon AIG companies throughout the region,
further recognizing the organization’s leadership: American Home
Singapore was voted General Insurance Company of the Year, AIU
Taiwan was awarded Best Investment Partner of the Year and AIG
Vietnam was named Favorite Travel Insurance Brand.
In continental Europe, AIG Europe S.A. had a very strong 2006.
Major and corporate accounts, along with consumer lines, comprised
the company’s target customer segments during the year. The imple-
mentation of strategies aimed at delivering products and services
more efficiently to these groups helped drive results. These strategies
also helped lay the foundation for future growth plans, particularly in
consumer lines, where net premium exceeded expectations.
28 AIG 2006 Annual Report
Foreign General Insurance –
Gross Premiums Written by Division
Total = $17.7billion
Accident and Health 19.0%
Energy 16.0%
Personal Lines 15.4%
Specialty Lines 14.9%
Casualty 11.6%
Property 7.8%
Lloyd’s 6.7%
Ocean Marine 4.9%
Other/Service Business 3.7%
Foreign General Insurance Premiums Written
(billions of dollars)
Gross Premiums
Net Premiums
’02 ’03 ’04 ’05 ’06
10.8
6.2
15.3
9.4
15.8
10.0
17.7
11.4
13.1
7.9