AIG 2010 Annual Report Download - page 12

10 AIG 2010 Annual Report
What are the key competitive factors affecting Chartis,
SunAmerica Financial Group and other operations?
Bob: For Chartis, there is no question that
there is a competitive market, and pric-
ing is not as strong as it should be. But we
need to remember that, as we do business
today, we’ll wake up in a couple years and
still be here and have to deal with the
prices we’ve charged today, and it’s impor-
tant that we don’t shortchange the future.
That has put a little pressure on sales. I
think the one thing we could do a better
job of is selling the people of AIG so that
it isn’t simply my price versus someone
else’s price. It’s what you’re getting for the
price, and the people of AIG are worth
a lot more than the competition, and we
need to account for that.
The same applies to SunAmerica Financial
Group. Look at their innovative products
on the variable annuity side. SunAmerica
Financial Group continues to be the most
innovative in selling xed annuities in the
banking system, which is why we’re still
number one, and we’re still making sales
in a market of historically low interest
rates. We have always been very competi-
Can you talk a little bit about the company’s views on
employee performance and compensation? What changes
were made in 2010, and how do you see the company’s
approach to these two things evolving over the next year?
Bob: We are developing and implementing
new compensation and reward programs
that recognize the contributions of our
people and differentiate pay based on per-
formance. Also, we developed longer-term
incentive compensation for the senior
team, which promotes better judgment of
risk. These are important steps in creating
a transparent and consistent performance
management culture, while also ensuring
that the day-to-day activities of our people
are aligned with the interests of U.S.
taxpayers.
businesses to raise capital. So we will not
rule out acquisition opportunities to en-
hance the core of AIG.
In addition, some of the customers we’ve
lost have realized that they left behind
a very strong company and very strong
people, so there are opportunities not only
to grow our business, but also to always
be mindful of the customers that we lost.
So on a go-forward basis, where histori-
cally we were always focused on top-line
and new business, well, top-line and new
business are important, but retaining and
maintaining the relationships with our ex-
isting customers and rebuilding trust with
those we lost will be high priorities.
tive in the not-for-prot market, and we’re
continuing to build even more innovative
products in the life market.
With ILFC, while it’s not core, the com-
pany has been a very good value invest-
ment for us. ILFC management is manag-
ing it for the long haul, and to the extent
that we ultimately nd a way to monetize
that asset for the benet of ILFC, its cus-
tomers, and for AIG, we would consider
that.
The team at UGC has done an absolutely
outstanding job of dealing with all the
claims management and client manage-
ment. They built a new underwriting
model that allows them to write business
today that is very, very good. And, in fact,
it is, by far, best in class, and it puts them
in a league by themselves. The way they’re
doing the underwriting, they’re still
getting close to 18 to 20 percent market
share, which is incredible, considering how
restrictive it is. Had the model been in
place for 2006 and 2007, where we took
$2 billion in losses, the outcome could
have been signicantly different.
Steve: I think the important thing is we
have ILFC and UGC set up now as self-
nanced and not burdens on the parent
company. ILFC is a good company, and
we would expect it to have great value and
monetize it at some point, but not now.