AIG 2014 Annual Report Download - page 34

ITEM 1 / BUSINESS / CONSUMER INSURANCE
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Consumer Insurance Competitive Strengths and Challenges
Our competitive strengths include:
Unique franchise – broad portfolio of retirement, life insurance and personal insurance products offered through multiple
distribution networks
Market leader – long-standing, leading positions in many of our product lines and key distribution channels
Global footprint – ability to selectively pursue international growth opportunities in countries with attractive markets
Strong distribution relationships across multiple channels – opportunity to expand on distribution relationships to
effectively market diverse product offerings
Information and science capabilities – used to build decision tools, transform processes and optimize performance
Customer-focused service – investments in technology and operating platforms provide the foundation to deliver our target
customer experience
Risk diversification and scale – breadth of product offerings and scale advantage in key product lines
Capital strength – capacity to drive growth in attractive markets and product lines
Our challenges include:
Highly competitive environment where products are differentiated by pricing, terms, customer service and ease of doing
business and barriers to entry are significant in certain markets
Regulatory requirements in recent years have created an increasingly complex environment that is affecting industry
growth and profitability
Low interest rate environment makes it more difficult to competitively price guaranteed return products and puts margin
pressure on existing products due to the challenge of investing in a low rate environment
Corporate and Other includes:
Direct Investment book (DIB) consists of a portfolio of assets and liabilities held directly by AIG Parent in the Matched
Investment Program (MIP) and certain non-derivative assets and liabilities of AIG Financial Products Corp. and related
subsidiaries (collectively AIGFP). The DIB portfolio is being wound down and is managed with the objective of ensuring that
at all times it maintains the liquidity we believe is necessary to meet all of its liabilities as they come due, even under stress
scenarios, and to maximize returns consistent with our risk management objectives.
Global Capital Markets (GCM) consists of the operations of AIG Markets, Inc. (AIG Markets) and the remaining derivatives
portfolio of AIGFP. AIG Markets acts as the derivatives intermediary between our subsidiaries and third parties to provide
hedging services. The AIGFP portfolio continues to be wound down and is managed consistently with our risk management
objectives. Although the portfolio may experience periodic fair value volatility, it consists predominantly of transactions that we
believe are of low complexity, low risk or currently not economically appropriate to unwind based on a cost versus benefit
analysis.
AIG Parent and Other consists primarily of interest expense, consolidation and eliminations, expenses of corporate staff not
attributable to specific reportable segments, certain expenses related to internal controls and the financial and operating