Big changes are ongoing within the American International Group Inc (AIG) camp as it moves its management for the second time in 2012. It also named a new CEO for United Guaranty and announced it completed the purchase of Hartford Financial Services, Inc. securities brokerage.
Both announcements were made on Tuesday, along with the announcement of its new United Guaranty CEO, Donna DeMaio. Referring to it as a ‘core unit’ within the company, this is just another fulfillment of its restructuring efforts after a massive bailout several years ago.
New CEO
DeMaio isn’t new to the team and in fact, joined United Guaranty this past May as chief underwriting officer. She also spent seven years as chief executive of MetLife Bank. DeMaio stepped into the role left behind by Kim Garland this past February. Garland now becomes the chief underwriting officer for the global customer base. He’s been with AIG since 2009. In its presser, the company said,
He will establish the risk appetite and profile for the business, and work with the business lines and regions to establish and drive the strategy for each product line.
A company spokesperson said,
AIG will benefit from Kim and Donna’s talent, knowledge, and leadership in their new roles. Kim’s experience in property casualty and mortgage insurance will help our Consumer Insurance business advance its pricing sophistication, and his experience in product development will further our ability to create and deliver innovative products around the world. Donna’s strong background in finance and insurance will help ensure UGC continues to offer leading private mortgage insurance that helps mortgage lenders remain competitive while continuing to grow the value of our business.
Could it Perform?
Many questioned whether or not United Guaranty could become a formidable business model. That was to put to rest when the firm took advantage of its competition’s weaknesses that began in 2008. Now, AIG says this new acquisition provides “an advantage when investing in mortgage-backed securities because of the market view that comes with owning a mortgage insurer.
Meanwhile, on Monday, AIG announced it had completed the final phases behinds its acquisition of a securities brokerage from Hartford Financial Services, Inc. As of last August, the deal to buy Woodbury Financial Services had already been announced and the wheels were in motion on that deal. These final stages are logistics as the merge is completed.
Hartford Financial Services Inc., based in Oakdale, MN., manages $125 billion in assets, and employs around 6,000 financial advisers and other employees. AIG opted not to disclose any of the financial considerations or details associated with the deal, but Hartford’s CEO Liam McGee, did tell The Wall Street Journal this past summer that it “could” be worth up to $90 million but that financial performances of Woodbury would be a strong deciding factor.
AIG did not disclose the price of the purchase, but Hartford CEO Liam McGee told The Wall Street Journal this year that the deal could be worth as much as $90 million based on Woodbury’s financial performance. Now that the deal’s been finalized, Woodbury is slated to become part of SunAmerica Financial Group, which is owned by AIG and is its U. S.based life and retirement insurance business.
SunAmerica
Interestingly enough, this deal is the first acquisition for SunAmerica over the past several years. The most recent being, of course, the close-to $185 billion federal bailout prior to the recession. That bailout remains controversial, despite the fact most banks have already repaid their debts. As part of its efforts during those times, AIG cut half of its workforce with the hopes it would be able to weather the difficult financial storms. It did and in fact, the past two years has seen impressive profits. It should be noted the federal government, specifically, the Department of Treasury, still owns some stock in the company; however, it no longer has control or the shares needed to keep it the majority entity in the boardroom.
It was recently announced that AIG ranked high in a number of surveys that A.M. Best rankings has ever seen. It was ranked number one in an impressive eight categories, including, a number 1 spot for the Top 25 U.S. Holding Companies, number three for the top 25 U.S. Holding Companies, number 3 for the top 75 North American Public Insurers by assets, number 4 for the top 75 North American Public Insurers by revenues, number 4 in the top 200 U.S. Life/Health Writers, number 5 in the top 25 world’s largest insurers and number 13 in the top 200 U.S. Property/Casualty Writers. Not only that, but several of its legal entities were on the receiving end of some of these prestigious awards. AIG Property Casualty and Life and Retirement were cited for “Standing the Test of Time” in a listing of insurers that have maintained a Best’s Financial Strength Rating of A or higher for at least 75 years and 50 years.
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