4. Investing returns: Tie
You would think this would be a no-brainer, right? But even though the Oracle from Omaha is in charge of investments at Berkshire, AIGkept up with the juggernaut and matched its 4.7%return on investment for 2012. AIG may have even gained a bit on the master, with a 0.2% improvement from 2011, while Berkshire’s return actually slipped from 5.1% in 2011. The chart below tracks the companies’ investment returns
since 2008 and tells an interesting story about how each insurer has been performing.
Source: Company annual reports and financial supplements.
Since AIG was (and continues to be) under strict supervision, the company has tamed its investing habits, producing a stabler and more profitable investing strategy for the firm. Berkshire has been having a harder time producing the same returns as its previous years, despite increased capital available for investment.
5. Global presence and expansion opportunities: AIG
With most of Berkshire’s operations focused on the U.S., AIG has a big advantage here. As one of the largest insurers in the world, AIG operates in 130 countries and has big plans for expansion into emerging markets. With its very strategic investment in the PICC Group, AIG has introduced itself to the growing Chinese middle class, who are presenting new opportunities for both property and casualty insurance and life and retirement policies. AIG will also be the exclusive provider of non-life insurance products in Turkey and France.
And the winner is… AIG.
Though the five categories above ultimately produced a tie, American International Group Inc (NYSE:AIG) has some major advantages over Berkshire going forward. With its underwriting losses mainly due to one-time items and catastrophic events, American International Group Inc (NYSE:AIG) is not as far behind Berkshire as first glance might lead you to believe. And an apt investing strategy is also paying off for the insurance giant, which will be a major boon for the company as it moves into new territory with its international operations and product-line expansions.
As the new hedge fund darling, AIG is primed for the spotlight going forward. With many big names in investing behind the resurgent insurer, you can be certain that AIG will be gaining favor on Main Street in no time.
The article A Berkshire AIG Throwdown: Who’s The Better Insurer? originally appeared on Fool.com and is written by Jessica Alling.
Fool contributor Jessica Alling has no position in any stocks mentioned, but you can contact her here. The Motley Fool recommends American International Group (NYSE:AIG) and Berkshire Hathaway. The Motley Fool owns shares of American International Group and Berkshire Hathaway and has the following options: Long Jan 2014 $25 Calls on American International Group.
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