It’s been a long road for American International Group Inc (NYSE:AIG) since the financial crisis, but the insurer seems to finally be back on its feet and ready to move forward. Though there are still challenges ahead, AIG is taking steps to position itself for greatness and is on its way to realizing some big goals. Here are the top three reasons AIG is poised for greatness, and how you can cash in on its progress.
Reason 1: Focus
The financial crisis not only took the wind out of American International Group Inc (NYSE:AIG)’s once-billowing sails, but it added heavy burdens to the company as it made its way through the storm. With the final traces of governmental ownership shed in late last year, the weight has mostly been lifted, and AIG has refocused its energy on long-term goals.
Not only has the insurer dropped its ownership matters, it’s also shed a number of non-core businesses that put a drag on its traditional operations. Though there is a new hiccup with the sale of its aircraft leasing operations, American International Group Inc (NYSE:AIG) has largely focused on renewed vigor in its insurance operations, expansion, and reductions in non-essential programs.
Focus has also been a cornerstone of management’s approach to the company’s balance sheet and shareholders. Though investors and analysts alike have been predicting and calling for a dividend or share buyback, management made it clear that neither of those would occur until other priorities were completed. One of the main priorities being liabilities management — by reducing their liabilities, the company now carries a lighter interest expense, leaving more capital available for other priorities or disbursements.
Reason 2: Expansion
American International Group Inc (NYSE:AIG) made a big investment in China last last year, with a $500 million price tag. In its work with the PICC Group in China, AIG has already realized a 10% return as of the first quarter. With a renewed confidence in the opportunities the People’s Republic provides, AIG is now partnering with PICC Life Insurance to form an agency distribution company, of which AIG will own 24.9%. Expanding outside of the property and casualty insurance lines their initial investment afforded, American International Group Inc (NYSE:AIG) is pressing forward into a new middle class that will be reaching out to providers for the first time in search of new insurance products that meet their needs. Though the current expansion news speaks mostly of activity in China, the moves made by AIG prove that the company is willing to put its money on the line in emerging markets that afford new opportunities — and that it can succeed in doing so.