American International Group, Inc. provides insurance products for commercial, institutional, and individual customers primarily in the United States, Europe, and Japan. The company's Commercial Insurance segment offers general liability, environmental, commercial automobile liability, workers' compensation, excess casualty, and crisis management insurance products, as well as various risk-sharing and other customized structured programs; commercial, industrial, and energy-related property insurance; aerospace, political risk, trade credit, surety, and marine insurance; and various insurance products for small and medium sized enterprises. It also provides professional liability insurance products for a range of businesses and risks, including directors and officers liability, fidelity, employment practices, fiduciary liability, cybersecurity risk, kidnap and ransom, and errors and omissions insurance. This segment sells its products through independent retail and wholesale brokers. Its Consumer Insurance segment offers fixed annuities, fixed index annuities, variable annuities, and retail mutual funds; group mutual funds, fixed annuities, and variable annuities, as well as individual annuity and investment products, and financial planning and advisory services; and term life and universal life insurance. Its products include personal auto and property insurance, voluntary and sponsor-paid personal accident, and supplemental health products; travel insurance products; and extended warranty insurance. This segment sells its products through independent marketing organizations, independent insurance agents, financial advisors, direct marketing, banks, wirehouses, and broker-dealers. The company also provides stable value wrap products, and structured settlement and terminal funding annuities; and corporate- and bank-owned life insurance and guaranteed investment contracts. American International Group, Inc. was founded in 1919 and is based in New York, New York.
Business Analysis of AIG
The Insurance Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how AIG compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by AIG to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of AIG with an interactive chart.
- Revenue Growth: AIG reported a revenue growth of -10.2% year-on-year during 2016. Property & Casualty Insurance Industry grew at 6.6% in the same period
- COGS share of Revenues: As a percentage of revenue, AIG spent 69.0% of its total revenues on COGS. Property & Casualty Insurance industry average (COGS share of revenue) in the same period was 65.6%
- R&D share of Revenues: AIG R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, AIG spent 21.0% of its total revenues on Sales, Marketing, and General Administration (SG&A). Property & Casualty Insurance industry average SG&A spending in the same period was 14.9%
- Inventory share of Revenues: AIG Inventory share of Revenues details are not available because either company does not share the data or we do not have it
- Accounts Payable share of Revenues: AIG Accounts Payable share of Revenues details are not available because either company does not share the data or we do not have it
- Accounts Receivable share of Revenues: As a percentage of revenue, AIG invested 20.0% of its total revenues on Accounts Receivable (A/R). Property & Casualty Insurance industry average Accounts Receivable investment in the same period was 33.0%
- PP&E share of Revenues: AIG PP&E share of Revenues details are not available because either company does not share the data or we do not have it
- Intangibles share of Revenues: AIG Intangibles share of Revenues details are not available because either company does not share the data or we do not have it
- Net Margins: AIG Net Margins in the year 2016 were -1.6%. Property & Casualty Insurance industry average Net Margins in the same period were 8.2%
Sector and Industry Association of AIG
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
AIG is associated with Financials Sector Group, Insurance Sector, and Property & Casualty Insurance Industry.
Insurance sector is comprised of the following industries: Life Insurance; Property & Casualty Insurance; Surety & Title Insurance; Insurance Brokerage; Diversified Insurance. The definitions for each of the industries is as follows:
- Life Insurance industry includes companies engaged principally in life insurance.
- Property & Casualty Insurance industry includes companies engaged principally in accident, fire, automotive, marine, malpractice and other classes of non-life insurance.
- Surety & Title Insurance industry includes companies providing title & surety insurance.
- Insurance Brokerage industry includes insurance brokers and agencies.
- Diversified Insurance industry includes companies with life, health, property & casualty, and reinsurance interests, none of which predominates.
Industry Ranking of AIG
With $52.4 billion revenues, AIG ranked number 2 of all the companies in the US Property & Casualty Insurance industry. There were a total of 66 public companies in the US Property & Casualty Insurance industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Property & Casualty Insurance industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.