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September 26, 2017 at 03:36 PM
American International Group Inc., the 98-year-old insurer and retirement planner, is finding being tech-savvy pays off.
Consumers are pumping cash into a unit that oversees $244 billion in client assets after it invested in digital platforms to make the process easier, according to the head of the division, Kevin Hogan.
“We believe our assets are up billions of dollars as a result,” Hogan said in an interview last week at AIG’s New York headquarters, referring to digital services created for clients such as teachers and hospitals. The unit, called Valic, has set up a record number of investment plans this year, he said.
(Related: Icahn Said to Ease Off Demand for AIG Breakup Under New CEO)
The market for digital advice is likely to grow to $1 trillion by 2020, according to a recent study by Aite Group. Under Chief Executive Officer Brian Duperreault, AIG has focused on tech to streamline operations and forged a relationship with hedge fund firm Two Sigma Investments to work on deals with small-to middle-sized businesses.
AIG shares slipped 1% to $60.38 at 1:12 p.m. in New York, extending its decline for the year to 7.6%.
Hogan leads the life and retirement business, a bright spot at the New York-based company that’s struggled with years of surprise costs at its commercial unit. The unit’s pretax operating income jumped 33% in the second quarter. AIG on Monday restructured its business operations, including moving the personal insurance unit into a segment overseen by new executive Peter Zaffino. Duperreault said the change would allow for “the greatest competitive advantage and ability to serve our clients.”
Valic has expanded to more than $99.2 billion in client assets, up from about $95.2 at the end of last year, while the individual retirement unit had almost $144.8 billion as of June 30. Valic has more than 1,000 financial advisors and joined with startup firm RetireUp to use new software in March.
