Property/casualty insurer American International Group says it will reduce its global workforce by approximately 3% by the end of the year.
AIG CEO Robert Benmosche announced the company plans alongside the insurer’s quarterly results, attributing the decision to a charge taken in the fourth quarter of 2013.
“With the results today, we announced $265mn severance change taken at the end of 2013, which we expect will reduce AIG’s global workforce by approximately 3%,” said Benmosche said in a company memo.
Benmosche hopes the severance change will help balance AIG’s balance sheet and streamline the organization, as well as reward company shareholders. Most of the job losses are expected to be in AIG’s property/casualty division, which the insurer hopes to centralize in more low-cost locations.
“We will continue to invest in our people with a competitive pay structure that rewards performance and provides opportunities that enable more internal mobility,” Benmosche added.
AIG also announced impressive quarterly revenue announcement of $8.62bn, which beat analysts’ expectations and exceeded its $8.61bn revenue from the year-earlier period.
Like other commercial insurers, AIG benefitted from a low number of natural disasters in 2013, following the huge loss event of Superstorm Sandy the year earlier. It also sold off a few of its non-insurance-related businesses in 2013, including its aircraft leasing business, which netted the company $5.4bn.
A Forbes report also pointed to AIG’s expansion in the P/C space and, despite general market trends, its strong sales record in its US life operations as reasons behind the carrier’s success.
The positive earnings report stands in stark contrast to AIG’s near-collapse during the 2008 financial crisis.