In AIG's lower Manhattan headquarters, SunAmerica Financial Group's CEO Jay Wintrob rattles off a series of encouraging statistics about SunAmerica. The company is currently the fourth-largest seller of annuities in the United States; the largest seller of fixed annuities in the United States; the sixth-largest seller of variable annuities in the United States; and the fifth-largest seller of term life insurance in the United States.
It is more than mere cheerleading; as the head of AIG's life and retirement savings operations, he wants to let the world know that SunAmerica remained strong even during AIG's larger problems, and that now, some years after the crisis that almost destroyed the world's largest insurer, SunAmerica — and AIG itself — is back in a big way, ready to compete on its own terms, and with a keen awareness of where it went wrong before.
"Granted, we were knocked down in 2008 and the first quarter of 2009, but the fact is that we are now back," Wintrob says, enthusiastic about the future of the life and retirement savings industry here in the United States, and for the prospects of SunAmerica.
A COMPANY MOVING FORWARD
There is more than one reason for his optimism. For starters, financial decisions have been made about AIG and its ongoing structure by AIG's current CEO, Robert Benmosche, that make SunAmerica, and the Chartis property and casualty unit, key components of the larger group.
"I think that the risk diversification we provide our shareholders and our customers is a strong benefit over a long time period."
Wintrob said he believed the restructuring and transformation going on at Chartis — led by his regarded colleague Peter Hancock — is going to be very successful, but he added that it would not happen overnight.
Hancock, Wintrob said, "is asking all of the right questions, and is off and running with a very well thought out long-term strategy of improving performance that I'm very optimistic will be a successful endeavor."
Wintrob's comments were made against the background of comments by analysts and others that Sun-America Financial Group might be better off spinning off from Chartis.
In his comments, Wintrob acknowledged the speculation, but it seemed to weigh little upon him. What mattered most to him was that SunAmerica would grow, thrive and become an important contributor to AIG in the years ahead. "That is the program I'm on," Wintrob said, " and that is the program the senior managers are on."
He said the AIG turnaround began when Robert Benmosche came in as CEO in August of 2009 and made it known what he thought were the key parts of AIG going forward.
"He announced his vision for the company, his business strategy, what he deemed core, and what he deemed not, and, as I said, what that really did for us was take us from an uncertain, ambiguous situation, because it was never entirely clear before that, exactly how things would come out, to one of certainty," Wintrob recalled.
He said the "great thing about our situation is that you now have a flag planted in the ground, something you can rally around, as a management team, as a group of committed employees.
"You could start planning for the future in increments, you can start setting milestones because you are not looking over your shoulder, or watching your employees chit-chat at the water cooler about, 'Gee, I wonder what they are going to do around here next month'," Wintrob said. 
"It has been Bob's hallmark since he arrived, that we deliver what we say we are going to deliver," Wintrob said. "We have been on this path since Bob became very public about the future structure in the summer and fall of 2009, and that is the path we are on. We are excited about that, positive about that."
AIG has made a host of divestitures since it got into trouble in the fall of 2008. It has divested insurance, reinsurance, banking, finance and financial operations throughout the world during that period. These have included insurance companies in Taiwan, Japan and Canada, among others.
The largest insurance operation sold was Alico, a global insurance company based in Delaware but with major operations in China, as well as Japan, Europe, including European Union and eastern European companies, as well as in Latin America.
It was sold in November 2010 to MetLife. It also sold, effective early last year, two of its Japan-based life insurance subsidiaries, AIG Star Life Insurance Co., Ltd. ("AIG Star") and AIG Edison Life Insurance Company ("AIG Edison"), to Prudential Financial, Inc. It also sold its interest early last year in Nan Shan Life Insurance Co. in Taiwan to a Taiwan-based company.
It sold AIG Life of Canada in January 2009, one of the first of the divestitures following the federal investment.
THE HIGH COST OF LIVING (LONGER)
Meanwhile, Wintrob says, Americans are becoming increasingly aware that as they live longer lives, the security of the current public safety net is growing threadbare. This, in turn, is generating greater demand for products such as life insurance and variable annuities with living benefit riders. This demographic shift alone could generate growth for the next two or three decades.
That is why, he said, that there have been recent periods of very strong growth in the variable annuity industry. (For more on that, see our special feature on annuities, "Great Expectations," on p. 40.)
At the same time, Wintrob sees this as a unique opportunity for AIG because the strong growth in the market has caused some of the leaders in this category to pull back out of concern that they are over-concentrated in this market at the same time that AIG is catching its second wind.
As part of this trend, he implied that some insurance companies that dominated the market are pulling back because the 2007-2010 "global financial crisis" impacted their balance sheets.
"We are very excited to be building back our own distribution, to see our growth, because it's actually a very good time to do that in the market," Wintrob said.
"The fact is that the annuity business in the last couple of years, like never before, has become very concentrated in the top three or four players," he said, These include MetLife, Prudential and Jackson Life, cited both by LIMRA and Morningstar as the largest players in the living benefits rider market.
"I am not going to comment on that, but it has now been publicly announced that some of those companies have said they may really want to pull back in their exposure in the annuity market, because they in effect, have become over-concentrated," Wintrob said.
He said that's a "good factor for us as we continue to move up the rankings in a controlled, risk-managed way."
He also said that, at the other end of the spectrum, coming out of the global financial crisis there were several other players, that used to be bigger players, and you could guess on who some of those are, actually have pulled way back, in the market, or in fact, exited the market."
He cited John Hancock as one former dominant player, and said Hartford Financial used to be the leader.
"You don't see them on the tote board in the same way anymore," Wintrob said. "That provides a wonderful opportunity for SunAmerica Financial Group to continue its growth in that area."
"We have gone about it in our own disciplined way, focusing on our risk-adjusted returns and really only selling where we could get our intended rates of return," he said. "At the same time, these competitive dynamics are happening. Certain players have pulled out of the market, while the remaining top three or four players in the market have moderated."
In general, Wintrob sees overall market factors as very positive. He noted that the U.S. has had relatively low rates of annuitization, and always has. This stems from an ongoing concern among customers that if they annuitize and then die soon thereafter, they might give up control of their money, and that annuitizing may not turn out to be a good financial transaction.
The flip side of mortality protection is longevity protection, Wintrob said. "Variable annuity living benefits resonate because you get, in effect, the same kind of longevity protection with a certain amount of lifetime guaranteed income but you also continue to have access to your funds.
"You have liquidity of the account value of your product. This is really starting to resonate and why the industry is going to continue to tell the story of the three 'Ps' of the variable annuity."
He said there is the downside protection embedded in the variable annuity. "Your account values are generally protected, generally the accounts work whereby you get your premium back; the premium is stepped up over time.
Second, you get "participation," meaning you can invest your variable annuity funds in a variety of sepa- rate accounts
