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AIG welcomes being taken off SIFI list, will benefit from lower expenses

2nd October 2017 - Author: Steve Evans

Insurance giant American International Group, Inc. (AIG) has welcomed regulators decision to take the company off the list of financial organisations deemed as a Systemically Important Financial Institution (SIFI).

AIG flagAIG had been deemed an organisation of systemic importance due to the insurers market position during the 2008 financial crisis.

Since then the company has downsized and adjusted its strategy considerably, with market commentators having expected it would eventually be removed from the SIFI list.

The news of AIG’s removal from the SIFI list by the Financial Stability Oversight Council’s was welcomed by the company.

AIG President and Chief Executive Officer Brian Duperreault commented; “I welcome the decision by the Financial Stability Oversight Council to rescind AIG’s SIFI designation. The Council’s decision reflects the substantial and successful de-risking that AIG’s employees have achieved since 2008. The company is committed to continued vigilant risk management and to working closely with our numerous regulators to enable a strong AIG to continue to serve our clients.”

There are benefits to the removal as well, given it’s estimated that AIG would have been spending up to $150 million a year just to stay compliant with the SIFI designation.

Lower expenses for SIFI-related compliance is seen as a positive by analyst firms, as to is the removal of potential SIFI-related regulatory friction, according to Keefe, Bruyette & Woods (KBW).

The removal from the systemically risky list comes at a time when AIG is focused once again on growth, under its new CEO Brian Duperreault. However, having shed the business that actually put it in the centre of the global financial crisis some years ago now, the insurer is back to focusing on its core business of insurance, rather than exotic financial products.

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