AIG Layoffs. Nowadays, insurance companies have also been grappling with tough choices amidst increasing economic challenges. Due to this, insurance companies announced layoffs, which also led to a profound job market transformation.
AIG also joined the bandwagon of Layoffs this year. Yep, you read that right! An affiliate of Insurance Giant American Insurance Group, Inc. (AIG) announced two or even more layoffs in the past years. Last year, AIG laid off around 461 employees. In 2023, the company announced plans to lay off an undisclosed number of employees.
The layoff round at AIG is not a big surprise, as the company had already announced layoffs last year.
To help you stay informed, we’ve covered almost everything about AIGs layoffs. So, let’s not wait up and continue reading this blog!
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AIG stands for American International Group, Inc. It is an American Multinational finance and insurance company. Its operations operate through three core businesses in more than 80 countries. General Insurance, Life & Retirement, and standalone technology-enabled subsidiaries are the three important businesses of AIG.
The company has more than 49,600 employees as of January 1, 2019. AIG is headquartered in New York City, and it operates its corporate offices across the globe.
AIG’s General Insurance includes Personal, Commercial, and U.S. and International field operations. While its Life & Retirement core business includes Individual Retirement, Group Retirement, Life, and Institutional Markets.
Reportedly, AIG is listed in the Fortune Global 500 and Forbes 2000, serving 87 per cent and 83 per cent, respectively. The company won the AIG Women’s Open Golf Tournament. Due to the contribution, AIG ranked 60th on the list of Fortune 500 in 2018. Moreover, it secured 87th position in the Forbes Global 2000 list in 2016 worldwide.
In 2017, AIG generated around 65.3 billion U.S. dollars in shareholder equity. When the company failed with the mass sales of unhedged insurance, at that time, the Federal Reserve bailed the company out for 180 billion U.S. dollars in 2007-2008. Again in 2012, AIG paid billions of dollars to the United States government.
AIG Layoffs 2022
In 2022, AIG warned employees by sharing the Texas Workforce Commission notice with its Amarillo employees. It said around 461 employees were supposed to be laid off this year.
The notice reported that the company would be restructuring with layoffs effective February 1, 2023. The separation may stretch to June 13, 2023. The company also mentioned in the notice that all the impacted employees will be benefited. At the same time, some may be provided with other job roles by the company.
AIG Layoff 2023
AIG’s stock dropped at the start of the year amid the termination of a senior executive. In the list of the biggest stock losers, AIG landed a spot in 2023.
The insurance company laid off several employees, including its CFO, vice president, and other senior working staff. AIG laid off CFO Mark Lyons, who also served as head of portfolio management, executive vice president, and global chief actuary.
The company explained, “He had violated confidentiality-related obligations. That violation was inappropriate according to the company’s financial reporting”.
AIG reported that its shares dwindled by 7.6 per cent until February 3, 2023.
Analyst Elyse Greenspan said, “We are expecting some potential pressure on the company’s shares. Due to this, AIG planned to lay off employees.”
She said, “In an attempt to fill the Lyons job role, the company’s entire management team, including its CEO, Peter Zaffino, have done an amazing job.”
AIG announced it would appoint Sabra Purtill as its interim CFO to fill the gap.
Purtill, who was formerly a CIO of Corebridge Financial Inc. The company also planned that Turab Hussain will take over as AIGs interim global chief actuary.
On the contrary, United Insurance Holdings Corp. landed among the biggest winners by leaving AIG behind. In August 2023, an insurer sold its renewal rights on certain data, intellectual property, or personal lines business to Slide Insurance Co. in Florida.
According to a Florida-based insurer, On February 1, 2023, about 72,000 UPC Insurance personal lines policies were declined. Consequently, the deal was set to issue replacement policies quickly. The UPC Insurance transaction focuses on its fast-growing commercial speciality property portfolio as United Insurance Holdings stock boosted to 28.9 per cent.
AIG’s Earnings Is Unstable
AIG’s earnings keep rolling from the fourth quarter of 2022 to 2023.
Josh Esterov, One of the CreditSights analysts, said, “The investment team expected more than how results are playing out so far. Due to this, they had loftier expectations as they had higher hopes for sales and variable investment income”.
He also added in the sector of life insurance, recurring profitable and more favourable opportunities could be seen. It is because of the moderation in general and in pandemic-related mortality.
MetLife Inc. disclosed a year-over-year reduction in its revenue as it has reduced net investment income. Executives of the company said during an earnings call that “The layoffs at large companies did not affect the company’s group business. As the company remains open to M&A opportunities.”
On February 3, MetLife confirmed that “It lost nearly 3.6 per cent of shares so far.”
Esterov continued, “Due to inflationary cost pressure and the limited opportunities for insurers to raise prices accordingly. The outlook for retail insurance looks more challenging and complicated in the property and casualty sector.
Particularly for those carriers who focused on the auto space.”
If we check on the commercial side, then underwriters have chosen peak margin as they have found a price point of rate adequacy.
Allstate Corp. Executives confirmed the company plans to restore its auto insurance brand profitability as it had high combined ratios and heavy losses. Recently, its stock increased by 1.8 per cent this year.
Will Layoffs Stop In 2023?
There is no indication of layoff stoppage in 2023. Moreover, many companies laid off thousands of their employees this year. At the same time, some are planning to do the same for the rest of the year.
Many big companies have laid off employees, while some are still joining the growing list of companies trimming their workforce.
The major cause of the ongoing layoff trend is the fallout from the Coronavirus pandemic. Besides, increasing economic uncertainties have pushed these companies to announce layoffs. In 2023, this trend came out as a ripple but now transformed into a tidal wave of Layoffs. In truth, receding indications have yet to be seen or can’t be expected further in 2023.
Other Layoffs That Happened In 2023
Below you can check a list of major layoffs in 2023.
An auto supplier, Autoliv is a leading provider of automotive safety systems. The company planned to improve operational efficiency and boost global cost reductions. It was noted that the company announced to cut around 11 per cent of its total workforce or 8,000 jobs. In this Layoff round, both direct and indirect positions were affected. The company aimed to boost its geographic footprint to drive long-term cash flow and margin improvement.
Alibaba’s cloud business announced a layoff in which approximately 7 per cent of its total workforce was affected. According to Bloomberg reports, Alibaba aimed for a potential initial public offering and planned spinoff.
It has improved its overall business model. The CEO of the company, Daniel Zhang, disclosed that Alibaba is expanding its size, and it generated around 12 billion U.S. dollars in sales last year.
Facebook’s parent company, Meta, announced significant layoffs in which thousands of workers have been affected. Partnerships and marketing divisions were affected the most. The company’s CEO, Mark Zuckerberg, said, “This layoff round would be scheduled for late May this year. The layoff would affect the overall business team”.
Besides Meta, other companies like Amazon, Google, Alphabet, Microsoft, etc., also announced layoffs to restructure and cost-cutting measures.
Due to the challenging economic conditions, Soundcloud has already laid off nearly 20 per cent of its workforce. Later, it again conducted an additional layoff round that affected 8% of its workforce. Soundcloud made this necessary reduction decision to ensure business health and profitability this year.
Disney started another round of layoffs this year. It noted that the company set to eliminate approximately 2,500 workers. Disney’s previous round of layoffs targeted a specific division. At the same time, this round does not target any division. The company has targeted relatively fewer employees in this wave of layoffs. According to the company’s CEO, this is the third layoff round and is expected to be the final major one in the coming months.
Of course, these are a few companies, as many other big companies have also announced layoffs this year.
The Bottom Line
In Conclusion, AIG announced layoffs multiple times over the past few years. When the release was announced by AIG last year, it was anticipated that targeted employees would be affected by this layoff trend from February 2023 through June 30, 2023. According to reports, some affected employees have been provided other job roles by the third-party provider. Besides, they all have also received a minimum of 2 months’ written notice of the termination of their employment.
According to reports, the most affected sector is the Tech sector. It was once known for its relentless growth. But now, the industry is in the middle of this storm. Reportedly, it trimmed more than 150,000 tech employees last year alone. In 2021, it laid off 15,000 workers; in 2020, 80,000 were impacted.
On the other hand, some companies are hiring employees and now have a larger workforce in recent years. It may be a sign that layoffs can recede in 2023.