BOSTON (Reuters) - Bailed-out insurer American International Group AIG.N saw a double-digit spike in business when its life insurance unit Matrix Direct started advertising under the AIG Direct name instead, the company said, in the first test of whether its brand survived the financial crisis intact.
The pilot, which started last year, was AIG’s first tentative step back into the advertising market as a brand since the U.S. government rescued the company from the brink of bankruptcy in September 2008.
At one point AIG was to be broken up and the pieces sold off, but the company survived that plan and has tried instead to consolidate around the U.S. life insurance and global property insurance markets.
Matrix Direct, which AIG bought in early 2007, offers direct quotes on life insurance policies online and over the phone. Last year, at the suggestion of AIG Chief Executive Bob Benmosche, it started spending about 20 percent of its ad budget on spots with the AIG Direct logo instead of its own.
The results came as something of a surprise - the customer response rates were 23 percent higher for the AIG Direct ads than the traditional Matrix Direct spots. The rate at which marketing emails were opened also rose 20 percent.
Ron Harris, the chief executive of Matrix Direct, said the company ultimately generated about 18 percent more premiums than it expected from the test program. The average Matrix Direct customer buys a life insurance policy of around $500,000 with a premium around $1,000.
“We have already discussed with AIG about going forward. We are in the process of developing a plan to ramp this up and roll it out further,” Harris said in an interview on Wednesday, adding that there were no plans to eliminate the Matrix Direct brand either.
AIG, once the world’s largest insurance company and one of the top 100 advertising brands, remains 77 percent owned by the U.S. Treasury. Harris said Matrix has not done any follow-up research as yet to see how that figured into customers’ buying decisions.
AIG shares rose 2.5 percent to $25.18 in late trading Wednesday. The stock, which lost half its value last year, is up 8.5 percent this year, nearly doubling the performance of the S&P insurance index. .GSPINSC
Reporting By Ben Berkowitz; Editing by Gary Hill
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