A good fit: AIU's business expertise flourishes as part of American International Group.

A strong company from its start in 1913, property and casualty insurer AIU Insurance Co. has maintained a positive financial track record that attracted one of the world's largest insurance companies--American International Group.

AIG eyed the company for an acquisition in the 1960s, but AIU Insurance had already been in the marketplace for decades.

AIU Insurance Co. was originally formed as Pacific Fire Insurance Co. on Dec. 1, 1913, as a result of the consolidation of Greenwich Insurance Co. and Pacific Fire Insurance Co. Forty-four years later, its name was changed to Pacific Insurance Co. of New York, according to a company report by A.M. Best Co.

It is one of only 15 companies to be ranked A+ or higher by A.M. Best Co. for the past half-century.

In the meantime, Maurice "Hank" Greenberg became chief executive officer of AIG in 1968, and he led the company to become public in 1969, according to information from AIG.

AIG's acquisition of AIU Insurance was one of many acquisitions the insurer made after becoming public. Its goal during the 1970s was to tailor products and services to specific industry segments and maintain a deep technical expertise in underwriting, engineering, risk management and other services, AIG said in its company information.

AIG has had complete financial control of AIU since 1970. AIU Insurance received its present name in November 1976. The holding company directly owns a majority interest, 52%, with the remaining minority interest, since Dec. 29, 1981, being held by National Union Fire Insurance Company of Pittsburgh, Pa., 32%, Birmingham Fire Insurance Company of Pennsylvania, 8%, and The Insurance Company of the State of Pennsylvania, 8%. Ownership was gained as National Union Fire Insurance Company of Pittsburgh, Pa., acquired the shares during 1970, having initially purchased majority interest from The Continental Insurance Co. on Oct. 1, 1970.

AIU Insurance was well taken care of under AIG, which has a reputation of near break-even underwriting results and overall excellent earnings performance, according to a report from A.M. Best. AIG, the nation's largest underwriters of commercial and industrial coverages, benefits from its profit center approach and strong broker relationships, according to A.M. Best. Between 1998 and 2002, AIU Insurance's net premiums written rose steadily to $531.1 million, from $382.8 million.

Like AIG's other subsidiaries, AIU Insurance operates under a business pooling arrangement. Domiciled in New York, AIU does business in all U.S. states and the District of Columbia, except Hawaii and Wyoming, according to AIG's Web site. It also writes commercial and personal insurance in China and provides commercial and liability insurance products and services in Japan.

AIU Insurance Co.

Ratio Comparison

                  1998    1999    2000    2001    2002

Combined Ratio    81.1    83.9    91.6    93.2    98.3
Operating Ratio   70.1    74.8    84.9    81.6    90.4

Note: Table made from line graph.

Then and Now

                      1953 *              2002

Assets         $22.2 million      $1.8 billion
Net Premium    $44.2 million    $531.1 million

* 1953 numbers are for AIU Insurance Co.
unaffiliated.

Source: A.M. Best Co. Executive Summary

Report: A. M. Best Company Report