American International Group Inc., the nation's largest public insurance company, received federal approval Friday to open a Delaware savings bank, making it one of the last to snag a thrift charter under the flexible rules that preceded financial reform.

With go-ahead from the Office of Thrift Supervision, AIG said it plans to sell investment products out of a Wilmington branch beginning in the second quarter.

"AIG is now going to be one of the fortunate insurance companies that made it through before the new law was passed," said Jordan Luke, a partner at Davis Polk & Wardwell in Washington.

The New York-based company, which earns most of its money from underwriting property and casualty insurance, was one of a number of insurance companies to apply for a thrift charter prior to the reform of Depression-era financial services legislation. Retailer Wal-Mart, which also applied for a charter, was shut out of its bid through a retroactive deadline in the new law.

Had AIG waited to apply for its charter under the new law, it could not have owned a bank or thrift and been sure it could keep its stake in commercial businesses, such as its Stowe Mountain Ski Resort in Vermont.

This way, "they've given up nothing by having a thrift charter," said Mr. Luke.

The $260 billion-asset group has been the subject of frequent rumors about the possibility of a merger with a large investment or commercial bank, such as Bank One Corp. But an analyst said the company's strategy in financial services, which only contributes about 14% of revenues, belies a big bank matchup.

"A thrift charter is something they wanted to have in their back pocket," said Maitland Lammert, an analyst at Edward Jones in St. Louis. "I don't think they have any intention of setting up a branch banking network - they'd much rather form alliances through which they can distribute their insurance products."

The group follows other insurers like State Farm Mutual Automobile Insurance Co., which received its thrift charter in 1998.

AIG, which waited over two years for its approval, is not alone in its pursuit of a charter. The Paine Webber Group, Equitable Cos., and GE Capital are among those with thrift applications waiting for approval, according to the OTS.

Some companies rushed their applications because of the pending financial reform law and could not supply the OTS with enough detail about their plans, forcing the agency to demand more information before moving forward, said Karen Shaw Petrou, president of the ISD/Shaw Inc. consulting firm in Washington.

"People filed, often really without a clear idea of why," she said.

The thrift, AIG Federal Savings Bank, will be located in a lobby branch office in downtown Wilmington. Through the branch, AIG will sell money-market savings accounts and certificates of deposit, savings and investment-type insurance, mortgage loans, and home equity loans, said Robert Pierce, president and chief executive officer.

AIG also plans initially to market the investment products sold from its Wilmington branch to mid-Atlantic consumers through non-branch vehicles like mail and telemarketing. Mr. Pierce said.

It will not sell other retail AIG products such as life-insurance through the branch, though, he said.

Mr. Pierce, who was president of Wilmington's Beneficial National Bank from 1991 to 1998, would only say that "customers would be referred to the appropriate AIG entity" for those products.

But the OTS approval notice said that any changes to the original business plan, such as cross-marketing of the thrift's products with those of other AIG subsidiaries, would first have to be approved by the agency.

Additional reporting by Dean Anason and Scott Barancik

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