October 1 - 3, 2000, The Westin Providence, Providence, R.I.

Tying the World Together Online Scott Martin Alexander, Chief e-business officer, AIG

AIG Internet Strategy Built on Business Fundamentals
By David Pilla, associate editor, BestWeek: David.Pilla@ambest.com

Technology and the Internet are critical components in the toolbox of a large, multinational insurer, but those tools must be used along with traditional business sense to be effective, American International Group's e-business chief said.

Scott Martin Alexander, chief e-business officer for AIG, said the company's legendary return-on-investment acid test for subsidiaries applies to the company's cyberspace exploits as well. AIG Chief Executive Officer Maurice R. Greenberg "requires it for e-business, just like any other AIG business," Alexander said.

Alexander spoke Monday at "E-Fusion: Where Insurance and Technology Converge," a conference sponsored by A.M. Best Co. and held Oct. 1-3 in Providence, R.I. Full coverage of the event is available online at http://www.ambest.com/e-fusion.html.

In addition to watching the return on investment, Alexander said insurers venturing into cyberspace must remember to treat e-business as business above all. Other key strategies implemented by AIG include making strategic investments in other companies and technologies and aligning Internet initiatives with offline business strategies.

As part of its investment strategy, for instance, AIG is promoting technology ventures worldwide. For example, this year the insurer's AIG Venture Capital Fund formed a $110 million fund with other corporate investors to support technology and Internet companies in Israel (BestWire, June 1, 2000).

In aligning Internet strategies with offline strategies, a company must know its business, its audience--including customers, agents, brokers--and its products, Alexander said. "Some of the pure Internet players have taken a 'build it and they will come' approach," he said. "They have it backward. You have to understand the wants and needs of your audience. You have to implement an online strategy for what you already know."

Alexander added that the perceived dichotomy between the technology aspects of the Internet and the business side is not the way to approach online challenges. "Is it technology or is it business? It's really a combination of both," he said. "Technology is critical for success, but you have to implement the technology in a practical manner. You don't do it just for the sake of the technology."

Alexander, who joined AIG in 1998, describes his role as that of a "police chief," coordinating and keeping order in the Internet presence of an insurer whose far-flung assets include about 1,600 companies doing business in 137 countries. While the top management in New York City can't control everything those companies do, Alexander said they can hold them to performance standards.

"We can't control any of those 1,600 companies," Alexander said, "but e-business is all about seamless activity. It's a challenge. We don't want to stifle creativity, but at the same time we want people to know it's AIG."

AIG's integrated approach to e-business is two-pronged. "When we go to a potential partner, or a client, we go to the business leaders, and we go to the technology leaders," he said. "We have to explain to both how there is real value in the technology."

Alexander said AIG's technology solutions take into account all aspects of the organizational work flow, from taking orders to serving customers, and all regional aspects, from a country's infrastructure and basic needs to regional variations. The big picture is important, but the devil is still in the details, he said.

Internet technology has some unique advantages when it comes to considering global business opportunities, Alexander said. "Using global vendors helps us to get around the world," he said. "Let technology be the universal language. It seems to be the one thing that's borderless; it cuts across countries and cultures."

American International Group Inc. is rated A++ (Superior) by A.M. Best Co..