American International Group Inc., once the world’s largest insurer, is getting a fresh start as a more focused company as the U.S. exits its stake four years after a bailout, Chief Executive Officer Robert Benmosche said.

“We are not at the finish line,” Benmosche, 68, wrote today in a memo to employees of the New York-based firm after the U.S. said it would record a $22.7 billion profit on the $182.3 billion rescue. “We have to exceed the expectations of our clients, our investors, our regulators, and our other stakeholders around the world.”

Benmosche, who took over in 2009, is cutting costs and seeking to restore the reputation of a firm tarnished by its near collapse. After selling non-U.S. life insurance operations, the company is increasingly reliant on property-casualty coverage at the unit previously known as Chartis, a business that has reported an underwriting loss for four straight years.

AIG is “investing a lot of its energy in trying to execute a turnaround in Chartis,” said Josh Stirling, an analyst at Sanford C. Bernstein & Co. “When this starts to work, earnings are going to start to recover.”

AIG is seeking an underwriting profit of 5 to 10 cents on every dollar of premiums it collects for property-casualty coverage by the end of 2015, according to goals it laid out in a regulatory filing last year. Stirling said the company can get there by cutting expenses, raising prices for coverage, and doing a better job of evaluating risk and handling claims.

The insurer is focusing more on writing profitable business than on building premium revenue, Peter Hancock, CEO of the property-casualty unit, said in May. He’s been increasing the focus on emerging markets and reducing business in segments that require the company to hold more capital.

‘Dramatically Different’

“It is a dramatically different company” from the insurer hobbled in 2008 by derivative bets on subprime mortgages, Timothy Massad, the Treasury’s assistant secretary for financial stability, said in an interview today on Bloomberg Television with Erik Schatzker and Stephanie Ruhle. “It’s much smaller. It’s more focused on its core insurance operations. It’s far less risky.”

Benmosche, who is fighting cancer, said in October he’d like to extend his tenure at AIG to 2014. He said in early 2011 he’d remain CEO until this year.

“We kept our promise to rebuild this great company and deliver a profit to those who put their trust in us,” Benmosche said in the memo. “Today warrants a celebration like no other in AIG’s history and places well in the past a crisis none of us will ever forget.”

Brand Restored

Benmosche has restored the AIG brand name to the property- casualty and U.S. life units this year while highlighting the company’s rebound as he bought back shares to help wind down the bailout. The company has posted four straight profitable quarters, driven by investment gains and a tax benefit. The CEO introduced a new logo and agreed to sponsor New Zealand rugby teams including the All Blacks.

AIG surged 5.7 percent to $35.26 at 4:11 p.m. in New York, bringing its gain to 52 percent this year. Still, the company is down more than 90 percent from the end of 2007.

“Management should place a stronger sense of urgency on driving expense levels down,” John Nadel, an analyst at Sterne Agee & Leach Inc. wrote in a Dec. 5 research note. “It might afford management the opportunity to spend parent company cash in a manner more ‘friendly’ to shareholders” such as paying a dividend, buying back shares or making acquisitions.

AIG has said it’s working to cut general and administrative expenses by about $1 billion from 2010 levels by the end of 2015. The insurer is weighing a move from its headquarters in lower Manhattan as part of a cost-saving consolidation, two people familiar with the matter said in July, asking not to be identified because the deliberations are private.

Supervision Welcomed

AIG is also seeking to improve relations with regulators after Federal Reserve Chairman Ben. S Bernanke said that the company “exploited a huge gap in the regulatory system” before Benmosche took over, and operated its derivatives unit without oversight.

“We welcome supervision by the Federal Reserve,” Benmosche wrote in a Nov. 1 letter to the U.S. regulators, saying he wouldn’t contest a designation as a potential risk to the financial system. Such companies face tighter capital rules.

While AIG reduced risk from derivatives and worked to improve liquidity, the sale of the AIA Group Ltd. and American Life Insurance Co. life divisions reduced the prospects for growth in emerging markets. The divestitures, and an agreement this week to sell a plane-leasing unit, also eliminate a cushion the insurer had against natural disasters hurting results at property-casualty units.

Ex-CEO Maurice “Hank” Greenberg, who built AIG over more than four decades, said Benmosche was unable to benefit from the same diversification of risk. AIG has sold more than $65 billion in assets since its rescue, including consumer lenders, real estate and a reinsurer, to help repay the bailout.

“He had to undo it,” Greenberg said of Benmosche in an interview today with Bloomberg Television’s Betty Liu. “It’s a different company.”