(Bloomberg) -- American International Group Inc. is cutting about three percent of its staff as Chief Executive Officer Robert Benmosche targets the property/casualty unit for reductions.

Severance costs cut fourth-quarter earnings by $265 million before taxes, AIG said in a statement today. The insurer expects the initiative to eliminate about 1,500 jobs, said a person familiar with the matter, who asked not to be identified because the figure isn’t public.

Benmosche, 69, is working to control expenses at New York- based AIG, after the company divested units to help repay a U.S. bailout. The company had about 63,000 employees at the end of 2012, with 45,000 at the property/casualty operation. The insurer was the world’s largest five years earlier and employed 116,000.

“Ultimately, we know that simplifying AIG will help you work more effectively, be more empowered to make decisions, and to be more informed,” Benmosche said today in a memo to employees.

Benmosche has warned employees against buying homes in the New York area as he weighs shifting some jobs to lower-cost areas. Those locations include Texas, the Philippines and Malaysia, Benmosche said last year.

Register or login for access to this item and much more

All Digital Insurance content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access