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Once Bitten: AIG Returns to Profitability, But Has It Learned From Its Mistakes?

AIG is returning to profitability using effective risk management strategies,

At one time pilloried for its role in the financial meltdown of 2008, American International Group appears to be on track toward profitability once more, according to a recent analysis in The Street. Its key to success? Effective risk management.

AIG famously collapsed in 2008 and was bailed out by the federal government. Although for a good long while it was considered among the most toxic companies out there, it has made leaps and bounds toward recovery, according to The Street. The company has taken significant advantage of emerging economies in parts of Asia and Latin America, and despite significant losses due to natural disasters during 2011, it has been able to generate serious profits so far this year largely due to improved risk selection.

The company has also returned to familiar stomping grounds with increased investment in subprime mortgage-backed securities. While this is precisely an area of investment that led to the global economic catastrophe in the first place, analysts with The Street indicated AIG is more aware of the risks involved and would be less likely to make the same mistakes again.

That could be a bit of an optimistic outlook: Recent billion-dollar losses at JPMorgan Chase caused by overly aggressive investing with poor risk management oversight have served as a reminder to many that the mistakes of the past are easily - and quickly - forgotten. Recent reports from The New York Times have also indicated JPMorgan execs were been warned about the company's risk management strategy more than a year prior to the losses.