While the insurance industry has struggled to get back on its feet in the wake of the financial meltdown, one company is making a comeback through creative branding: American International Group.

AIG, the subject of both populist outrage and government ire after it came to light that the insurer was paying its employees outrageous bonuses -- and sending them on luxurious week-long spa trips -- even after receiving $180 billion in bailout dollars from taxpayers, has learned at least one thing from the financial fiasco of the last several years: Investor memory is short. Insurance companies, such as AIG, who were flailing not so long ago, are now moving back into favor.

One way AIG has eased investor fears is by switching the name of its subsidiary from AIG Annuity Insurance Co. to Western National Life Insurance Co. earlier this year, helping to boost its sales in the bank channel by distancing itself from its tarnished brand.

Western National even beat out New York Life Insurance Co. for the number one spot as the top seller of fixed annuities in the bank channel during the third quarter, according to Kehrer-LIMRA, a financial services and research company. Year-to-date, though, New York Life still holds the top slot.

“We would attribute our lower third quarter sales to overall lower market interest rates, which makes fixed annuities less attractive,” said a New York Life spokesperson. “A couple of competitors had strong sales in the third quarter due to very attractive interest rates or aggressive product features.”

Ken Kehrer, founder of Kehrer-LIMRA, said Western National has been able to attract more clients by making special arrangements with banks to reduce commissions so that in turn it could offer clients higher interest rates. Some experts and rival companies have criticized this strategy saying Western National has used its bailout money as a cushion to offer competitive interest rates and undercut others in the insurance space. But Kehrer believes that annuity purchasers are the ones who benefit. If Western National can lower its expenses by paying banks decreased commissions, it can offer its clients higher interest rates.   

But why would banks be willing to have their commissions slashed? Analysts said that it is a way to lure customers back to annuities.

After peaking in the first quarter at $10.7 billion in fixed income annuity sales through banks, sales dropped to $8.4 billion in the second quarter, according to Kehrer-LIMRA, which estimated that fixed income annuity sales through banks will tumble even further to $6.9 billion in the third quarter.

With customers buying fewer fixed income annuities, banks are hoping volume will make up for lower commissions.

Western National isn’t the only life insurer to offer higher interest rates to its customers, but its parent, AIG, is the only company that has been bailed out by the government and then turned around and become successful again.

This has caused a lot of hand wringing in the life insurance space. Yet by definition the government expects companies that receive bailout dollars to bounce back –- or at least not deteriorate further –- in the hopes that taxpayers will eventually get paid back.

So, why the surprise that Western National is using its money to boost its business and rake in revenue?