In the insurance industry, American International Group (NYSE:AIG) has "a diverse portfolio of business and [a] global footprint." In fact, it is probably the most diversified insurance firm out there, which can be a very appealing investment advantage for Fools looking for exposure to the space.

The above quote is from CEO Martin Sullivan, the helmsman responsible for bringing AIG out of past regulatory challenges and accounting investigations that almost derailed its reputation and removed the valuation premium AIG used to have over other insurance rivals. Sullivan was referring to the way the company was able to post a 29% increase in first-quarter earnings and strong performance in its general insurance and asset management operations.

AIG's diverse business mix helped offset weakness in its financial services segment, which is being hit by subprime industry challenges and related reductions in credit quality.  The life insurance and retirement division also reported a fall in operating income, but this wasn't enough to offset favorable general insurance trends, with more than 7% growth in net premiums earned and written, and an improvement in the combined ratio to 87.52%.

A lack of catastrophes and a generally benign environment regarding disasters is currently benefiting most operators in the insurance industry, including AIG, Allstate (NYSE:ALL), Allianz (NYSE:AZ), Chubb (NYSE:CB), and Hartford Financial (NYSE:HIG). These firms are also seeing favorable premium pricing as consumers and businesses fret that global warming will lead to more frequent and severe natural disasters such as Hurricane Katrina, which became one of the costliest calamities of all time in late 2005.

It's only a matter of time before Mother Nature rears her ugly head again, and what better way to spread your risk than by investing in a firm with product and geographic diversity? Shares of AIG are still hovering near their 52-week highs, but they trade at a reasonable multiple of forward earnings. The peers I listed above have higher dividend yields and similar P/E multiples, but primarily do business in their home markets.

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Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.