NEW YORK—American International Group Inc.'s decision to return to the “AIG name in full” rather than operating its commercial property/casualty business under the Chartis brand is drawing generally positive reaction from market observers.

AIG President and CEO Robert H. Benmosche announced the decision to revert to the AIG name for all operations in an internal memo last week.

“I can say with pride that together we are close to achieving a complete turnaround of AIG, and we continue to make significant progress restoring our reputation,” Mr. Benmosche wrote in the memo. “Research shows that the AIG name is well-respected among our partners and customers in every corner of our business. Therefore, we have made the decision: We will return to the AIG name in full.”

AIG rebranded its commercial property/casualty insurance operations as Chartis Inc. in July 2009. That was less than a year after AIG stood on the brink of collapse, which led the federal government to assume a nearly 80% stake in the company. Since then, AIG has repaid much of the federal assistance.

“The increasing positive sentiment toward AIG is a positive asset,” Mr. Benmosche wrote. “As we continue to make good on our goal to make American taxpayers whole plus a profit, AIG has the potential to stand for not just a turnaround but also for people's potential to accomplish the seemingly impossible when given the opportunity.”

Starting this fall, Chartis will be known as AIG externally and as AIG Property Casualty for internal “organizational purposes” AIG's SunAmerica Financial Group will become AIG Life & Retirement both internally and externally and all other entities will add an AIG tagline to their logos, according to the memo.

“Now is clearly the right time to call ourselves by the name that stands for the fact that we keep our promises and deliver on our commitment to uphold the highest standards for the benefit of all of our stakeholders: AIG,” Mr. Benmosche wrote.

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The AIG name is an asset, market observers said.

“I think particularly in the international area, the AIG name was preferred,” said James Auden, an analyst with Fitch Ratings Inc. in Chicago. “As they've progressed from their problems, some of the negative aspects of the AIG name have diminished and it's still very well-known internationally and also domestically. It seems like they think that makes more sense to go forward.”

The move shows that AIG no longer considers that the company is impaired, said Meyer Shields, director at Stifel Nicolaus & Co. Inc. in Baltimore. “AIG had some issues, but it also has a strong history, and I think that's really the point: to re-demonstrate confidence in the brand.”

The AIG brand is very distinctive in the marketplace, said John Ward, CEO of Cincinnatus Partners L.L.C in Loveland, Ohio. “This is somewhat of an acknowledgement they can't change the past, so move forward with that distinctive brand.”