American International Group, Inc. (AIG) is an American multinational finance and insurance corporation with operations in more than 80 countries and jurisdictions.
Geral Insurance includes Commercial, Personal Insurance, U.S. and International field operations. Life & Retiremt includes Group Retiremt, Individual Retiremt, Life, and Institutional Markets.
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AIG's corporate headquarters are in New York City and the company also has offices around the world. AIG serves 87% of the Fortune Global 500 and 83% of the Forbes 2000.
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During the financial crisis of 2007–2008, the Federal Reserve bailed the company out for $180 billion and assumed controlling ownership stake, with the Financial Crisis Inquiry Commission correlating AIG's failure with the mass sales of unhedged insurance.
The steady growth of the Latin American agcies proved significant as it would offset the decline in business from Asia due to the impding World War II.
To provide insurance for American military personnel. Throughout the late 1940s and early 1950s, AIU continued to expand in Europe, with offices oping in France, Italy,
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In 1952, Starr began to focus on the American market by acquiring Globe & Rutgers Fire Insurance Company and its subsidiary, American Home Fire Assurance Company.
By the d of the decade, C.V. Starr's geral and life insurance organization included an extsive network of agts and offices in over 75 countries.
Greberg focused on selling insurance through indepdt brokers rather than agts to eliminate agt salaries. Using brokers, AIU could price insurance according to its pottial return ev if it suffered decreased sales of certain products for great lgths of time with very little extra expse. In 1967, American International Group, Inc. (AIG) was incorporated as a unifying umbrella organization for most of C.V. Starr's geral and life insurance businesses.
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The 1970s prested many challges for AIG as operations in the Middle East and Southeast Asia were curtailed or ceased altogether due to the changing political landscape. However, AIG continued to expand its markets by introducing specialized ergy, transportation, and shipping products to serve the needs of niche industries.
During the 1980s, AIG continued expanding its market distribution and worldwide network by offering a wide range of specialized products, including pollution liability
Throughout the 1990s, AIG developed new sources of income through diverse investmts, including the acquisition of International Lease Finance Corporation (ILFC), a provider of leased aircraft to the airline industry.
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In 1992, AIG received the first foreign insurance licse granted in over 40 years by the Chinese governmt. Within the U.S., AIG acquired SunAmerica Inc. a retiremt savings company managed by Eli Broad, in 1999.
The early 2000s saw a marked period of growth as AIG acquired American Geral Corporation, a leading domestic life insurance and annuities provider,
In February 2000, AIG created a strategic advisory vture team with the Blackstone Group and Kissinger Associates to provide financial advisory services to corporations seeking high level indepdt strategic advice.
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AIG was an investor in Blackstone from 1998 to March 2012, wh it sold all of its shares in the company. Blackstone acted as an adviser for AIG during the 2007–2008 financial crisis.
In the early 2000s, AIG made significant investmts in Russia as the country recovered from its financial crisis. In July 2003, Maurice Greberg met with Putin to discuss AIG's investmts and improving U.S.-Russia economic ties, in anticipation of Putin's meeting with U.S. Presidt George W. Bush later that year.
In November 2004, AIG reached a $126 million settlemt with the U.S. Securities and Exchange Commission and the Justice Departmt partly resolving a number of regulatory matters, and the company needed to continue to cooperate with investigators continuing to probe the sale of a non-traditional insurance product.
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In 2005, AIG became embroiled in a series of fraud investigations conducted by the Securities and Exchange Commission, U.S. Justice Departmt, and New York State Attorney Geral's Office. Greberg was ousted amid an accounting scandal in February 2005.
On May 1, 2005, investigations conducted by outside counsel at the request of AIG's Audit Committee and the consultation with AIG's indepdt auditors, PricewaterhouseCoopers LLP resulted in AIG's decision to restate its financial statemts for the years ded December 31, 2003, 2002, 2001 and 2000, the quarters ded March 31, June 30 and September 30, 2004, and 2003 and the quarter ded December 31, 2003.
On November 9, 2005, the company was said to have delayed its third-quarter earnings report because it had to restate earlier financial results, to correct accounting errors.
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Martin J. Sullivan became CEO of the company in 2005. He began his career at AIG as a clerk in its London office in 1970.
AIG th took on ts of billions of dollars of risk associated with mortgages. It insured ts of billions of dollars of derivatives against default, but did not purchase reinsurance to hedge that risk. Secondly, it used collateral on deposit to buy mortgage-backed securities. Wh losses hit the mortgage market in 2007–2008, AIG had to pay out insurance claims and also replace the losses in its collateral accounts.
AIG purchased the remaining 39% that it did not own of online auto insurance specialist 21st Ctury Insurance in 2007 for $749 million.
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With the failure of the part company and the continuing recession in late 2008, AIG rebranded its insurance unit to 21st Ctury Insurance.
On June 11, 2008, three stockholders, collectively owning 4% of the outstanding stock of AIG, delivered a letter to the Board of Directors of AIG seeking to oust CEO Martin Sullivan and make certain other managemt and Board of Directors changes. This letter was the latest volley in what The Wall Street Journal called a public spat betwe the company's board and managemt on one hand, and its key stockholders and former CEO Maurice Greberg on the other hand.
On June 15, 2008, after disclosure of financial losses and subsequt to a falling stock price, Sullivan resigned and was replaced by Robert B. Willumstad, Chairman of the AIG Board of Directors since 2006. Willumstad was forced by the US governmt to step down and was replaced by Ed Liddy on September 17, 2008.
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AIG's board of directors named Bob Bmosche CEO on August 3, 2009, to replace Liddy, who earlier in the year announced his retiremt.
In late 2008, the federal governmt bailed out AIG for $180 billion, and technically assumed control, because many believed its failure would danger the financial integrity of other major firms that were its trading partners--Goldman Sachs, Morgan Stanley, Bank of America and Merrill Lynch, as well as dozs of European banks.
In January 2011, the Financial Crisis Inquiry Commission issued one of many critical governmtal reports, deciding that AIG failed and was rescued by the governmt primarily because its ormous sales of credit default swaps were made without putting up the initial collateral, setting aside capital reserves, or hedging its exposure, which one analyst considered a profound failure in corporate governance, particularly its risk managemt practices.
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Other analysts believed AIG's failure was possible because of the sweeping deregulation of over-the-counter (OTC) derivatives, including credit default swaps, which effectively eliminated federal and state regulation of these products, including capital and margin requiremts that would have lessed the likelihood of AIG's failure.
Illustrating the danger of an AIG bankruptcy, a September 17, 2008, CNN Money article stated, But in AIG's case, the situation is ev more serious. The company is much larger and complex than Lehman Brothers and its assets hitting the market all at once would likely cause worldwide chaos and sd values plummeting. Experts question whether there are ev ough qualified buyers out there to digest the company and its subsidiaries.
AIG had sold credit protection through its London unit in the form of credit default swaps (CDSs) on collateralized debt obligations (CDOs) but by 2008, they had declined in value.
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AIG's Financial Products division, headed by Joseph Cassano in London, had tered into credit default swaps to insure $441 billion worth of securities originally rated AAA. Of those securities, $57.8 billion were structured debt securities backed by subprime loans.
As a result, AIG's credit rating was downgraded and it was required to post additional collateral with its trading counter-parties, leading to a liquidity crisis that began on September 16, 2008, and esstially bankrupted all of AIG. The New York United States Federal Reserve Bank (led by Timothy Geithner who would later become Treasury secretary) stepped in, announcing creation of a secured credit facility, initially of up to $85 billion to prevt the company's collapse, abling AIG to deliver additional collateral to its credit default swap trading partners. The credit facility was secured by the stock in AIG-owned subsidiaries in the form of warrants for a 79.9% equity stake in the company and the right to suspd dividds to previously issued common and preferred stock.
The AIG board accepted the terms of the Federal Reserve rescue package that same day, making it the largest governmt bailout of a private company in U.S. history.
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In March 2009, AIG compounded public cynicism concerning the too big to fail firm's bailout by announcing that it would pay its executives over $165 million in executive bonuses.
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Total bonuses for the financial unit could reach $450 million, and bonuses for the tire company could reach $1.2 billion. Newly inaugurated Presidt Barack Obama,
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