PRODUCTS Insurance, Property Casualty: Commercial & Consumer, Life LINE-HEIGHT:1.2EM;">OPERATING INCOME US$ 74 million (2016)
NET INCOME US$ 349 million (2016)
TOTAL ASSETS US$ 498.3 billion (2016)
TOTAL EQUITY US$ 76.9 billion (2016)
NUMBER OF EMPLOYEES Approximately 56,400 (2016)
AMERICAN INTERNATIONAL GROUP, INC., also known as AIG, is an American multinational insurance corporation with more than 88 million customers in 130 countries. As of 2015 AIG companies employed around 65,000 people. The company operates through three businesses: AIG Property Casualty, AIG Life and Retirement, and United Guaranty Corporation (UGC). AIG Property Casualty provides insurance products for commercial, institutional, and individual customers. AIG Life and Retirement provides life insurance and retirement services in the United States. UGC focuses on mortgage guaranty insurance and mortgage insurance. AIG also provides financial services in global capital markets operations, including direct investment and retained interests.
AIG was a central player in the financial crisis of 2008 . It was bailed out by the federal government for $180 billion, and the government took control. The Financial Crisis Inquiry Commission (FCIC) of the US government concluded AIG failed primarily because it sold massive amounts of insurance without hedging its investment. Its enormous sales of credit default swaps were made without putting up initial collateral, setting aside capital reserves, or hedging its exposure — a profound failure in corporate governance, particularly its risk-management practices."
AIG's corporate headquarters are in
New York City
* 1 History
* 1.1 The early years: 1919 to 1945 * 1.2 International and domestic expansion: 1946 to 1959 * 1.3 Reorganization and specialization: 1960 to 1979 * 1.4 New opportunities and directions: 1980 to 1999
* 1.5 Further expansion and decline: 2000 to 2012
* 1.5.1 Growth * 1.5.2 Accounting scandal * 1.5.3 Expansion to the credit default insurance market * 1.5.4 Liquidity crisis and government bailout
* 1.6 Modern era: 2012 to present
* 2 Bailout litigation
* 2.1 Money damages
* 3 Corporate governance
* 3.1 Board of directors
* 4 Business * 5 Subsidiaries * 6 See also * 7 References * 8 Further reading * 9 External links
North China Daily News Building on the Bund , Shanghai
(elevation): the original home of what became AIG; now the AIA
70 Pine Street
THE EARLY YEARS: 1919 TO 1945
AIG traces its roots back to 1919, when American Cornelius Vander Starr (1892-1968) established a general insurance agency, American Asiatic Underwriters (AAU), in Shanghai, China. Business grew rapidly, and two years later, Starr formed a life insurance operation. By the late 1920s, AAU had branches throughout China and Southeast Asia, including the Philippines, Indonesia, and Malaysia. In 1926, Mr. Starr opened his first office in the United States, American International Underwriters Corporation (AIU). He also focused on opportunities in Latin America and, in the late 1930s, AIU entered Havana, Cuba. The steady growth of the Latin American agencies proved significant as it would offset the decline in business from Asia due to the impending World War II. In 1939, Mr. Starr moved his headquarters from Shanghai, China, to New York City.
INTERNATIONAL AND DOMESTIC EXPANSION: 1946 TO 1959
After World War II, American International Underwriters (AIU) entered Japan and Germany, to provide insurance for American military personnel. Throughout the late 1940s and early 1950s, AIU continued to expand in Europe, with offices opening in France, Italy, and the United Kingdom. In 1952, Mr. Starr began to focus on the American market by acquiring Globe "> AIG Headquarters in New York
The 1970s presented many challenges 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 energy, transportation, and shipping products to serve the needs of niche industries. By 1979, with a growing workforce and a worldwide network of offices, AIG offered clients superior technical and risk management skills in an increasingly competitive marketplace.
NEW OPPORTUNITIES AND DIRECTIONS: 1980 TO 1999
During the 1980s, AIG continued expanding its market distribution and worldwide network by offering a wide range of specialized products, including pollution liability and political risk. In 1984, AIG listed its shares on the New York Stock Exchange (NYSE). Throughout the 1990s, AIG developed new sources of income through diverse investments, including the acquisition of International Lease Finance Corporation (ILFC), a provider of leased aircraft to the airline industry. In 1992, AIG received the first foreign insurance license granted in over 40 years by the Chinese government. Within the U.S., AIG acquired SunAmerica Inc. a retirement savings company, in 1999.
FURTHER EXPANSION AND DECLINE: 2000 TO 2012
The AIG Headquarter Building of
Woodland Hills, Los Angeles
The early 2000s saw a marked period of growth as AIG acquired American General Corporation, a leading domestic life insurance and annuities provider, and AIG entered new markets including India. In February 2000, AIG created a strategic advisory venture team with the Blackstone Group and Kissinger Associates "to provide financial advisory services to corporations seeking high level independent strategic advice." AIG was an investor in Blackstone from 1998 to March 2012, when it sold all of its shares in the company. Blackstone acted as an adviser for AIG during the 2007-2008 financial crisis.
In November 2004, AIG reached a US$126 million settlement with the U.S. Securities and Exchange Commission and the Justice Department partly resolving a number of regulatory matters, but the company must still cooperate with investigators continuing to probe the sale of a non-traditional insurance product.
In 2005, AIG became embroiled in a series of fraud investigations
conducted by the Securities and Exchange Commission , U.S. Justice
Department , and
New York State Attorney General
On May 1, 2005, investigations conducted by outside counsel at the request of AIG's Audit Committee and the consultation with AIG's independent auditors, PricewaterhouseCoopers LLP resulted in AIG's decision to restate its financial statements for the years ended December 31, 2003, 2002, 2001 and 2000, the quarters ended March 31, June 30 and September 30, 2004 and 2003 and the quarter ended 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.
Expansion To The Credit Default
Martin J. Sullivan became CEO of the company in 2005. He began his
career at AIG as a clerk in its
AIG purchased the remaining 39% that it did not own of online auto
insurance specialist 21st Century
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
Board of Directors changes. This letter was the latest
volley in what
The Wall Street Journal
On June 15, 2008, after disclosure of financial losses and subsequent 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 government to step down and was replaced by Ed Liddy on September 17, 2008. AIG's board of directors named Bob Benmosche CEO on August 3, 2009, to replace Mr. Liddy, who earlier in the year announced his retirement.
Liquidity Crisis And Government Bailout
Further information: Subprime mortgage crisis and Financial crisis of 2007–08
AIG faced the most difficult financial crisis in its history when a series of events unfolded in late 2008. AIG was bailed out by the federal government for $180 billion, and the government took control. The Financial Crisis Inquiry Commission (FCIC) made the major government study of the crisis. It concluded in January 2011: The Commission concludes AIG failed and was rescued by the government primarily because its enormous sales of credit default swaps were made without putting up the initial collateral, setting aside capital reserves, or hedging its exposure – a profound failure in corporate governance, particularly its risk management practices. 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 requirements that would have lessened the likelihood of AIG's failure.
AIG had sold credit protection through its
On March 17, 2009, AIG announced that they were paying $165 million
in executive bonuses, prompting the
AIG bonus payments controversy
Due to the Q3 2011 net loss widening, on November 3, 2011, AIG shares plunged 49 percent year to date. The insurer's board approved a share buyback of as much as $1 billion.
AIG since September 2008 marketed its assets to pay off its
government loans. A global decline in the valuation of insurance
businesses, and the weakening financial condition of potential
bidders, challenged its efforts. AIG closed on the sale of its
Hartford Steam Boiler unit on March 31, 2009, to
Munich Re for $742
million, which was announced December 22, 2008. On April 16, 2009,
AIG announced plans to sell 21st Century
AIG agreed in March 2010 to sell its American Life
In October 2010 the WSJ reported that a family sued AIG for alleged complicity in a 'stranger-originated life insurance ' scheme, whereby AIG managers allegedly welcomed people without an insurable interest to take out life insurance policies against others. The case involved JB Carlson and Germaine Tomlinson, and was one of many similar lawsuits in the US at the time.
It was reported in January 2011, that AIG sold its Taiwanese life insurance company, Nan Shan Life, to a consortium of buyers for $2.16 billion.
MODERN ERA: 2012 TO PRESENT
On May 7, 2012, the United States Department of the Treasury announced an offering of 188.5 million shares of AIG for a total of $5.8 billion. The sale reduced Treasury’s stake in AIG to 61 percent, from 70 percent before the transaction.
On September 6, 2012, AIG sold $2 billion of its investment in AIA to repay government loans. The board also approved a $5 billion stock repurchase of government-owned shares in AIA.
On September 14, 2012, the Department of Treasury completed its fifth sale of AIG common stock, with proceeds of approximately $20.7 billion, reducing the Treasury’s ownership stake in AIG to approximately 15.9 percent from 53 percent. Government commitments were fully recovered, and Treasury and the FRBNY to date had received a combined positive return of approximately $15.1 billion.
On October 12, 2012, AIG announced a five and a half year agreement to sponsor six New Zealand-based rugby teams, including world champion All Blacks. The AIG logo and the Adidas logo, the league’s primary sponsor, will be displayed on the league’s team jerseys.
The U.S. Department of the Treasury in December 2012 published an itemized list of the loans, stock purchases, special purpose vehicles (SPVs) and other investments engaged in with AIG, the amount AIG paid back and the positive return on the loans and investments to the government. Treasury said that it and the Federal Reserve Bank of New York provided a total $182.3 billion to AIG, which paid back a total $205 billion, for a total positive return, or profit, to the government of $22.7 billion. In addition, AIG sold off a number of its own assets to raise money to pay back the government.
On December 14, 2012, the Treasury Department sold the last of its AIG stock in its sixth stock stale for a total of approximately $7.6 billion. In total, the Treasury Department realized a gain of more than $22 billion from the sale of AIG common stock and $0.9 billion from the sale of AIG preferred stock.
AIG began an advertising campaign on January 1, 2013, called "Thank You America," in which several company employees, including AIG President and CEO Robert Benmosche, talked directly to the camera and offered their thanks for the government assistance.
In a January 2016 news release, AIG announced plans for an initial public offering of 19.9 percent of United Guaranty Corp., a Greensboro, North Carolina -based provider of mortgage insurance for lenders .
In 2016, AIG announced a joint venture with Hamilton
In January 2013, AIG's board discussed joining a lawsuit against the United States government because the bailout they received was unfair to their investors. The idea was rejected. AIG was criticized, however, when news stories soon appeared that it was considering joining a lawsuit brought by AIG shareholders and former CEO Maurice R. Greenberg against the New York Federal Reserve Bank for what the plaintiffs considered unfair terms imposed on AIG by the New York Fed. The AIG board announced on January 9, 2013, that the company would not join the lawsuit, and on January 9, 2013, Bob Benmosche told CNBC’s Maria Bartiromo that it would not be “socially acceptable” for AIG to sue the government, continuing that while people may be angry, "a deal’s a deal."
The specific issue was whether the New York Federal Reserve transferred $18 billion in litigation claims on troubled mortgage debt through the Maiden Lane Transactions , entities created by the Fed in 2008, and thus prevented AIG from recouping losses from insured banks. On May 7, 2013, Los Angeles U.S. District Judge, Mariana Pfaelzer , ruled that $7.3 billion of the disputed claims had, in fact, not been assigned. AIG withdrew the case "with prejudice " on May 28, 2013. Praelzer was overseeing a suit between AIG and Bank of America (BAC-US) concerning possible misrepresentations by Merrill Lynch and Countrywide as to the quality of the mortgage portfolio. In signing the order closing the case, U.S. District Judge Lewis Kaplan who also adjudicated the Maiden Lane case, American International Group Inc. et al. v. Maiden Lane II LLC, U.S. District Court, Southern District of New York, No. 13-00951 admonished the Fed saying, "On the face of it" some of its actions "perhaps are unattractive and, indeed, wrongful.”
After the case was thrown out by the District Court, the United States Court of Appeals for the Second Circuit affirmed, holding that federal common law preempted any Delaware fiduciary duties owed to shareholders.
Hank Greenberg next had David Boies sue the U.S. Government separately for money damages in the United States Court of Federal Claims , prompting strong criticism. After hearing thirty-seven days of testimony and requiring appearances by Ben Bernanke, Timothy Geithner and Hank Paulson, Judge Thomas C. Wheeler ruled that the Federal Reserve responses to the subprime crisis had been illegal. The court reasoned the AIG bailout had been an illegal exaction because the Federal Reserve Act did not authorize the New York Fed to nationalize a corporation by owning its stock.
However, Judge Wheeler did not award monetary compensation to the plaintiffs ruling that they did not suffer economic damage because "if the government had done nothing, the shareholders would have been left with 100 percent of nothing." Both parties appealed to the United States Court of Appeals for the Federal Circuit . The New York Fed volunteered an amicus brief arguing that “Apart from an erroneous interpretation of a federal statute, the trial court’s opinion is riddled with material, clearly erroneous findings of fact.”
BOARD OF DIRECTORS
* Brian Duperreault – President and Chief Executive Officer, American International Group, Inc. * W. Don Cornwell – Former Chairman of the Board and Chief Executive Officer, Granite Broadcasting Corporation * Peter R. Fischer - Former Head of Fixed Income Portfolio Management, Blackrock Inc. * John H. Fitzpatrick – Chairman, Oak Street Management Co., LLC * Christopher S. Lynch – Former Partner, KPMG LLP * Samuel J. Merksamer - Managing Director of Icahn Capital LP * George L. Miles, Jr. – President and Chief Executive Officer, WQED Multimedia * Henry S. Miller – Chairman, Marblegate Asset Management, LLC * Robert S. Miller – Non-Executive Chairman of the Board, American International Group, Inc. * Linda A. Mills - Former Vice President of Operations, Northrop Grumman Corporation * Suzanne Nora Johnson – Former Vice Chairman, The Goldman Sachs Group, Inc. * John Paulson - President and Portfolio Manager of Paulson "> NZ All Blacks Mens XV's Shirt
In the United States, AIG is the largest underwriter of commercial and industrial insurance.
AIG offers property casualty insurance, life insurance, retirement products, mortgage insurance and other financial services. In the third quarter of 2012, the global property-and-casualty insurance business, Chartis, was renamed AIG Property Casualty. SunAmerica, life-insurance and retirement-services division, was renamed AIG Life and Retirement, other existing brands continue to be used in certain geographies and market segments.
Main article: Holdings of American International Group
* AIG Europe Limited
* Companies portal
Bernard Connolly - former strategist for AIG
Late-2000s financial crisis
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