American International Group
Encyclopedia : A : AM : AME : American International Group
American International Group, Inc. (AIG) NYSE: [AIG]
History
AIG was founded in 1919 by Edwin Cornelius Vander Starr in Shanghai, China. Starr was the first Westerner in Shanghai to sell insurance to the Chinese. When his business was successful there, he expanded to Asia, Latin America, Europe, and the Middle East.In 1962, Starr gave management of the company's unsuccessful U.S. holdings to Hank Greenberg, who shifted the company's U.S. focus from personal insurance to high-margin corporate coverage. Greenberg focused on selling the insurance through independent brokers rather than agents because Greenberg want to avoid selling insurance at prices which occasionally became too low (to cover the future payouts) given marketplace competition; a company with agents must pay their salary even while selling little to no insurance. Instead, with brokers, AIG could price insurance properly even if it suffered decreased sales of certain products for long lengths of time with very little extra expense. In 1968, Starr named Greenberg his successor. The company went public in 1969. Greenberg resigned as the company's CEO in February 2005 amid concern from the board about regulatory inquiries.
On 6 April 2006, AIG president and chief executive Martin J. Sullivan, announced American International Group (AIG) as the new shirt sponsors of English football (soccer) team Manchester United, in a British record shirt sponsorship deal of £56.5 million (£14.1 million a year) over four years.
The Manchester United shirt sponsered by AIG.
Holdings
AIG owns ILFC, the world's largest aircraft leasing company, with hundreds of aircraft ranging from Airbus A319s to Boeing 747-400s.Through various subsidiaries, AIG owns about 62% of 21st Century Insurance Group (see http://finance.yahoo.com/q?s=TW)
AIG directly owns 9.9% of PICC. Through three subsidiaries plus its direct ownership, AIG actually owns 19.8 percent.
The company also owns a ski resort (Greenberg skis frequently) and a private golf course in upstate New York.
Business
It is the world's leading international insurance and financial services organization, with operations in more than 130 countries and jurisdictions. AIG member companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In the United States, AIG companies are the largest underwriters of commercial and industrial insurance and [AIG American General] is a top-ranked life insurer. AIG's global businesses also include financial services, retirement services and asset management. AIG's financial services businesses include aircraft leasing, financial products, trading and market making. AIG's growing global consumer finance business is led in the United States by [American General Finance]. AIG also has one of the largest U.S. retirement services businesses through AIG SunAmerica and AIG VALIC, and is a leader in asset management for the individual and institutional markets, with specialized investment management capabilities in equities, fixed income, alternative investments and real estate. AIG's common stock is listed on the New York Stock Exchange, as well as stock exchanges in London, Paris, Switzerland and Tokyo.Business Model
Besides being a financial conglomerate to cause more stable earnings, and the sale of commercial insurance through brokers and not agents as described earlier, a third focus of AIG's business model is the concept of an underwriting profit. For example, an auto insurance company collects money every month from its customers. If one gets into an accident it has to pay money for the accident, but in the meantime the money can be invested. Returns from investments are one (and for many insurance companies throughout time, the only) source of profits for an insurance company. If the amount of money over time paid out is less then what is taken in, this excess is an additional profit, which is called an "underwriting profit". Greenberg believed that it was necessary for an insurance company to make an underwriting profit, even though this is not normal for many companies in different segments of the insurance industry.Litigation
In November 2004, AIG reached a $126 million settlement with the U.S. Securities and Exchange Commission and the Justice Department partly resolving the matter, but must still cooperate with investigators continuing to probe the sale of a "non-traditional insurance product." The settlement concerned a so-called "finite insurance" product.Accounting fraud claims
In 2005, after a scandal on insurance and mutual funds the year before, AIG was under investigation for accounting fraud. The company already lost over 58 billion US dollars worth of market capitalization because of the scandal as of May.Timeline
- In early May 2005, AIG restates financial statements, and issues a reduction in book value of USD $2.7 billion, a 3.3 percent reduction in net worth. AIG's share price falls due to conservative investors selling shares.
- On February 9, 2006, AIG and the New York State Attorney General's office agreed to a settlement in which AIG would pay a fine of $1.6 billion.
Corporate Governance
Board of directors
M. Bernard Aidinoff, Pei-yuan Chia, Marshall A. Cohen, William S. Cohen, Martin S. Feldstein, Ellen V. Futter, Stephen L. Hammerman, Carla A. Hills, Richard C. Holbrooke, Donald P. Kanak (Executive Vice Chairman and Chief Operating Officer), George L. Miles, Morris W. Offit, Martin J. Sullivan (President and Chief Executive Officer), Michael H. Sutton, Edmund S. W. Tse (Senior Vice Chairman, Life Insurance), and Frank G. Zarb.See also
Other articles
External links
Data
Books
Articles
- [AIG to reveal details of Gen Re deal]
- [Famous Philanthropists and the Foundations They Built - Part 1 ... - Cornelius Vander Starr]
From Wikipedia, the Free Encyclopedia. Original article here. Support Wikipedia by contributing or donating.
All text is available under the terms of the GNU Free Documentation License See Wikipedia Copyrights for details.