American International Group

Also found in: Financial, Wikipedia.

American International Group

(AIG), American multinational insurance corporation whose potential bankruptcy in 2008 led to the largest federal bailout of a private company. AIG was founded as American Asiatic Underwriters by Cornelius Vander Starr in 1919 in Shanghai, China; it soon expanded internationally and became known as American International Underwriters. With the advance of Mao Zedong's Red Army on Shanghai in 1949, Starr moved the headquarters to New York. In 1962 Maurice R. "Hank" Greenberg (1925–) took over leadership of the company; he remained its head until he was forced out as chief executive in 2005 because of transactions that created overstated earnings reports (he settled the civil accounting fraud changes arising from the transactions in 2017). Greenberg expanded AIG by buying up numerous insurance and other financial firms. The company, which assumed its present name in 1967, became one of the largest insurance companies in the world. In the 2000s, however, AIG incurred huge losses relating to subprime home mortgages, both its own and those of other companies and banks it had insured against losses on mortgage-backed securities, although many AIG businesses remained profitable.

By 2008 bankruptcy loomed due to a downgraded credit rating and increased calls for collateral required by the insurance on the mortgage-backed securites. The Federal Reserve Bank, concerned over potentially far-reaching repercussions to the international financial system should AIG fail, agreed to give AIG a line of credit for up to $85 billion in exchange for 80% of its stock, effectivily nationalizing the company. Eventually the Federal Reserve Bank and U.S. government increased their potential support to more than $182 billion through investment and credit lines and by buying mortgage-backed securities. The Treasury Dept. ultimately owned more than 90% of AIG before beginning to sell off shares in 2011. AIG sold a number of its profitable assets in order to pay back the U.S. government, and recovered from its near collapse in 2009. The bailout became controversial because large bonuses were paid to many AIG employees after the bailout (though these were largely later returned) and because some of the financial firms, such as Goldman Sachs, that benefited from the financial stability the bailout was designed to preserve also received sizable payments from AIG after the bailout. Goldman Sachs was also accused by some at AIG of having misled AIG over the quality of the mortgage-backed securities that AIG insured. In 2011 Greenberg brought a class-action lawsuit for damages against the government, contending it had exceeded its authority in demanding its stock in return for aid. The 2015 verdict said the government had had no right to demand the ownership control of AIG, but did not award damages because the company would have become bankrupt without the government aid.

The Columbia Electronic Encyclopedia™ Copyright © 2013, Columbia University Press. Licensed from Columbia University Press. All rights reserved.
Mentioned in ?
References in periodicals archive ?
American International Group hired an executive to fill the new position of Global Head of Shared Services.
Financial Services Conference on Wednesday, December 5, 2018, American International Group, Inc.
(NYSE: MTN) has closed the acquisition Vermont, US-based ski resort Stowe Mountain Resort from American International Group, Inc's Mt.
Operating Companies Rating Business Company Name/ Action Type Ultimate Parent AMB# U.S., CANADA AND BERMUDA LIFE/HEALTH U L AGC Life Insurance Company 009199 American International Group, Inc U L American General Life Insurance Company 006058 American International Group, Inc U L Delaware American Life Insurance Company 006305 MetLife Inc W H Excellus Health Plan Inc 060082 Lifetime Healthcare Inc U L First MetLife Investors Insurance Co 006119 MetLife Inc U L General American Life Insurance Company 006439 MetLife Inc [DELTA] L Hawaii Dental Service 058183 U H Independence American Insurance Company 003552 Geneve Holdings, Inc.
State regulators have told Congress the Treasury's assessment of how American International Group holding company problems could have impacted AIG's ability to pay insurance claims is wrong.
London City Airport has been acquired by a consortium comprising AIG Financial Products, a subsidiary of American International Group, and Global Infrastructure Partners, a joint venture between Credit Suisse and GE Infrastructure.
Prior to joining Citigroup, Frank was director of strategic planning and facility planning at American International Group (AIG), the multinational insurance and financial services firm, where he held numerous successive positions over ten years.
CASTELLI, CPA (New York City Chapter), was promoted to Chief Administrative Officer and Senior Vice President of New York-based American International Group Inc.
Some major companies, such as American International Group, Citigroup, Corning and Lucent, have sophisticated strategies in Asia.
In another announcement, ADM, in conjunction with several member companies of American International Group Inc., has developed a customized insurance program for its grain elevator customers.
Companies named in the suits include: investment banks J.P.MorganChase & Co., Lehman Brothers Holdings Inc., and Brown Brothers Harriman & Co.; insurers American International Group Inc.

Full browser ?