AIG - aMeRiCaN InTeRnAtiOnAL GrOuP

American International Group, Inc. (AIG) (NYSE: AIG) is a major American insurance corporation based at the American International Building in New York City. The British headquarters are located on Fenchurch Street in London, continental Europe operations are based in La Défense, Paris, and its Asian HQ is in Hong Kong. According to the 2008 Forbes Global 2000 list, AIG was the 18th-largest public company in the world. It was on the Dow Jones Industrial Average from April 8, 2004 to September 22, 2008.
It suffered from a liquidity crisis after its credit ratings were downgraded below "AA" levels, and the Federal Reserve Bank on September 16, 2008, created an $85 billion credit facility to enable the company to meet collateral and other cash obligations, at the cost to AIG of the issuance of a stock warrant to the Federal Reserve Bank for 79.9% of the equity of AIG. In November 2008 the U.S. government revised its loan package to the company, increasing the total amount to $152 billion. AIG is attempting to sell assets to repay the loans. So far the U.S. government has given the company over $170 billion.
AIG became a target of criticism from the media, Congress, United States President Barack Obama, and the public following its allocation of about 165 million USD as bonuses to its executives. The CEO of AIG was grilled in both houses of Congress about the bonuses. This matter, and the large stake US taxpayers own in the company make the limits of US Government involvement in the daily management of the failing company a dilemma yet to be resolved. See AIG bonus payments controversy

History
The American International Building in lower Manhattan
AIG history dates back to 1919, when Cornelius Vander Starr established an insurance agency in Shanghai, China. Starr was the first Westerner in Shanghai to sell insurance to the Chinese, which he continued to do until AIG left China in early 1949—as Lin Long led the advance of the Communist People's Liberation Army on Shanghai.[2][3] Starr then moved the company headquarters to its current home in New York City.[4] The company went on to expand, often through subsidiaries, into other markets, including other parts of Asia, Latin America, Europe, and the Middle East.[5]
In 1962, Starr gave management of the company's lagging U.S. holdings to Maurice R. "Hank" Greenberg, who shifted its focus from personal insurance to high-margin corporate coverage. Greenberg focused on selling insurance through independent brokers rather than agents to eliminate agent salaries. Using brokers, AIG could price insurance according to its potential return even if it suffered decreased sales of certain products for great lengths of time with very little extra expense. In 1968, Starr named Greenberg his successor. The company went public in 1969.[6]
In the mid-2000s (2000s the decade) 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's Office. Greenberg was ousted amid an accounting scandal in February 2005; he is still fighting civil charges being pursued by New York state.[7][8] The New York Attorney General's investigation led to a $1.6 billion fine for AIG and criminal charges for some of its executives.[9] Greenberg was succeeded as CEO by Martin J. Sullivan, who had begun his career at AIG as a clerk in its London office in 1970.[10]
On June 15, 2008, under intense pressure due to financial losses and 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 to step down and was replaced by Edward M. Liddy on September 17, 2008.[11]

Financial crisis
Further information: Subprime mortgage crisis, Financial crisis of 2007–2009, and Liquidity crisis of September 2008

Counterparty Controversy
AIG has had to settle its debts to many creditors, touching off a mini-controversy when over $100 billion dollars were paid out to major global financial institutions that had previously received TARP money. While this money was owed to the banks by AIG (the result of insurance purchased from AIG by the institutions), a number of Congressmen and media members expressed outrage that "taxpayer" money was going to these banks through AIG.[44]

Post-bailout spending
The following week (of September bailout), AIG executives participated in a lavish California retreat which cost $444,000 and featured spa treatments, banquets, and golf outings.[45][46]
It was reported that the trip was a reward for top-performing life-insurance agents planned before the bailout.[47] Less than 24 hours after the news of the party was first reported by the media, it was reported that the Federal Reserve had agreed to give AIG an additional loan of up to $37.8 billion. [48]
AP reported on October 17 that AIG executives spent $86,000 on a luxurious English hunting trip. News of the lavish spending came just days after AIG received an additional $37.8 billion loan from the Federal Reserve, on top of a previous $85 billion emergency loan granted the month before. Regarding the hunting trip, the company responded, "We regret that this event was not canceled."[49]
An October 30, 2008 article from CNBC reported that AIG had already drawn upon $90 billion of the $123 billion allocated for loans.[50]
On November 10, 2008, just a few days before renegotiating another bailout with the US Government for $40 billion, ABC News reported that AIG spent $343,000 on a trip to a lavish resort in Phoenix, Arizona. [51]

Record losses
The lobby of AIG's headquarters in the American International Building.
On March 2, 2009, AIG reported a fourth quarter loss of $61.7bn (£43bn) for the final three months of 2008. This was the largest quarterly loss in corporate history.[57] The announcement of the loss had an impact on morning trading in Europe and Asia, with the FTSE100, DAX and Nikkei all suffering sharp falls. In the US the Dow Jones Industrial Average fell to below 7000 points, a twelve-year low.[58][59] The news of the loss came the day after the U.S. Treasury Department had confirmed that AIG was to get an additional $30 billion in aid, on top of the $150 billion it has already received.[60] The Treasury Department suggested that the potential losses to the US and global economy would be 'extremely high' if it were to collapse[61] and has suggested that if in future there is no improvement, it will invest more money into the company, as it is unwilling to allow it to fail.[62] The firm's position as not just a domestic insurer, but also one for small businesses and many listed firms, has prompted US officials to suggest its demise could be 'disastrous' and the Federal Reserve said that AIG posed a 'system risk' to the global economy.[63] The fourth quarter result meant the company made a $99.29 billion loss for the whole of 2008,[64] with five consecutive quarters of losses costing the company well over $100 billion.[65] In a testimony before the Senate Budget Committee on March 3, 2009, the Federal Reserve Chairman Ben Bernanke stated that "AIG exploited a huge gap in the regulatory system,” ... and "to nobody’s surprise, made irresponsible bets and took huge losses".[66]

2009 bonus payments
In March 2009, AIG announced that they were paying out $165 million in executive bonuses. Total bonuses for the financial unit could reach $450 million and bonuses for the entire company could reach $1.2 billion.[67] President Barack Obama, who voted for the AIG bailout as a Senator[68], responded to the planned payments by saying "[I]t’s hard to understand how derivative traders at A.I.G. warranted any bonuses, much less $165 million in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat?" and "In the last six months, A.I.G. has received substantial sums from the U.S. Treasury. I’ve asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole."[69]


Business
In the United States, AIG is the largest underwriter of commercial and industrial insurance, and AIG American General is a top-ranked life insurer..[citation needed]

Auto insurance
AIG sold auto insurance policies through its subsidiary unit, AIG Direct (aka aigdirect.com). The policies they offered included insurance for private automobiles, motorcycles, recreational vehicles and commercial vehicles.
AIG purchased the remaining 39% that it did not own of online auto insurance specialist 21st Century Insurance in 2007 for $749 million.[100] With the failure of the parent company and the continuing recession in late 2008, AIG rebranded its insurance unit to 21st Century Insurance.[101][102]

Accounting fraud claims
On October 14, 2004 the New York State Office of Attorney General Eliot Spitzer announced that it had commenced a civil action against Marsh & McLennan Companies for steering clients to preferred insurers with whom the company maintained lucrative payoff agreements, and for soliciting rigged bids for insurance contracts from the insurers. The Attorney General announced in a release that two AIG executives pleaded guilty to criminal charges in connection with this illegal course of conduct. In early May 2005, AIG restated its financial position and issued a reduction in book value of USD $2.7 billion, a 3.3 percent reduction in net worth.
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.[105]
There is an ongoing fraud investigation that has been launched by the FBI after the collapse in stock price.[106]

Corporate governance
Board of directors
Zach Blackhurst – Chairman of the Board of Directors and Chief Executive Officer, American International Group
Stephen F. Bollenbach – Former Co-Chairman and CEO, Hilton Hotels Corporation
Martin S. Feldstein – Professor of Economics, Harvard University
George L. Miles – President and Chief Executive Officer, WQED Multimedia
Morris W. Offit – Chairman, Offit Capital Advisors LLC
Michael H. Sutton – Consultant
Fred H. Langhammer – Chairman, Global Affairs, and former CEO of The Estee Lauder Companies, Inc.
Virginia M. Rometty – Senior Vice President, Global Business Services, IBM Corporation
James F. Orr, III – Chairman of the Board of Trustees, The Rockefeller Foundation
Edmund S.W. Tse – Senior Vice Chairman, Life Insurance, American International Group
Suzanne Nora Johnson – Director