UPDATE: American International Group, Inc. (AIG) (NYSE: AIG) - Federal Reserve Board, with full support of the Treasury Department, authorizes the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG)
Secretary Henry M. Paulson, Jr. Federal Reserve American International Group (AIG) - Statement by Secretary Henry M. Paulson, Jr. on Federal Reserve Actions Surrounding AIG September 16, 2008 hp-1143
FULL HISTORY FOLLOWS:
 | American International Group, Inc. (AIG) (NYSE: AIG) is a major American insurance corporation based in New York City. The UK headquarters are located on Fenchurch Street in London, England, UK, |
Continental Europe operations are based in La Defense, Paris and its Asian HQ is in Hong Kong. According to the 2008 Forbes Global 2000 list, AIG was the 18th-largest company in the world. It became a component of the Dow Jones Industrial Average on April 8, 2004. As of March 16, 2007, AIG Investments, a division of AIG, completed the purchase of 100% of the stock of P&O Ports North America from Dubai-based DP World.
AIG's history dates back to 1919 by when Cornelius Vander Starr established an insurance agency in Shanghai, China. Starr was the first Westerner in Shanghai to sell insurance to the Chinese. After his business became successful in Asia, he expanded to other markets, including Latin America, Europe, and the Middle East.
In 1962, Starr gave management of the company's less than successful U.S. holdings to Maurice R. "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 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 and was succeeded by Martin Sullivan, who began his career at AIG as a clerk in its London office in 1970.
On June 15, 2008, under intense pressure due to financial losses and a falling stock price, Martin Sullivan resigned from the CEO position. He was replaced by Robert B. Willumstad who has served as Chairman of the Board of Directors of the Company since 2006.
In 2008, AIG's share prices fell over 94% to less than $23 in September and the company reported over $13.2 billion in losses in the first six months of that year. As Lehman Brothers suffered a major decline in value and share price, potential investors began to compare the types of securities held by AIG to those held by Lehman, and found that AIG had valued their Alt-A and sub-prime mortgage-backed securities at rates 1.7 to 2.0 times those Lehman had used for what Lehman officials called similar securities. On September 14, 2008, AIG announced it was considering selling its aircraft leasing division, International Lease Finance Corporation, in an effort to raise necessary capital for the company. The Federal Reserve has hired Morgan Stanley to determine if there are systemic risks to a failing AIG, and has asked private entities to supply short-term "bridge" loans to the company. In the meantime, New York regulators have approved AIG for $20 billion in borrowing from its subsidiaries.
AIG owns ILFC (International Lease Finance Corporation), the world's largest aircraft leasing company, with hundreds of aircraft ranging from Airbus A319s to Boeing 747s.
Through various subsidiaries, AIG owns almost 100% of 21st Century Insurance Group.
AIG owns American International Assurance known as AIA. It is an insurance company based in Hong Kong and has offices in the Asia-Pacific region.
AIG directly owns 9.9% of People's Insurance Company of China (PICC). Through three subsidiaries plus its direct ownership, AIG actually owns 19.8 percent.
AIG owns Stowe Mountain Resort. AIG's connection to Stowe started when C.V. Starr, the company's founder, invested in the resort in 1946. It is AIG's sole ski business. At Stoic Old Stowe, a New Era
As of August 2007, AIG Investments (through its member company AIG Capital Partners, Inc.) acquired a 90% stake in Bulgarian Telecommunications Company (BTC) from Viva Ventures Holding GmbH (“Viva”) and certain minority shareholders. Then, in May 2007, Novator and Viva signed an agreement for AIG Investments to acquire Viva’s 65% stake in BTC.
AIG also owns AIG American General, a life insurance company based out of Houston, Texas. American General Life Insurance Company owns Matrix Direct Insurance Services, one of the largest direct marketers of Term Life Insurance which it aquried from Protective Life Corporation in 2007.
AIG owns Ocean Finance a UK based company providing home owner loans, mortgages and remortgages.
AIG also owns a share in London City Airport.
AIG is one of the largest international insurance and financial services organizations in the world, 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 service businesses include aircraft leasing, financial products, trading, market making and financial advice. AIG's growing global consumer finance business is led in the United States by American General Finance. AIG also owns several of the largest U.S. retirement services businesses through AIG Retirement and AIG SunAmerica, and the largest network of independent broker-dealers through AIG Advisor Group; through these subsidiaries AIG runs 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 (NYSE: AIG, as well as stock exchanges in Japan and Ireland (TYO: 8685; ISEQ: AIN). AIG is also the principal sponsor of English football team Manchester United and the Japan Open Tennis Championships.
Subsidiary Holdings:
* AIG American General Life Companies
* AIG Annuity Insurance Company
* AIG UK Limited
* AIG Financial Products Corp.
* AIG Hawaii Insurance Company, Inc.
* AIG Investments
o Utilities, Inc.
* AIG Retirement Services, Inc.
o AIG SunAmerica Life Assurance Company
o The Variable Annuity Life Insurance Company
* Allied World Assurance Company Holdings, Ltd
* American General Finance Corporation
* American Life Insurance Company
* Brazos Capital Management, L.P.
* HSB Group, Inc.
* International Lease Finance Corporation
* Lexington Insurance Company
* SunAmerica Ventures, Inc.
o AIG Financial Advisors
* Transatlantic Holdings, Inc.
o Transatlantic Re (Brasil) Ltda.
o Transatlantic Reinsurance Company
* United Guaranty Corporation
In November 2004, AIG reached 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 still must cooperate with investigators continuing to probe the sale of a "non-traditional insurance product.
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 management and Board of Directors changes. This letter was the latest volley in what the Wall Street Journal deemed a "public spat" between the Company's Board and management, on the one hand, and its key stockholders, and former CEO Maurice "Hank" Greenberg on the other hand.
In 2006, AIG became main sponsors of Manchester United Football Club. AIG CEO Martin Sullivan said in an interview with Time magazine that they invest millions of dollars into Manchester United not because they want to buy the UK: it was because they want to buy Asia. Manchester United has a huge following in Asia. The deal with Manchester United is said to be worth around £14m a year, the largest shirt sponsorship deal in the English Premier League at this date.
* 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 restates financial statements, and issues 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.
Board of directors
* Robert Willumstad- Chairman of the Board of Directors and Chief Executive Officer (American International Group)
* Stephen F. Bollenback- Former Co-Chairman and CEO, Hilton Hotels Corporation
* Marshall A. Cohen- Counsel: Cassels Brock & Blackwell
* Martin S. Feldstein- Professor of Economics, Harvard University
* Ellen V. Futter- President, American Museum of National History
* Richard C. Holbrooke- Vice Chairman, Perseus LLC
* George L. Miles- President and Chief Executive Officer, WQED Multimedia
* Morris W. Offit- Chairman, Offit Capital Advisors LLC
* Michael H. Sutton- Consultant
* Frank G. Zarb- Senior Advisor and Managing Director, Hellman and Friedman LLC.
* Stephen L. Hammerman- Retired Vice Chairman, Merril Lynch and Co., Inc.
* 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
SOURCES:
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