AIG Overview: AIG (American International Group) is an insurance and financial services giant. On September 16, 2008 The Federal Reserve became its effective owner, extending an $85 billion loan in exchange for a 79.9% ownership stake, to prevent the firm's possible collapse and a deepening of the general financial crisis.
The federal loan is supposed to be repaid within 24 months, financed largely through asset and business sales. AIG's main lines of business include:
- Property and Casualty Insurance
- Life Insurance
- Retirement Services
- Aircraft Leasing
- Consumer Finance
- Asset Management
- Private Banking
Size: AIG operates in 130 countries. These figures are as of June, 2008:
- Fortune 500 Rank (2008) = 13
- Assets = $1,050 billion
- Employees = 106,000
Positives: Measured across various dimensions, AIG is the largest insurance company in the U.S., and also is a major player in other sectors of the financial services industry.
The asset and business sales resulting from the September 16, 2008 federal bailout are bound to simplify AIG's business structure and increase transparency markedly.
Negatives: AIG posted a loss of $13.2 billion through the first half of 2008. Massive markdowns in its holdings of residential mortgage backed securities and credit default swaps are to blame. Prior to the federal bailout, AIG was scheduled to announce a restructuring plan on September 25, 2008.
AIG has been at the center of various recent scandals over accounting and business practices. Longtime autocratic CEO Maurice "Hank" Greenberg resigned under fire in 2005.
AIG still lacks adequate reporting transparency. The careers section of its website cites financial data from 2006, which are more favorable than 2007 or 2008 results. The number of employees had to be obtained through outside data sources for the list above.
The asset and business sales necessary to repay the September 16, 2008 federal loan will have impacts on the current employee base of AIG. Overall downsizing of the core firm and its eventual spinoffs are likely to occur, as measures to achieve cost reductions.
