American International Group
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| American International Group, Inc | |
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| Type | Public (NYSE: AIG) |
| Founded | 1919 |
| Headquarters | 70 Pine Street, New York City, New York |
| Key people | Martin J. Sullivan, President & CEO |
| Industry | Insurance Financial Services |
| Products | Insurance Annuities Mutual Funds Financial Products |
| Revenue | ▲ $110.064 billion USD (2007) |
| Net income | ▲ $6.2 billion USD (2007) |
| Employees | More than 100,000 |
| Website | www.aig.com |
American International Group, Inc. (AIG) (NYSE: AIG) is a major American insurance corporation based in Wall Street in New York City. The UK headquarters are located on Fenchurch Street in London, England. UK, European operations are based in La Defence, Paris and its Asian HQ is in Hong Kong. According to the 2008 Forbes Global 2000 list, AIG is 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.
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[edit] History
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.
On April 6, 2006, AIG president and chief executive Martin J. Sullivan announced American International Group (AIG) as the new shirt sponsors of English football team Manchester United, in a British record shirt sponsorship deal of £56.5 million (£14.1 million a year) over four years.
[edit] Holdings
AIG owns ILFC, the world's largest aircraft leasing company, with hundreds of aircraft ranging from Airbus A319s to Boeing 747s.
Through various subsidiaries, AIG owns about 100% of 21st Century Insurance Group (see http://finance.yahoo.com/q?s=TW).
21st Century Insurance Company http://www.21st.com, insures auto, motorcycles, and personal umbrella policies. The Home office is in Woodland Hills California.
AIG owns American International Assurance known as AIA. It is an insurance company based in Hong Kong and has offices in 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 and a private golf course in Vermont. AIG's connection to Stowe started when C.V. Starr, the company's founder, invested in the resort in 1946. Maurice R. Greenberg has a home in Stowe and still skis. Stowe is AIG's sole ski business. At Stoic Old Stowe, a New Era
Since May 2007, AIG also owns most of the Bulgarian Telecommunications Company and the third Bulgarian mobile operator, Vivatel.[1]
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
AIG owns Ocean Finance[1] a UK based company providing home owner loans, mortgages and remortgages.[2]
AIGSS a subsidiary of AIG Global Services, Inc., a member company of American International Group, Inc., commenced business operations in March 2003 with its corporate office and a software delivery center at Chennai (Tamil Nadu) and a delivery center at Kolkatta (West Bengal) in India. [[2]]
[edit] Business
AIG 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 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). [3] AIG is also the principal sponsor of English football team Manchester United and the Japan Open Tennis Championships.
[edit] Business model
A major focus of AIG's insurance business model is the concept of an underwriting profit. For example, an auto insurer collects money every month from its customers in the form of premium. Should a customer have a covered auto accident, the company pays out a claim. In the time between the receipt of each premium payment and the paying of the claim, the money received by the insurer can be invested. Returns from investments are the primary source of profits for an insurance company. If the amount of premiums taken in is greater than the claims paid out (including the cost of adjusting the claim) even before taking into account investment returns the excess additional profit is called an "underwriting profit". Greenberg believed that it was necessary for an insurance company to make an underwriting profit, even though typically most (property and casualty) insurance companies do not.
[edit] Subsidiary Structure[4]
- AIG American General Life Companies
- AIG Annuity Insurance Company
- AIG Europe (UK) Limited
- AIG Financial Products Corp.
- AIG Hawaii Insurance Company, Inc.
- AIG Investments
- Utilities, Inc.
- AIG Retirement Services, Inc.
- AIG SunAmerica Life Assurance Company
- 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.
- AIG Financial Advisors
- Transatlantic Holdings, Inc.
- Transatlantic Re (Brasil) Ltda.
- Transatlantic Reinsurance Company
- United Guaranty Corporation
[edit] Litigation
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.
[edit] Sponsorship
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 sponsership deal in the English Premier League at this date.
[edit] Accounting fraud claims
In 2005 AIG came under investigation for accounting fraud.
[edit] Timeline
- 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.
[edit] Corporate governance
[edit] Board of directors
- Marshall A. Cohen
- Martin S. Feldstein
- Ellen V. Futter
- Richard C. Holbrooke
- George L. Miles
- Morris W. Offit
- Martin J. Sullivan, (President and Chief Executive Officer)
- Michael H. Sutton
- Robert Willumstad
- Frank G. Zarb
[edit] See Also
[edit] References
[edit] Data
[edit] Books
[edit] Articles
- AIG to reveal details of Gen Re deal
- Famous Philanthropists and the Foundations They Built - Part 1 ... - Cornelius Vander Starr
[edit] External links
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