('''AIG''') is a major
Insurance Corporation based in
New York City . It is the third-largest company in the world according to the 2005
Forbes Global 2000 list. The company became a component of the
Dow Jones Industrial Average on
April 8 ,
2004 .
AIG was founded in
1919 by Edwin Cornelius Vander Starr in
Shanghai ,
China . Starr was the first Westerner in Shanghai to sell insurance to the Chinese. When his business was successful there, he expanded to
Asia ,
Latin America ,
Europe , and the
Middle East .
In
1962 , Starr gave management of the company's unsuccessful
U.S. holdings to
Hank Greenberg , who shifted the company's U.S. focus from personal insurance to high-margin corporate coverge. Greenberg focused on selling the insurance through independent
Broker s, and not agents. This is because Greenberg did not want to sell insurance at prices that sometimes became too low (to cover the future payouts) because of competition from other companies; if the company had agents it would have to continue paying their salary while selling little to no insurance. Instead, with brokers, AIG could always price insurance properly and have little to no sales of certain products for long lengths of time with very little extra expense. In
1968 , Starr named Greenberg as his successor. The company
Went Public in
1969 . Greenberg resigned as the company's
CEO in February 2005 amid concern from the board about regulatory inquiries.
On
6 April 2006 , AIG president and chief executive Martin J. Sullivan, announced American International Group (AIG) as the new shirt sponsors of English
Football (soccer) team
Manchester United , in a British record shirt sponsorship deal of
£ 56.5 million (£14.1 million a year) over four years.
AIG owns
ILFC , the world's largest aircraft leasing company, with hundreds of aircraft ranging from
Airbus A319 s to
Boeing 747-400s .
The company also owns a ski resort (Greenberg skis frequently) and a private golf course in upstate
New York .
It 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 and
AIG VALIC , and is a leader in 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 , as well as stock exchanges in
London ,
Paris ,
Switzerland and
Tokyo .
Besides being a financial conglomerate to cause more stable earnings, and the sale of commercial insurance through brokers and not agents as described earlier, a third focus of AIG's business model is the concept of an ''underwriting profit''. For example, an auto insurance company collects money every month from its customers. If one gets into an accident it has to pay money for the accident, but in the meantime the money can be invested. Returns from
Investment s are one (and for many insurance companies throughout time, the only) source of profits for an insurance company. If the amount of money over time paid out is less then what is taken in, this excess is an additional profit, which is called an "underwriting profit". Greenberg believed that it was necessary for an insurance company to make an underwriting
Profit , even though this is not normal for many companies in different segments of the insurance industry.
In November of
2004 , AIG reached a
$ 126 million settlement with the
U.S. Securities And Exchange Commission and the
Justice Department that resolved the matter in part, but the insurer must still co-operate with investigators who are continuing their probe into the sale of a "non-traditional insurance product". The settlement was related to a so called "
Finite Insurance " product.
In 2005, after a scandal on insurance and mutual funds the year before, AIG was under investigation for accounting
Fraud . The company already lost over 58 billion US dollars worth of market capitalisation because of the scandal as of May.
- 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. AIG's share price falls due to conservative investors selling shares.
- 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.
M. Bernard Aidinoff ,
Pei-yuan Chia ,
Marshall A. Cohen ,
William S. Cohen ,
Lauren K. Day ,
Martin S. Feldstein ,
Ellen V. Futter ,
Stephen L. Hammerman ,
Carla A. Hills ,
Richard C. Holbrooke ,
Donald P. Kanak (Executive Vice Chairman and Chief Operating Officer),
George L. Miles ,
Morris W. Offit ,
Martin J. Sullivan (President and Chief Executive Officer),
Michael H. Sutton ,
Edmund S. W. Tse (Senior Vice Chairman, Life Insurance), and
Frank G. Zarb .
