American International Group
Encyclopedia
American International Group, Inc. or AIG is an American multinational
insurance corporation. Its corporate headquarters is located in the American International Building
in New York City. The British headquarters office is on Fenchurch Street
in London, continental Europe operations are based in La Défense
, Paris, and its Asian headquarters office is in Hong Kong. According to the 2011 Forbes
Global 2000 list, AIG was the 29th-largest public company in the world. It was listed on the Dow Jones Industrial Average
from April 8, 2004 to September 22, 2008.
AIG suffered from a liquidity crisis when its credit ratings were downgraded below "AA" levels in September 2008. The United States Federal Reserve Bank
on September 16, 2008 created an $85 billion credit facility to enable the company to meet increased collateral obligations consequent to the credit rating downgrade, in exchange for the issuance of a stock warrant
to the Federal Reserve Bank for 79.9% of the equity of AIG. The Federal Reserve Bank and the United States Treasury by May 2009 had increased the potential financial support to AIG, with the support of an investment of as much as $70 billion, a $60 billion credit line and $52.5 billion to buy mortgage-based assets owned or guaranteed by AIG, increasing the total amount available to as much as $182.5 billion.
AIG subsequently sold a number of its subsidiaries and other assets to pay down loans received, and continues to seek buyers of its assets.
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 Mao Zedong
led the advance of the Communist People's Liberation Army
on Shanghai. Starr then moved the company headquarters to its current home in New York City. The company went on to expand, often through subsidiaries, into other markets, including other parts of Asia, Latin America, Europe, and the Middle East.
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.
Beginning in 2005, 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. The New York Attorney General's investigation led to a $1.6 billion fine for AIG and criminal charges for some of its executives. 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.
On June 15, 2008, after disclosure of financial losses and subsequent to 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 by the US government to step down and was replaced by Edward M. Liddy
on September 17, 2008. AIG's board of directors named Robert Benmosche CEO on August 3, 2009 to replace Mr. Liddy, who earlier in the year announced his retirement.
AIG purchased the remaining 39% that it did not own of online auto insurance specialist 21st Century Insurance
in 2007 for $749 million.
With the failure of the parent company and the continuing recession in late 2008, AIG rebranded its insurance unit to 21st Century Insurance. In April 2009 it was announced that AIG was selling the 21st Century Insurance subsidiary to Farmers Insurance Group for $1.9 billion.
, headquartered in Stevens Point, Wisconsin
.
following the downgrade of its credit rating
. Industry practice permits firms with the highest credit ratings to enter swap
s without depositing collateral with their trading counter-parties. When its credit rating was downgraded, the company was required to post additional collateral with its trading counter-parties, and this led to an AIG liquidity crisis. AIG's London unit sold credit protection in the form of credit default swap
s (CDSs) on collateralized debt obligation
s (CDOs) that had by that time declined in value.
The United States Federal Reserve Bank
announced the creation of a secured credit facility of up to US$85 billion, to prevent the company's collapse by enabling AIG to meet its obligations to deliver additional collateral to its credit default swap trading partners. The credit facility provided a structure to loan as much as US$85 billion, secured by the stock in AIG-owned subsidiaries, in exchange for warrants
for a 79.9% equity stake, and the right to suspend dividends to previously issued common
and preferred stock
.
AIG announced the same day that its board accepted the terms of the Federal Reserve Bank's rescue package and secured credit facility.
This was the largest government bailout of a private company in U.S. history, though smaller than the bailout of Fannie Mae and Freddie Mac
a week earlier.
AIG's share prices had fallen over 95% to just $1.25 by September 16, 2008, from a 52-week high of $70.13. The company reported over $13.2 billion in losses in the first six months of the year.
The AIG Financial Products
division headed by Joseph Cassano
, in London, had entered into credit default swaps to insure $441 billion worth of securities originally rated AAA. Of those securities, $57.8 billion were structured debt securities backed by subprime loans.
CNN
named Cassano as one of the "Ten Most Wanted: Culprits" of the 2008 financial collapse in the United States.
As Lehman Brothers
(the largest bankruptcy in U.S. history at that time) suffered a catastrophic decline in share price, investors began comparing the types of securities held by AIG and Lehman, and found that AIG had valued its Alt-A
and sub-prime mortgage-backed securities at 1.7 to 2 times the values used by Lehman which weakened investors' confidence in AIG.
On September 14, 2008, AIG announced it was considering selling its aircraft leasing division, International Lease Finance Corporation
, to raise cash.
The Federal Reserve hired Morgan Stanley
to determine if there are systemic risk
s to a financial failure of AIG, and asked private entities to supply short-term bridge loan
s to the company. In the meantime, New York regulators allowed AIG to borrow $20 billion from its subsidiaries.
At the stock market's opening on September 16, 2008, AIG's stock dropped 60 percent.
The Federal Reserve continued to meet that day with major Wall Street investment firms, hoping to broker a deal for a non-governmental $75 billion line of credit to the company.
Rating agencies Moody's
and Standard and Poor downgraded AIG's credit ratings
on concerns over likely continuing losses on mortgage-backed securities. The credit rating downgrade forced the company to deliver collateral of over $10 billion to certain creditors and CDS counter-parties.
The New York Times
later reported that talks on Wall Street had broken down and AIG may file for bankruptcy protection on Wednesday, September 17.
Just before the bailout by the US Federal Reserve, AIG former CEO Maurice (Hank) Greenberg sent an impassioned letter to AIG CEO Robert B. Willumstad offering his assistance in any way possible, ccing
the Board of Directors. His offer was rebuffed.
's Board of Governors announced that the Federal Reserve Bank of New York
had been authorized to create a 24-month credit-liquidity facility from which AIG could draw up to $85 billion. The loan was collateralized
by the assets of AIG, including its non-regulated subsidiaries and the stock of "substantially all" of its regulated subsidiaries, and with an interest rate of 850 basis point
s over the three-month London Interbank Offered Rate
(LIBOR) (i.e., LIBOR plus 8.5%). In exchange for the credit facility, the U.S. government received warrants for a 79.9 percent equity stake in AIG, with the right to suspend the payment of dividends to AIG common and preferred shareholders.
The credit facility was created under the auspices of Section 13(3) of the Federal Reserve Act
.
AIG's board of directors announced approval of the loan transaction in a press release the same day. The announcement did not comment on the issuance of a warrant for 79.9% of AIG's equity, but the AIG 8-K filing of September 18, 2008, reporting the transaction to the Securities and Exchange Commission stated that a warrant for 79.9% of AIG shares had been issued to the Board of Governors of the Federal Reserve.
AIG drew down US$ 28 billion of the credit-liquidity facility on September 17, 2008.
On September 22, 2008, AIG was removed from the Dow Jones Industrial Average
.
An additional $37.8 billion credit facility was established in October. As of October 24, AIG had drawn a total of $90.3 billion from the emergency loan, of a total $122.8 billion.
Maurice Greenberg
, former CEO of AIG, on September 17, 2008, characterized the bailout as a nationalization
of AIG. He also stated that he was bewildered by the situation and was at a loss over how the entire situation got out of control as it did.
On September 17, 2008, Federal Reserve Board chair Ben Bernanke
asked Treasury Secretary Henry Paulson
join him, to call on members of Congress, to describe the need for a congressionally authorized bailout of the nation's banking system. Weeks later, Congress approved the Emergency Economic Stabilization Act of 2008
.
Bernanke said to Paulson on September 17, "We can’t keep doing this. Both because we at the Fed don’t have the necessary resources and for reasons of democratic legitimacy, it's important that the Congress come in and take control of the situation."
On November 10, 2008, the U.S. Treasury announced it would purchase $40 billion in newly issued AIG senior preferred stock, under the authority of the Emergency Economic Stabilization Act's Troubled Asset Relief Program.
The FRBNY announced that it would modify the September 16 secured credit facility; the Treasury investment would permit a reduction in its size from $85 billion to $60 billion, and that the FRBNY would extend the life of the facility from three to five years, and change the interest rate from 8.5% plus the three-month London interbank offered rate
(LIBOR) for the total credit facility, to 3% plus LIBOR for funds drawn down, and 0.75% plus LIBOR for funds not drawn, and that AIG would create two off- balance-sheet Limited Liability Companies (LLC) to hold AIG assets: one will act as an AIG Residential Mortgage-Backed Securities Facility and the second to act as an AIG Collateralized Debt Obligations Facility.
Federal officials said the $40 billion investment would ultimately permit the government to reduce the total exposure to AIG to $112 billion from $152 billion.
On December 15, 2008, the Thomas More Law Center
filed suit to challenge the Emergency Economic Stabilization Act of 2008, alleging that it unconstitutionally promotes Islamic law (Sharia
) and religion. The lawsuit was filed because AIG provides Takaful Insurance Plans, which, according to the company, avoid investments and transactions that are"un-Islamic".
s 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. In January, 2010, a document known as "Schedule A – List of Derivative Transactions" was released to the public, against the wishes of the New York Fed. It listed many of the insurance deals that AIG had with various other parties, such as Goldman Sachs
, Société Générale
, Deutsche Bank
, and Merrill Lynch
.
Had AIG been allowed to fail in a controlled manner through bankruptcy, bondholders and derivative counterparties (major banks) would have suffered significant losses, limiting the amount of taxpayer funds directly used. Fed Chairman Ben Bernanke argued: "If a federal agency had [appropriate authority] on September 16, [2008], they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors and counterparties as appropriate. That outcome would have been far preferable to the situation we find ourselves in now." The "situation" to which he is referring is that the claims of bondholders and counterparties were paid at 100 cents on the dollar by taxpayers, without giving taxpayers the rights to the future profits of these institutions. In other words, the benefits went to the banks while the taxpayers suffered the costs.
It was reported that the trip was a reward for top-performing life-insurance agents planned before the bailout.
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.
AP reported on October 17 that AIG executives spent $86,000 on a previously scheduled 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."
An October 30, 2008 article from CNBC
reported that AIG had already drawn upon $90 billion of the $123 billion allocated for loans.
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
.
s to hedge them against Lehman bankruptcy settled those accounts. The net payments were $5.2 billion
even though initial estimates of the amount of the settlement were between $100 billion and $400 billion.
By December 2008, AIG had paid at least $18.7 billion to various financial institutions, including Goldman Sachs
and Société Générale
to retire obligations related to credit default swaps (CDS). As much as $53.5 billion related to swap payouts are part of the bailout.
On March 15, 2009, under mounting pressure from Congress and after consultation with the Federal Reserve, AIG disclosed a list of major recipients of collateral postings and payments under credit default swap
s, guaranteed investment agreements, and securities lending agreements. Below is data from one of the charts AIG released, representing only a portion of the total payouts, over a period of a few months.
As of September 6, 2009, The Wall Street Journal
reported that Pacific Century Group
had agreed to pay $500 million for a part of American International Group's asset management business, and that they also expected to pay an additional $200 million to AIG in carried interest and other payments linked to future performance of the business.
Also in 2009, AIG sold its operations in Colombia to Ecuador's Banco del Pichincha
.
On March 1, 2010, insurance company Prudential
confirmed that it was in advanced negotiations to buy the Asian operations of AIG. Prudential was to buy the pan-Asian life insurance company, American International Assurance (AIA), for approximately $35.5 billion. On June 1, 2010 the deal failed because AIG would not accept the $30.5 billion after Prudential lowered the amount by $5 billion from the originally planned $35.5 billion after Prudential shareholder discontent.
AIG agreed on March 8, 2010, to sell its American Life Insurance Co. unit (ALICO) to MetLife Inc. for $15.5 billion in cash and stock by November 1, 2010. Alico has annuities, life and health insurance operations in Japan, Middle East (including Nepal, Bangladesh and Pakistan), Western and Eastern Europe, Latin America and the Caribbean. AIG said it will sell Alico for $6.8 billion in cash and the remainder in MetLife equity. The deal leaves AIG as the second-largest shareholder of MetLife, with a stake of more than 20% in the company.
On March 29, 2010, Bloomberg L.P.
reported that after almost three months of delays, AIG had completed the $500 million sale of a portion of its asset management business, branded PineBridge Investments, to the Asia-based Pacific Century Group
.
On September 30, 2010, AIG announced an agreement to sell two of its life insurance companies in Japan, AIG Star and AIG Edison, to Prudential Financial for $4.2 billion in cash and $600 million in the assumption of third party debt to help repay some of the money owed to the U.S. government.
On November 1, 2010, AIG announced it had raised $36.71 billion from the sale of ALICO and an initial public offering for AIA. The company will use the proceeds Federal Reserve Bank of New York credit facility and make payments on other interests owned by the government.
On September 2, 2011, AIG filed with the SEC to spin off their aircraft leasing firm, International Lease Finance Corporation
(ILFC), in an initial public offering.
at that time.
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. 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.
The Treasury Department suggested that the potential losses to the US and global economy would be 'extremely high' if it were to collapse 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.
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 'systemic risk' to the global economy.
The fourth quarter result meant the company made a $99.29 billion loss for the whole of 2008,
with five consecutive quarters of losses costing the company well over $100 billion.
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".
President Barack Obama
, who voted for the AIG bailout as a Senator
responded to the planned payments by saying "[I]t's hard to understand how derivative traders at AIG 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, AIG 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."
Politicians on both sides of the Congressional aisle reacted with outrage to the planned bonuses. Senator Chuck Grassley
(R-Iowa) said "I would suggest the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example
and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide."
Senator Chuck Schumer (D-New York) accused AIG of "Alice in Wonderland
business practices" and said "It boggles the mind." He has threatened to tax the bonuses at up to 100%.
Senator Richard Shelby
(R-Alabama) said "These people brought this on themselves. Now you're rewarding failure. A lot of these people should be fired, not awarded bonuses. This is horrible. It's outrageous." Senator Mitch McConnell
(R-Kentucky) echoed his comments, saying "This is an outrage."
Senator Jon Tester
(D-Montana) said "This is ridiculous." and AIG executives "need to understand that the only reason they even have a job is because of the taxpayers."
Senator Dick Durbin (D-Illinois) said "I've had it." and "The fact that they continue to do it while we pour in billions of dollars is indefensible."
Representative Barney Frank
(D-Massachusetts), Chairman of the House Financial Services Committee, said paying these bonuses would be "rewarding incompetence" and "These people may have a right to their bonuses. They don't have a right to their jobs forever."
Representative Mark Kirk
(R-Illinois) said "AIG should not be on welfare from Uncle Sam, and yet paying bonuses and transferring a considerable amount of taxpayer funds to entities overseas."
Federal Reserve
Chairman Ben Bernanke
said "It makes me angry. I slammed the phone more than a few times on discussing AIG."
Lawrence Summers
, Director of the National Economic Council, said "The easy thing would be to just say, you know, ‘Off with their heads
,’ and violate the contracts."
Austan Goolsbee
, of the Council of Economic Advisers
said "I don't know why they would follow a policy that's really not sensible, is obviously going to ignite the ire of millions of people." and "You worry about that backlash."
Political commentators and journalists expressed an equally bipartisan outrage.
On March 24, 2009, The New York Times
printed the resignation letter of Jake DeSantis, executive vice president of AIG's financial products unit, to Edward M. Liddy, the chief executive of AIG. DeSantis stated he had nothing to do with the credit default swaps, he lost much of his life savings in the form of deferred compensation invested in the capital of AIG Financial Products; he had agreed to work for an annual salary of $1 out of a sense of duty, that he was assured many times the bonuses would be paid in March 2009, and that he believed he and others were let down by Liddy's lack of support. He also stated he was going to donate his bonus to those suffering from the global economic downturn.
It was reported that Senator Christopher Dodd
(D-Con) (who first denied, then admitted to amending the legislation to allow the AIG bonuses), received $160,000 from employees of AIG.
A memo issued in 2006 by Joseph Cassano, AIG Financial Products chief executive, urged AIG employees to donate to Dodd, saying that as "next in line to become chairman of the Senate Banking, Housing, and Urban Affairs Committee... Senator Dodd will now have the opportunity to set the committee's agenda on issues critical to the financial services industry."
on April 6, 2006, for a British shirt sponsorship record £56.5 million, to be paid over four years (£14.1 million a year). The deal became the most valuable sponsorship deal in the world in September 2006, after the renegotiation and subsequent degrading of the £15 million-a-year deal Italian team Juventus had with oil firm Tamoil
. During AIG's sponsorship, Manchester United enjoyed one of its most successful periods in history, winning the Premier League three consecutive years, two Football League Cup
s, and the UEFA Champions League
.
On January 21, 2009, it was announced that AIG would not be renewing its sponsorship of the club at the end of the deal in May 2010. It is not clear, however, whether or not AIG's agreement to run MU Finance will continue. American risk consulting firm Aon Corporation was named the club's new principal sponsor on June 3, 2009, with its sponsorship of the club taking effect from the beginning of the 2010–11 season. The terms of the deal were not revealed, but it has been reported to be worth approximately £80 million over four years.
partly resolving a number of regulatory matters, but the company must still 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.
Death Bet
Circa 2010 the WSJ reported that a family sued AIG for alleged complicity in a 'stranger-originated life insurance' scheme, whereby AIG managers allegedly welcomed people without an insurable interest
to take out life insurance policies against others. The case involved JB Carlson
and Germaine Tomlinson, and was one of many similar lawsuits in the US at the time.
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.
As of October 2011.
Multinational corporation
A multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...
insurance corporation. Its corporate headquarters is located in the American International Building
American International Building
The American International Building is a 66-story, 952 foot tall building in Lower Manhattan in New York City. The official address is 70 Pine Street, New York, NY 10270 and is also bordered by Cedar Street and Pearl Street. It was completed in 1932 by the Cities Service Company for the oil and...
in New York City. The British headquarters office is on Fenchurch Street
Fenchurch Street
Fenchurch Street is a street in the City of London home to a number of shops, pubs and offices. It links Aldgate at its eastern end with Lombard Street and Gracechurch Street to the west. To the south of Fenchurch Street and towards its eastern end is Fenchurch Street railway station...
in London, continental Europe operations are based in La Défense
La Défense
La Défense is a major business district of the Paris aire urbaine. With a population of 20,000, it is centered in an orbital motorway straddling the Hauts-de-Seine département municipalities of Nanterre, Courbevoie and Puteaux...
, Paris, and its Asian headquarters office is in Hong Kong. According to the 2011 Forbes
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
Global 2000 list, AIG was the 29th-largest public company in the world. It was listed on the Dow Jones Industrial Average
Dow Jones Industrial Average
The Dow Jones Industrial Average , also called the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index, and one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow...
from April 8, 2004 to September 22, 2008.
AIG suffered from a liquidity crisis when its credit ratings were downgraded below "AA" levels in September 2008. The United States Federal Reserve Bank
Federal Reserve Bank
The twelve Federal Reserve Banks form a major part of the Federal Reserve System, the central banking system of the United States. The twelve federal reserve banks together divide the nation into twelve Federal Reserve Districts, the twelve banking districts created by the Federal Reserve Act of...
on September 16, 2008 created an $85 billion credit facility to enable the company to meet increased collateral obligations consequent to the credit rating downgrade, in exchange for the issuance of a stock warrant
Warrant (finance)
In finance, a warrant is a security that entitles the holder to buy the underlying stock of the issuing company at a fixed exercise price until the expiry date....
to the Federal Reserve Bank for 79.9% of the equity of AIG. The Federal Reserve Bank and the United States Treasury by May 2009 had increased the potential financial support to AIG, with the support of an investment of as much as $70 billion, a $60 billion credit line and $52.5 billion to buy mortgage-based assets owned or guaranteed by AIG, increasing the total amount available to as much as $182.5 billion.
AIG subsequently sold a number of its subsidiaries and other assets to pay down loans received, and continues to seek buyers of its assets.
History
AIG history dates back to 1919, when Cornelius Vander StarrCornelius Vander Starr
Cornelius Van der Starr also known as Neil Starr or CV Starr was an American businessman and Office of Strategic Services operative who founded the American International Group insurance corporation and a major philanthropic foundation.-Early life:Starr was born in Fort Bragg, California with the...
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 Mao Zedong
Mao Zedong
Mao Zedong, also transliterated as Mao Tse-tung , and commonly referred to as Chairman Mao , was a Chinese Communist revolutionary, guerrilla warfare strategist, Marxist political philosopher, and leader of the Chinese Revolution...
led the advance of the Communist People's Liberation Army
People's Liberation Army
The People's Liberation Army is the unified military organization of all land, sea, strategic missile and air forces of the People's Republic of China. The PLA was established on August 1, 1927 — celebrated annually as "PLA Day" — as the military arm of the Communist Party of China...
on Shanghai. Starr then moved the company headquarters to its current home in New York City. The company went on to expand, often through subsidiaries, into other markets, including other parts of Asia, Latin America, Europe, and the Middle East.
In 1962, Starr gave management of the company's lagging U.S. holdings to Maurice R. "Hank" Greenberg
Maurice R. Greenberg
Maurice Raymond "Hank" Greenberg is an American business executive and former chairman and CEO of American International Group , which was the world's 18th largest public company and its largest insurance and financial services corporation.He is currently chairman and CEO of C.V. Starr & Co., Inc....
, 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.
Beginning in 2005, AIG became embroiled in a series of fraud investigations conducted by the Securities and Exchange Commission, U.S. Justice Department
United States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...
, and New York State Attorney General
New York State Attorney General
The New York State Attorney General is the chief legal officer of the State of New York. The office has been in existence in some form since 1626, under the Dutch colonial government of New York.The current Attorney General is Eric Schneiderman...
's Office. Greenberg was ousted amid an accounting scandal in February 2005; he is still fighting civil charges being pursued by New York state. The New York Attorney General's investigation led to a $1.6 billion fine for AIG and criminal charges for some of its executives. Greenberg was succeeded as CEO by Martin J. Sullivan
Martin J. Sullivan
Martin J. Sullivan, OBE, , is the Deputy Chairman of Willis Group Holdings plc and Chairman and CEO of its, Willis Global Solutions, which oversees brokerage and risk management advisory services for Willis’s multinational and global accounts...
, who had begun his career at AIG as a clerk in its London office in 1970.
On June 15, 2008, after disclosure of financial losses and subsequent to a falling stock price, Sullivan resigned and was replaced by Robert B. Willumstad
Robert B. Willumstad
Robert B. Willumstad is a former Chairman and CEO of the American International Group .He was born in Brooklyn and grew up on Long Island. His alma mater is Adelphi University....
, Chairman of the AIG Board of Directors since 2006. Willumstad was forced by the US government to step down and was replaced by Edward M. Liddy
Edward M. Liddy
Edward Michael Liddy was the chairman and chief executive officer of American International Group from 2008 to 2009 during the late-2000s financial crisis.-Early life:...
on September 17, 2008. AIG's board of directors named Robert Benmosche CEO on August 3, 2009 to replace Mr. Liddy, who earlier in the year announced his retirement.
Holdings
In the United States, AIG is the largest underwriter of commercial and industrial insurance, and AIG acquired American General Life Insurance in August 2001.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
21st Century Insurance
21st Century Insurance is an auto insurance company and is wholly owned by the Farmers Insurance Group of Companies®. They are headquartered in Wilmington, Delaware, and provide private passenger auto insurance in 48 states and the District of Columbia....
in 2007 for $749 million.
With the failure of the parent company and the continuing recession in late 2008, AIG rebranded its insurance unit to 21st Century Insurance. In April 2009 it was announced that AIG was selling the 21st Century Insurance subsidiary to Farmers Insurance Group for $1.9 billion.
Travel Insurance
AIG sells travelers insurance internationally through Travel GuardTravel Guard
Travel Guard is a North American travel insurance provider. It specializes in providing travel insurance, assistance and emergency travel service plans.- History :...
, headquartered in Stevens Point, Wisconsin
Stevens Point, Wisconsin
Stevens Point is the county seat of Portage County, Wisconsin, United States. Located in the central part of the state, it is the largest city in the county, with a population of 24,551 at the 2000 census...
.
Financial crisis
Chronology of September 2008 liquidity crisis
On September 16, 2008, AIG suffered a liquidity crisisCredit crunch
A credit crunch is a reduction in the general availability of loans or a sudden tightening of the conditions required to obtain a loan from the banks. A credit crunch generally involves a reduction in the availability of credit independent of a rise in official interest rates...
following the downgrade of its credit rating
Credit rating
A credit rating evaluates the credit worthiness of an issuer of specific types of debt, specifically, debt issued by a business enterprise such as a corporation or a government. It is an evaluation made by a credit rating agency of the debt issuers likelihood of default. Credit ratings are...
. Industry practice permits firms with the highest credit ratings to enter swap
Swap (finance)
In finance, a swap is a derivative in which counterparties exchange certain benefits of one party's financial instrument for those of the other party's financial instrument. The benefits in question depend on the type of financial instruments involved...
s without depositing collateral with their trading counter-parties. When its credit rating was downgraded, the company was required to post additional collateral with its trading counter-parties, and this led to an AIG liquidity crisis. AIG's London unit sold credit protection in the form of credit default swap
Credit default swap
A credit default swap is similar to a traditional insurance policy, in as much as it obliges the seller of the CDS to compensate the buyer in the event of loan default...
s (CDSs) on collateralized debt obligation
Collateralized debt obligation
Collateralized debt obligations are a type of structured asset-backed security with multiple "tranches" that are issued by special purpose entities and collateralized by debt obligations including bonds and loans. Each tranche offers a varying degree of risk and return so as to meet investor demand...
s (CDOs) that had by that time declined in value.
The United States Federal Reserve Bank
Federal Reserve System
The Federal Reserve System is the central banking system of the United States. It was created on December 23, 1913 with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907...
announced the creation of a secured credit facility of up to US$85 billion, to prevent the company's collapse by enabling AIG to meet its obligations to deliver additional collateral to its credit default swap trading partners. The credit facility provided a structure to loan as much as US$85 billion, secured by the stock in AIG-owned subsidiaries, in exchange for warrants
Warrant (finance)
In finance, a warrant is a security that entitles the holder to buy the underlying stock of the issuing company at a fixed exercise price until the expiry date....
for a 79.9% equity stake, and the right to suspend dividends to previously issued common
Common stock
Common stock is a form of corporate equity ownership, a type of security. It is called "common" to distinguish it from preferred stock. In the event of bankruptcy, common stock investors receive their funds after preferred stock holders, bondholders, creditors, etc...
and preferred stock
Preferred stock
Preferred stock, also called preferred shares, preference shares, or simply preferreds, is a special equity security that has properties of both an equity and a debt instrument and is generally considered a hybrid instrument...
.
AIG announced the same day that its board accepted the terms of the Federal Reserve Bank's rescue package and secured credit facility.
This was the largest government bailout of a private company in U.S. history, though smaller than the bailout of Fannie Mae and Freddie Mac
Federal takeover of Fannie Mae and Freddie Mac
The federal takeover of Fannie Mae and Freddie Mac refers to the placing into conservatorship of government sponsored enterprises Fannie Mae and Freddie Mac by the U.S. Treasury in September 2008. It was one financial event among many in the ongoing subprime mortgage crisis.On September 6, 2008,...
a week earlier.
AIG's share prices had fallen over 95% to just $1.25 by September 16, 2008, from a 52-week high of $70.13. The company reported over $13.2 billion in losses in the first six months of the year.
The AIG Financial Products
AIG Financial Products
AIG Financial Products Corporation. is a subsidiary of the American International Group, headquartered in Fairfield, CT, with major operations in London, it is currently in the process of winding down all of its operations. The collapse of AIG Financial Products is considered to have played a...
division headed by Joseph Cassano
Joseph Cassano
Joseph J. "Joe" Cassano is an American insurance executive who was an officer at AIG Financial Products from the division's founding in 1987 until his resignation in February 2008. Cassano is considered a key figure in the Global financial crisis of 2008–2009...
, in London, had entered into credit default swaps to insure $441 billion worth of securities originally rated AAA. Of those securities, $57.8 billion were structured debt securities backed by subprime loans.
CNN
CNN
Cable News Network is a U.S. cable news channel founded in 1980 by Ted Turner. Upon its launch, CNN was the first channel to provide 24-hour television news coverage, and the first all-news television channel in the United States...
named Cassano as one of the "Ten Most Wanted: Culprits" of the 2008 financial collapse in the United States.
As Lehman Brothers
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
(the largest bankruptcy in U.S. history at that time) suffered a catastrophic decline in share price, investors began comparing the types of securities held by AIG and Lehman, and found that AIG had valued its Alt-A
Alt-A
An Alt-A mortgage, short for Alternative A-paper, is a type of U.S. mortgage that, for various reasons, is considered riskier than A-paper, or "prime", and less risky than "subprime," the riskiest category. Alt-A interest rates, which are determined by credit risk, therefore tend to be between...
and sub-prime mortgage-backed securities at 1.7 to 2 times the values used by Lehman which weakened investors' confidence in AIG.
On September 14, 2008, AIG announced it was considering selling its aircraft leasing division, International Lease Finance Corporation
International Lease Finance Corporation
The International Lease Finance Corporation is an aircraft lessor headquartered in Century City, Los Angeles, California.It is the world's largest aircraft lessor by value, though ILFC's rival, General Electric's GECAS unit, has more aircraft...
, to raise cash.
The Federal Reserve hired Morgan Stanley
Morgan Stanley
Morgan Stanley is a global financial services firm headquartered in New York City serving a diversified group of corporations, governments, financial institutions, and individuals. Morgan Stanley also operates in 36 countries around the world, with over 600 offices and a workforce of over 60,000....
to determine if there are systemic risk
Systemic risk
In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to risk associated with any one individual entity, group or component of a system. It can be defined as "financial system instability, potentially catastrophic, caused or exacerbated by...
s to a financial failure of AIG, and asked private entities to supply short-term bridge loan
Bridge loan
A bridge loan is a type of short-term loan, typically taken out for a period of 2 weeks to 3 years pending the arrangement of larger or longer-term financing.-Description:A bridge loan is interim financing for an individual or business until...
s to the company. In the meantime, New York regulators allowed AIG to borrow $20 billion from its subsidiaries.
At the stock market's opening on September 16, 2008, AIG's stock dropped 60 percent.
The Federal Reserve continued to meet that day with major Wall Street investment firms, hoping to broker a deal for a non-governmental $75 billion line of credit to the company.
Rating agencies Moody's
Moody's
Moody's Corporation is the holding company for Moody's Analytics and Moody's Investors Service, a credit rating agency which performs international financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized...
and Standard and Poor downgraded AIG's credit ratings
Bond credit rating
In investment, the bond credit rating assesses the credit worthiness of a corporation's or government debt issues. It is analogous to credit ratings for individuals.-Table:...
on concerns over likely continuing losses on mortgage-backed securities. The credit rating downgrade forced the company to deliver collateral of over $10 billion to certain creditors and CDS counter-parties.
The New York Times
The New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...
later reported that talks on Wall Street had broken down and AIG may file for bankruptcy protection on Wednesday, September 17.
Just before the bailout by the US Federal Reserve, AIG former CEO Maurice (Hank) Greenberg sent an impassioned letter to AIG CEO Robert B. Willumstad offering his assistance in any way possible, ccing
Carbon copy
Carbon copying, abbreviated cc or c.c., is the technique of using carbon paper to produce one or more copies simultaneously during the creation of paper documents...
the Board of Directors. His offer was rebuffed.
Federal Reserve bailout
On the evening of September 16, 2008, the Federal Reserve BankFederal Reserve Bank
The twelve Federal Reserve Banks form a major part of the Federal Reserve System, the central banking system of the United States. The twelve federal reserve banks together divide the nation into twelve Federal Reserve Districts, the twelve banking districts created by the Federal Reserve Act of...
's Board of Governors announced that the Federal Reserve Bank of New York
Federal Reserve Bank of New York
The Federal Reserve Bank of New York is one of the 12 Federal Reserve Banks of the United States. It is located at 33 Liberty Street, New York, NY. It is responsible for the Second District of the Federal Reserve System, which encompasses New York state, the 12 northern counties of New Jersey,...
had been authorized to create a 24-month credit-liquidity facility from which AIG could draw up to $85 billion. The loan was collateralized
Collateral (finance)
In lending agreements, collateral is a borrower's pledge of specific property to a lender, to secure repayment of a loan.The collateral serves as protection for a lender against a borrower's default - that is, any borrower failing to pay the principal and interest under the terms of a loan obligation...
by the assets of AIG, including its non-regulated subsidiaries and the stock of "substantially all" of its regulated subsidiaries, and with an interest rate of 850 basis point
Basis point
A basis point is a unit equal to 1/100 of a percentage point or one part per ten thousand...
s over the three-month London Interbank Offered Rate
London Interbank Offered Rate
The LIBOR rate is the average interest rate that leading banks in London charge when lending to other banks. It is an acronym for London Interbank Offered Rate Banks borrow money for one day, one month, two months, six months, one year etc. and they pay interest to their lenders based on...
(LIBOR) (i.e., LIBOR plus 8.5%). In exchange for the credit facility, the U.S. government received warrants for a 79.9 percent equity stake in AIG, with the right to suspend the payment of dividends to AIG common and preferred shareholders.
The credit facility was created under the auspices of Section 13(3) of the Federal Reserve Act
Federal Reserve Act
The Federal Reserve Act is an Act of Congress that created and set up the Federal Reserve System, the central banking system of the United States of America, and granted it the legal authority to issue Federal Reserve Notes and Federal Reserve Bank Notes as legal tender...
.
AIG's board of directors announced approval of the loan transaction in a press release the same day. The announcement did not comment on the issuance of a warrant for 79.9% of AIG's equity, but the AIG 8-K filing of September 18, 2008, reporting the transaction to the Securities and Exchange Commission stated that a warrant for 79.9% of AIG shares had been issued to the Board of Governors of the Federal Reserve.
AIG drew down US$ 28 billion of the credit-liquidity facility on September 17, 2008.
On September 22, 2008, AIG was removed from the Dow Jones Industrial Average
Dow Jones Industrial Average
The Dow Jones Industrial Average , also called the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index, and one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow...
.
An additional $37.8 billion credit facility was established in October. As of October 24, AIG had drawn a total of $90.3 billion from the emergency loan, of a total $122.8 billion.
Maurice Greenberg
Maurice R. Greenberg
Maurice Raymond "Hank" Greenberg is an American business executive and former chairman and CEO of American International Group , which was the world's 18th largest public company and its largest insurance and financial services corporation.He is currently chairman and CEO of C.V. Starr & Co., Inc....
, former CEO of AIG, on September 17, 2008, characterized the bailout as a nationalization
Nationalization
Nationalisation, also spelled nationalization, is the process of taking an industry or assets into government ownership by a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being...
of AIG. He also stated that he was bewildered by the situation and was at a loss over how the entire situation got out of control as it did.
On September 17, 2008, Federal Reserve Board chair Ben Bernanke
Ben Bernanke
Ben Shalom Bernanke is an American economist, and the current Chairman of the Federal Reserve, the central bank of the United States. During his tenure as Chairman, Bernanke has overseen the response of the Federal Reserve to late-2000s financial crisis....
asked Treasury Secretary Henry Paulson
Henry Paulson
Henry Merritt "Hank" Paulson, Jr. is an American banker who served as the 74th United States Secretary of the Treasury. He previously served as the Chairman and Chief Executive Officer of Goldman Sachs.-Early life and family:...
join him, to call on members of Congress, to describe the need for a congressionally authorized bailout of the nation's banking system. Weeks later, Congress approved the Emergency Economic Stabilization Act of 2008
Emergency Economic Stabilization Act of 2008
The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 (Division A of , commonly referred to as a bailout of the U.S. financial system, is a law enacted in response to the subprime mortgage crisis...
.
Bernanke said to Paulson on September 17, "We can’t keep doing this. Both because we at the Fed don’t have the necessary resources and for reasons of democratic legitimacy, it's important that the Congress come in and take control of the situation."
Additional Bailouts of 2008
From mid September till early November, AIG's credit-default spreads were steadily rising, implying the company was heading for default.On November 10, 2008, the U.S. Treasury announced it would purchase $40 billion in newly issued AIG senior preferred stock, under the authority of the Emergency Economic Stabilization Act's Troubled Asset Relief Program.
The FRBNY announced that it would modify the September 16 secured credit facility; the Treasury investment would permit a reduction in its size from $85 billion to $60 billion, and that the FRBNY would extend the life of the facility from three to five years, and change the interest rate from 8.5% plus the three-month London interbank offered rate
London Interbank Offered Rate
The LIBOR rate is the average interest rate that leading banks in London charge when lending to other banks. It is an acronym for London Interbank Offered Rate Banks borrow money for one day, one month, two months, six months, one year etc. and they pay interest to their lenders based on...
(LIBOR) for the total credit facility, to 3% plus LIBOR for funds drawn down, and 0.75% plus LIBOR for funds not drawn, and that AIG would create two off- balance-sheet Limited Liability Companies (LLC) to hold AIG assets: one will act as an AIG Residential Mortgage-Backed Securities Facility and the second to act as an AIG Collateralized Debt Obligations Facility.
Federal officials said the $40 billion investment would ultimately permit the government to reduce the total exposure to AIG to $112 billion from $152 billion.
On December 15, 2008, the Thomas More Law Center
Thomas More Law Center
The Thomas More Law Center is a prominent conservative Christian, not-for-profit law center based in Ann Arbor, Michigan, and is active throughout the United States. Its stated goals are defending the religious freedom of Christians, restoring "time honored values" and protecting the sanctity of...
filed suit to challenge the Emergency Economic Stabilization Act of 2008, alleging that it unconstitutionally promotes Islamic law (Sharia
Sharia
Sharia law, is the moral code and religious law of Islam. Sharia is derived from two primary sources of Islamic law: the precepts set forth in the Quran, and the example set by the Islamic prophet Muhammad in the Sunnah. Fiqh jurisprudence interprets and extends the application of sharia to...
) and religion. The lawsuit was filed because AIG provides Takaful Insurance Plans, which, according to the company, avoid investments and transactions that are"un-Islamic".
Counterparty controversy
AIG was required to post additional collateral with many creditors and counter-parties, touching off controversy when over $100 billion was paid out to major global financial institutions that had previously received TARP money. While this money was legally owed to the banks by AIG (under agreements made via credit default swapCredit default swap
A credit default swap is similar to a traditional insurance policy, in as much as it obliges the seller of the CDS to compensate the buyer in the event of loan default...
s 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. In January, 2010, a document known as "Schedule A – List of Derivative Transactions" was released to the public, against the wishes of the New York Fed. It listed many of the insurance deals that AIG had with various other parties, such as Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
, Société Générale
Société Générale
Société Générale S.A. is a large European Bank and a major Financial Services company that has a substantial global presence. Its registered office is on Boulevard Haussmann in the 9th arrondissement of Paris, while its head office is in the Tours Société Générale in the business district of La...
, Deutsche Bank
Deutsche Bank
Deutsche Bank AG is a global financial service company with its headquarters in Frankfurt, Germany. It employs more than 100,000 people in over 70 countries, and has a large presence in Europe, the Americas, Asia Pacific and the emerging markets...
, and Merrill Lynch
Merrill Lynch
Merrill Lynch is the wealth management division of Bank of America. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill Lynch & Co., Inc., prior to 2009 the firm was publicly owned and traded on the New York...
.
Had AIG been allowed to fail in a controlled manner through bankruptcy, bondholders and derivative counterparties (major banks) would have suffered significant losses, limiting the amount of taxpayer funds directly used. Fed Chairman Ben Bernanke argued: "If a federal agency had [appropriate authority] on September 16, [2008], they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors and counterparties as appropriate. That outcome would have been far preferable to the situation we find ourselves in now." The "situation" to which he is referring is that the claims of bondholders and counterparties were paid at 100 cents on the dollar by taxpayers, without giving taxpayers the rights to the future profits of these institutions. In other words, the benefits went to the banks while the taxpayers suffered the costs.
Post-bailout expenditures
The week following the September bailout, AIG employees and distributors participated in a California retreat which cost $444,000 and featured spa treatments, banquets, and golf outings.It was reported that the trip was a reward for top-performing life-insurance agents planned before the bailout.
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.
AP reported on October 17 that AIG executives spent $86,000 on a previously scheduled 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."
An October 30, 2008 article from CNBC
CNBC
CNBC is a satellite and cable television business news channel in the U.S., owned and operated by NBCUniversal. The network and its international spinoffs cover business headlines and provide live coverage of financial markets. The combined reach of CNBC and its siblings is 390 million viewers...
reported that AIG had already drawn upon $90 billion of the $123 billion allocated for loans.
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
Phoenix, Arizona
Phoenix is the capital, and largest city, of the U.S. state of Arizona, as well as the sixth most populated city in the United States. Phoenix is home to 1,445,632 people according to the official 2010 U.S. Census Bureau data...
.
Settlement of credit default swaps
On October 22, 2008, those creditors of Lehman Brothers who bought credit default swapCredit default swap
A credit default swap is similar to a traditional insurance policy, in as much as it obliges the seller of the CDS to compensate the buyer in the event of loan default...
s to hedge them against Lehman bankruptcy settled those accounts. The net payments were $5.2 billion
even though initial estimates of the amount of the settlement were between $100 billion and $400 billion.
By December 2008, AIG had paid at least $18.7 billion to various financial institutions, including Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
and Société Générale
Société Générale
Société Générale S.A. is a large European Bank and a major Financial Services company that has a substantial global presence. Its registered office is on Boulevard Haussmann in the 9th arrondissement of Paris, while its head office is in the Tours Société Générale in the business district of La...
to retire obligations related to credit default swaps (CDS). As much as $53.5 billion related to swap payouts are part of the bailout.
On March 15, 2009, under mounting pressure from Congress and after consultation with the Federal Reserve, AIG disclosed a list of major recipients of collateral postings and payments under credit default swap
Credit default swap
A credit default swap is similar to a traditional insurance policy, in as much as it obliges the seller of the CDS to compensate the buyer in the event of loan default...
s, guaranteed investment agreements, and securities lending agreements. Below is data from one of the charts AIG released, representing only a portion of the total payouts, over a period of a few months.
| Counterparty | US $ posted | Counterparty | US $ posted |
|---|---|---|---|
| Société Générale Société Générale Société Générale S.A. is a large European Bank and a major Financial Services company that has a substantial global presence. Its registered office is on Boulevard Haussmann in the 9th arrondissement of Paris, while its head office is in the Tours Société Générale in the business district of La... |
$4,100,000,000 | Deutsche Bank Deutsche Bank Deutsche Bank AG is a global financial service company with its headquarters in Frankfurt, Germany. It employs more than 100,000 people in over 70 countries, and has a large presence in Europe, the Americas, Asia Pacific and the emerging markets... |
$2,600,000,000 |
| Goldman Sachs Goldman Sachs The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients... |
$2,500,000,000 | Merrill Lynch Merrill Lynch Merrill Lynch is the wealth management division of Bank of America. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill Lynch & Co., Inc., prior to 2009 the firm was publicly owned and traded on the New York... |
$1,800,000,000 |
| Calyon Calyon Crédit Agricole Corporate and Investment Bank is Crédit Agricole's corporate and investment banking entity. With a staff of 13,000 employees in 58 countries, Crédit Agricole CIB is active in a broad range of capital markets, investment banking and financing activities... |
$1,100,000,000 | Barclays | $900,000,000 |
| UBS | $800,000,000 | DZ Bank DZ Bank DZ Bank AG is an acronym for Deutsche Zentral-Genossenschaftbank . DZ Bank is the fourth largest bank in Germany by asset size and the central institution for more than 900 co-operative banks and their 12,000 branch offices... |
$700,000,000 |
| Wachovia Wachovia Wachovia was a diversified financial services company based in Charlotte, North Carolina. Before its acquisition by Wells Fargo in 2008, Wachovia was the fourth-largest bank holding company in the United States based on total assets... |
$700,000,000 | Rabobank Rabobank Rabobank is a financial services provider with offices worldwide. Their main location is in the Netherlands. They are a global leader in Food and Agri financing and in sustainability-oriented banking... |
$500,000,000 |
| KFW KFW KFW may refer to:*Keith Fullerton Whitman , an American musician*KfW or Kreditanstalt für Wiederaufbau, a German public-sector financial institution... |
$500,000,000 | JPMorgan | $400,000,000 |
| Banco Santander | $300,000,000 | Danske Bank Danske Bank Danske Bank is a Danish bank. The name literally means "Danish Bank" It was founded 5 October 1871 as Den Danske Landmandsbank, Hypothek- og Vexelbank i Kjøbenhavn .... |
$200,000,000 |
| Reconstruction Finance Corporation | $200,000,000 | HSBC Bank HSBC HSBC Holdings plc is a global banking and financial services company headquartered in Canary Wharf, London, United Kingdom. it is the world's second-largest banking and financial services group and second-largest public company according to a composite measure by Forbes magazine... |
$200,000,000 |
| Morgan Stanley Morgan Stanley Morgan Stanley is a global financial services firm headquartered in New York City serving a diversified group of corporations, governments, financial institutions, and individuals. Morgan Stanley also operates in 36 countries around the world, with over 600 offices and a workforce of over 60,000.... |
$200,000,000 | Bank of America Bank of America Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina... |
$200,000,000 |
| Bank of Montreal Bank of Montreal The Bank of Montreal , , or BMO Financial Group, is the fourth largest bank in Canada by deposits. The Bank of Montreal was founded on June 23, 1817 by John Richardson and eight merchants in a rented house in Montreal, Quebec. On May 19, 1817 the Articles of Association were adopted, making it... |
$200,000,000 | Royal Bank of Scotland Royal Bank of Scotland The Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the... |
$200,000,000 |
| Other (unknown) | $4,100,000,000 |
Sales of assets
AIG since September 2008 has marketed its assets to pay off its government loans. A global decline in the valuation of insurance businesses, and the weakening financial condition of potential bidders, has challenged its efforts. If the U.S. government decides to continue to protect the company from falling into bankruptcy, it may have to take the assets itself in exchange for the loans, or offer further direct financial support.As of September 6, 2009, The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
reported that Pacific Century Group
Pacific Century Regional Developments Limited
Pacific Century Regional Developments Limited is a Singapore based company owned by Hong Kong's Richard Li, son of Hong Kong billionaire Li Ka Shing.PCRD Limited focus is a telecommunications services provider, as well as sales and services activities...
had agreed to pay $500 million for a part of American International Group's asset management business, and that they also expected to pay an additional $200 million to AIG in carried interest and other payments linked to future performance of the business.
Also in 2009, AIG sold its operations in Colombia to Ecuador's Banco del Pichincha
Banco del Pichincha
The Banco del Pichincha is the largest private bank in Ecuador, by capitalization and by number of depositors. It is the primary bank of the Pichincha Group , a business group that includes the companies associated with the bank and businesses related to Fidel Egas Grijalva and his family, which...
.
On March 1, 2010, insurance company Prudential
Prudential plc
Prudential plc is a multinational financial services company headquartered in London, United Kingdom.Prudential's largest division is Prudential Corporation Asia, which has over 15 million customers across 13 Asian markets and is a top-three provider of life insurance in mainland China, Hong...
confirmed that it was in advanced negotiations to buy the Asian operations of AIG. Prudential was to buy the pan-Asian life insurance company, American International Assurance (AIA), for approximately $35.5 billion. On June 1, 2010 the deal failed because AIG would not accept the $30.5 billion after Prudential lowered the amount by $5 billion from the originally planned $35.5 billion after Prudential shareholder discontent.
AIG agreed on March 8, 2010, to sell its American Life Insurance Co. unit (ALICO) to MetLife Inc. for $15.5 billion in cash and stock by November 1, 2010. Alico has annuities, life and health insurance operations in Japan, Middle East (including Nepal, Bangladesh and Pakistan), Western and Eastern Europe, Latin America and the Caribbean. AIG said it will sell Alico for $6.8 billion in cash and the remainder in MetLife equity. The deal leaves AIG as the second-largest shareholder of MetLife, with a stake of more than 20% in the company.
On March 29, 2010, Bloomberg L.P.
Bloomberg L.P.
Bloomberg L.P. is an American privately held financial software, media, and data company. Bloomberg makes up one third of the $16 billion global financial data market with estimated revenue of $6.9 billion. Bloomberg L.P...
reported that after almost three months of delays, AIG had completed the $500 million sale of a portion of its asset management business, branded PineBridge Investments, to the Asia-based Pacific Century Group
Pacific Century Regional Developments Limited
Pacific Century Regional Developments Limited is a Singapore based company owned by Hong Kong's Richard Li, son of Hong Kong billionaire Li Ka Shing.PCRD Limited focus is a telecommunications services provider, as well as sales and services activities...
.
On September 30, 2010, AIG announced an agreement to sell two of its life insurance companies in Japan, AIG Star and AIG Edison, to Prudential Financial for $4.2 billion in cash and $600 million in the assumption of third party debt to help repay some of the money owed to the U.S. government.
On November 1, 2010, AIG announced it had raised $36.71 billion from the sale of ALICO and an initial public offering for AIA. The company will use the proceeds Federal Reserve Bank of New York credit facility and make payments on other interests owned by the government.
On September 2, 2011, AIG filed with the SEC to spin off their aircraft leasing firm, International Lease Finance Corporation
International Lease Finance Corporation
The International Lease Finance Corporation is an aircraft lessor headquartered in Century City, Los Angeles, California.It is the world's largest aircraft lessor by value, though ILFC's rival, General Electric's GECAS unit, has more aircraft...
(ILFC), in an initial public offering.
Record losses
On March 2, 2009, AIG reported a fourth quarter loss of $61.7bn (£43bn) and revenue of −$23.7bn (−£16.2bn) for the final three months of 2008. This was the largest quarterly loss in corporate historyCorporate history
A corporate history is a chronological account of a business or other co-operative organization. Usually it is produced in written format but it can also be done in audio or audiovisually...
at that time.
The announcement of the loss had an impact on morning trading in Europe and Asia, with the FTSE100, DAX
DAX
The DAX is a blue chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. Prices are taken from the electronic Xetra trading system...
and Nikkei
Nikkei 225
The , more commonly called the Nikkei, the Nikkei index, or the Nikkei Stock Average , is a stock market index for the Tokyo Stock Exchange . It has been calculated daily by the Nihon Keizai Shimbun newspaper since 1950. It is a price-weighted average , and the components are reviewed once a year...
all suffering sharp falls. In the US the Dow Jones Industrial Average
Dow Jones Industrial Average
The Dow Jones Industrial Average , also called the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index, and one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow...
fell to below 7000 points, a twelve-year low. 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.
The Treasury Department suggested that the potential losses to the US and global economy would be 'extremely high' if it were to collapse 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.
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 'systemic risk' to the global economy.
The fourth quarter result meant the company made a $99.29 billion loss for the whole of 2008,
with five consecutive quarters of losses costing the company well over $100 billion.
In a testimony before the Senate Budget Committee on March 3, 2009, the Federal Reserve Chairman Ben Bernanke
Ben Bernanke
Ben Shalom Bernanke is an American economist, and the current Chairman of the Federal Reserve, the central bank of the United States. During his tenure as Chairman, Bernanke has overseen the response of the Federal Reserve to late-2000s financial crisis....
stated that "AIG exploited a huge gap in the regulatory system," ... and "to nobody's surprise, made irresponsible bets and took huge losses".
2009 employee bonus payments
In March 2009, AIG announced that they were paying $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.President Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...
, who voted for the AIG bailout as a Senator
responded to the planned payments by saying "[I]t's hard to understand how derivative traders at AIG 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, AIG 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."
Chuck Grassley
Charles Ernest "Chuck" Grassley is the senior United States Senator from Iowa . A member of Republican Party, he previously served in the served in the United States House of Representatives and the Iowa state legislature...
(R-Iowa) said "I would suggest the first thing that would make me feel a little bit better toward them if they'd follow the Japanese example
Seppuku
is a form of Japanese ritual suicide by disembowelment. Seppuku was originally reserved only for samurai. Part of the samurai bushido honor code, seppuku was either used voluntarily by samurai to die with honor rather than fall into the hands of their enemies , or as a form of capital punishment...
and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide."
Senator Chuck Schumer (D-New York) accused AIG of "Alice in Wonderland
Alice's Adventures in Wonderland
Alice's Adventures in Wonderland is an 1865 novel written by English author Charles Lutwidge Dodgson under the pseudonym Lewis Carroll. It tells of a girl named Alice who falls down a rabbit hole into a fantasy world populated by peculiar, anthropomorphic creatures...
business practices" and said "It boggles the mind." He has threatened to tax the bonuses at up to 100%.
Senator Richard Shelby
Richard Shelby
Richard Craig Shelby is the senior U.S. Senator from Alabama. First elected to the Senate in 1986, he is the ranking member of the United States Senate Committee on Banking, Housing, and Urban Affairs and was its chairman from 2003 to 2007....
(R-Alabama) said "These people brought this on themselves. Now you're rewarding failure. A lot of these people should be fired, not awarded bonuses. This is horrible. It's outrageous." Senator Mitch McConnell
Mitch McConnell
Addison Mitchell "Mitch" McConnell, Jr. is the senior United States Senator from Kentucky and the Republican Minority Leader.- Early life, education, and military service :...
(R-Kentucky) echoed his comments, saying "This is an outrage."
Senator Jon Tester
Jon Tester
Jon Tester is the junior U.S. Senator for Montana, serving since 2007. He is a member of the Democratic Party. He previously served as President of the Montana Senate.-Early life, education, and farming career:...
(D-Montana) said "This is ridiculous." and AIG executives "need to understand that the only reason they even have a job is because of the taxpayers."
Senator Dick Durbin (D-Illinois) said "I've had it." and "The fact that they continue to do it while we pour in billions of dollars is indefensible."
Representative Barney Frank
Barney Frank
Barney Frank is the U.S. Representative for . A member of the Democratic Party, he is the former chairman of the House Financial Services Committee and is considered the most prominent gay politician in the United States.Born and raised in New Jersey, Frank graduated from Harvard College and...
(D-Massachusetts), Chairman of the House Financial Services Committee, said paying these bonuses would be "rewarding incompetence" and "These people may have a right to their bonuses. They don't have a right to their jobs forever."
Representative Mark Kirk
Mark Kirk
Mark Steven Kirk is the junior United States Senator from Illinois and a member of the Republican Party. Previously, Kirk was a member of the United States House of Representatives, representing Illinois's 10th congressional district....
(R-Illinois) said "AIG should not be on welfare from Uncle Sam, and yet paying bonuses and transferring a considerable amount of taxpayer funds to entities overseas."
Federal Reserve
Federal Reserve System
The Federal Reserve System is the central banking system of the United States. It was created on December 23, 1913 with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907...
Chairman Ben Bernanke
Ben Bernanke
Ben Shalom Bernanke is an American economist, and the current Chairman of the Federal Reserve, the central bank of the United States. During his tenure as Chairman, Bernanke has overseen the response of the Federal Reserve to late-2000s financial crisis....
said "It makes me angry. I slammed the phone more than a few times on discussing AIG."
Lawrence Summers
Lawrence Summers
Lawrence Henry Summers is an American economist. He served as the 71st United States Secretary of the Treasury from 1999 to 2001 under President Bill Clinton. He was Director of the White House United States National Economic Council for President Barack Obama until November 2010.Summers is the...
, Director of the National Economic Council, said "The easy thing would be to just say, you know, ‘Off with their heads
French Revolution
The French Revolution , sometimes distinguished as the 'Great French Revolution' , was a period of radical social and political upheaval in France and Europe. The absolute monarchy that had ruled France for centuries collapsed in three years...
,’ and violate the contracts."
Austan Goolsbee
Austan Goolsbee
Austan Dean Goolsbee is an American economist, formerly serving as the Chairman of the Council of Economic Advisers and the youngest member of the cabinet of President Barack Obama. Goolsbee is from the University of Chicago where he is the Robert P...
, of the Council of Economic Advisers
Council of Economic Advisers
The Council of Economic Advisers is an agency within the Executive Office of the President that advises the President of the United States on economic policy...
said "I don't know why they would follow a policy that's really not sensible, is obviously going to ignite the ire of millions of people." and "You worry about that backlash."
Political commentators and journalists expressed an equally bipartisan outrage.
On March 24, 2009, The New York Times
The New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...
printed the resignation letter of Jake DeSantis, executive vice president of AIG's financial products unit, to Edward M. Liddy, the chief executive of AIG. DeSantis stated he had nothing to do with the credit default swaps, he lost much of his life savings in the form of deferred compensation invested in the capital of AIG Financial Products; he had agreed to work for an annual salary of $1 out of a sense of duty, that he was assured many times the bonuses would be paid in March 2009, and that he believed he and others were let down by Liddy's lack of support. He also stated he was going to donate his bonus to those suffering from the global economic downturn.
It was reported that Senator Christopher Dodd
Christopher Dodd
Christopher John "Chris" Dodd is an American lawyer, lobbyist, and Democratic Party politician who served as a United States Senator from Connecticut for a thirty-year period ending with the 111th United States Congress....
(D-Con) (who first denied, then admitted to amending the legislation to allow the AIG bonuses), received $160,000 from employees of AIG.
A memo issued in 2006 by Joseph Cassano, AIG Financial Products chief executive, urged AIG employees to donate to Dodd, saying that as "next in line to become chairman of the Senate Banking, Housing, and Urban Affairs Committee... Senator Dodd will now have the opportunity to set the committee's agenda on issues critical to the financial services industry."
Manchester United Sponsorship
AIG was the principal sponsor of English football club Manchester United from 2006–2010, and as part of the sponsorship deal, its logo was prominently displayed on the front of the club's jerseys and other merchandise. The AIG deal was announced by Manchester United chief executive David GillDavid Gill (executive)
David Alan Gill is British football executive, currently Chief Executive of Manchester United F.C. and a board member of the Football Association...
on April 6, 2006, for a British shirt sponsorship record £56.5 million, to be paid over four years (£14.1 million a year). The deal became the most valuable sponsorship deal in the world in September 2006, after the renegotiation and subsequent degrading of the £15 million-a-year deal Italian team Juventus had with oil firm Tamoil
Tamoil
Tamoil is the trading name of the Oilinvest B.V. Group, a European based downstream oil group.The Tamoil Group, which was purchased by Libyan state entities in the late 1980s, is involved in supplying, trading, refining and selling petroleum products.Recently, Roger Tamraz’s Netoil group of...
. During AIG's sponsorship, Manchester United enjoyed one of its most successful periods in history, winning the Premier League three consecutive years, two Football League Cup
Football League Cup
The Football League Cup, commonly known as the League Cup or, from current sponsorship, the Carling Cup, is an English association football competition. Like the FA Cup, it is played on a knockout basis...
s, and the UEFA Champions League
UEFA Champions League
The UEFA Champions League, known simply the Champions League and originally known as the European Champion Clubs' Cup or European Cup, is an annual international club football competition organised by the Union of European Football Associations since 1955 for the top football clubs in Europe. It...
.
On January 21, 2009, it was announced that AIG would not be renewing its sponsorship of the club at the end of the deal in May 2010. It is not clear, however, whether or not AIG's agreement to run MU Finance will continue. American risk consulting firm Aon Corporation was named the club's new principal sponsor on June 3, 2009, with its sponsorship of the club taking effect from the beginning of the 2010–11 season. The terms of the deal were not revealed, but it has been reported to be worth approximately £80 million over four years.
Share buyback
Due to the Q3 2011 net loss widened, so on November 3, 2011 the AIG shares has plunged 49 percent year to date. The insurer's board has approved the share buyback of as much as $1 billion.Litigation
In November 2004, AIG reached a US$126 million settlement with the U.S. Securities and Exchange Commission and the Justice DepartmentUnited States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...
partly resolving a number of regulatory matters, but the company must still 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
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the 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.
Death Bet
Circa 2010 the WSJ reported that a family sued AIG for alleged complicity in a 'stranger-originated life insurance' scheme, whereby AIG managers allegedly welcomed people without an insurable interest
Insurable interest
Insurable interest exists when an insured person derives a financial or other kind of benefit from the continuous existence of the insured object...
to take out life insurance policies against others. The case involved JB Carlson
JB Carlson
JB Carlson is an American businessman, entrepreneur and CEO. Carlson founded The Carlson Corporation in 1993 , The JB Carlson Corporation and Carlson Media Group, Inc...
and Germaine Tomlinson, and was one of many similar lawsuits in the US at the time.
Accounting fraud claims
On October 14, 2004 the New York State Office of Attorney General Eliot SpitzerEliot Spitzer
Eliot Laurence Spitzer is an American lawyer, former Democratic Party politician, and political commentator. He was the co-host of In the Arena, a talk-show and punditry forum broadcast on CNN until CNN cancelled his show in July of 2011...
announced that it had commenced a civil action against Marsh & McLennan Companies
Marsh & McLennan Companies
Marsh & McLennan Companies, Inc. is a US-based global professional services and insurance brokerage firm. In 2007, it had over 57,000 employees and annual revenues of $10.49 billion. Marsh & McLennan Companies was ranked the 221st largest corporation in the United States by the 2009 Fortune 500...
for steering clients to preferred insurers with whom the company maintained lucrative payoff agreements
Bribery
Bribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...
, 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.
Board of directors
- Robert H. Benmosche – President and Chief Executive Officer, American International Group, Inc.
- W. Don CornwellW. Don CornwellW. Don Cornwell is the former CEO, Chairman, and co-founder of Granite Broadcasting . He stepped down as CEO on August 31, 2009 and will remain as a Vice Chairman and member of the Board of Directors until December 31, 2009...
– Former Chairman of the Board and Chief Executive Officer, Granite Broadcasting Corporation - John H. Fitzpatrick – Chairman, Oak Street Management Co., LLC
- Laurette T. Koellner – Former Senior Vice President, The Boeing Company and Former President Boeing International
- Donald H. Layton – Former Chairman and Chief Executive Officer, E*Trade Financial Corporation
- Christopher S. Lynch – Former Partner, KPMG LLP
- Arthur C. Martinez – Former Chairman of the Board, President and Chief Executive Officer, Sears, Roebuck and Co.
- George L. Miles, Jr. – President and Chief Executive Officer, WQED Multimedia
- Henry S. Miller – Chairman and Managing Director, Miller Buckfire & Co., LLC
- Robert S. MillerRobert S. MillerRobert S. "Steve" Miller was hired as Delphi chairman by General Motors and Delphi Corporation to file bankruptcy. Known as a restructuring expert, he was hired to slash costs and close unprofitable operations. Miller, who was hired in July 2005 filed bankruptcy Saturday, October 8, 2005. ...
– Non-Executive Chairman of the Board, American International Group, Inc. - Suzanne Nora JohnsonSuzanne Nora JohnsonSuzanne Nora Johnson is an American corporate lawyer and executive. Until 2007, she was Vice Chairman of Goldman Sachs, Chairman of the Global Markets Institute, head of the firm's Global Investment Research Division, and a member of the firm's Management Committee.Johnson joined Goldman Sachs in...
– Former Vice Chairman, The Goldman Sachs Group, Inc. - Morris W. OffitMorris W. OffitMorris W. Offit is an American businessman. He is Co-Chief Executive Officer Offit Hall Capital Management LLC, Founder and Former Chief Executive Officer OFFITBANK and Independent director of American International Group, elected to the Board of Directors and chairman of the Audit Committee in...
– Chairman, Offit Capital Advisors LLC - Ronald A. Rittenmeyer – Former Chairman, Chief Executive Officer and President, Electronic Data Systems Corporation
- Douglas M. Steenland – Former President and Chief Executive Officer, Northwest Airlines Corporation
As of October 2011.
See also
- AIG Advisor GroupAIG Advisor GroupAIG Advisor Group, a subsidiary of American International Group, is the largest network of independent broker-dealers in the U.S.A., with over 10,000 registered representatives, many of whom are also investment advisors...
- AIG RetirementAIG RetirementFounded in 1955 as The Variable Annuity Life Insurance Company of America, Incorporated, located in Washington, D.C., VALIC was reorganized in the State of Texas in 1968. On November 5, 1968, the company name was changed to The Variable Annuity Life Insurance Company . VALIC has more than half a...
- Bailout (finance)
- ChartisChartisChartis , is a division of AIG in the process of being spun off, formerly referred to as the 'Property Casualty Insurance' part of AIG...
- Global financial crisis of 2008–2009
- Lemon socialismLemon socialism"Lemon socialism" is a pejorative term for government support of private-sector companies whose imminent collapse is perceived to threaten broader economic stability. Some assert it is not a subcategory of socialism per se; rather, it points to a corruption of free-market capitalist systems, which...
- List of United States insurance companies
- MBIA