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American International Group (AIG) in New York City

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American International Group (AIG) in New York City
Table of Contents
  1. American International Group (AIG)
  2. History of AIG
  3. AIG- its operations
  4. AIG- Present Situation
  5. Comment
  6. References

In order to explore American International Group (AIG) fully this paper has been broken into several parts namely:

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  1. American International Group (AIG) – gives a definition of the company
  2. History of AIG – details how the company was conceived
  3. AIG- its operations – details what the company is concerned with
  4. AIG- Present Situation- details the current situation facing the company
  5. Comment – gives a personal account of the company as at present

American International Group (AIG)

American International Group (AIG) is a major American insurance corporation that has its headquarters in New York City. Its functions are carried through branches found distributed in around 130 jurisdictions and countries all over the world (Campanella, 23-50). The company’s United Kingdoms headquarter is located in Fenchurch Street in London, while continental operations of the company are anchored at La Defense. Continental operations in Asia and Paris are carried via Hong Kong Headquarters.

Paris and its Asian headquarters are based in Hong Kong. This company was ranked 18th largest company in the world by Forbes Global 2000, in 2008 (Shelp, pp. 12-47).

History of AIG

According the History of AIG (p. 23), the origin of the company dates back to 1919the year when Cornelius Vander Starr established an insurance agency in Shanghai-China. This man was the first to conceptualize and implement the idea of selling insurance to the Chinese. The business realized great margins that enable it to venture into fresh markets including Latin America, Europe, and the Middle East.

It was not until 1962 that the company’s focus, under the management of Maurice R. Greenberg changed from that of selling personal insurance to that of high Margin corporate coverage. Given the market competition, Greenberg employed a formula that could realize fewer costs for the company, in that he used independent brokers instead of agents. This model ensured that the company had to meet lower overhead costs since brokers are paid according to the number of products sold. In 1968 Starr proceeded to retirement choosing Greenberg to oversee the running of the company as its new CEO. One year in office Greenberg floated the company’s shares to the general public. The following year the company went public. Martin Sultan succeeded Greenberg in 2005 after the latter resigned.

AIG- its operations

The company generally undertakes a number of insurance and insurance-related activities in the U.S. and abroad. The company through its branches found distributed worldwide provides insurance as well as financial services in the United States and internationally. In meeting its objectives and goals, the company concentrates on four key areas; General Insurance, Life Insurance and Retirement Services, Financial Services, and lastly Asset Management (Campanella, pp. 23-50).

The general insurance protocol allows the company to offer a number of insurance products. Under this heading, the company deals with commercial or industrial property insurance, excess liability, inland marine, environmental, workers compensation, as well as excess and umbrella coverages (Campanella, pp. 23-50). The company is also known to provide insurance covers relating to aviation, accident and health, equipment breakdown, directors and officers’ liability, difference-in-conditions, kidnap-ransom, export credit and political risk, and professional errors and omissions coverages (Campanella, pp. 23-50). The company also offers s coverage on residential mortgage, commercial, and consumer products among others.

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Campanella, (pp. 23-50) describes some of the functions of AIG falling under the Life Insurance and Retirement Services sector to be offering cover to individuals as well as groups. She further asserts that through the Financial Services division the company is able to offer commercial aircraft and equipment leasing, capital market operations, consumer finance, and insurance premium financing. While Investment-related services and investment products to individuals, pension funds, and institutions is undertaken by the corporation’s fourth division, the Asset Management Division

AIG- Present Situation

Recently the company suffered a liquidity crisis after it was unearthed that its credit rating levels were below the required “AA” levels (Shelp, pp.  12-47). However, the company was saved from this awkward situation by the United States Federal Reserve Bank, by offering it a credit facility of $85 billion, on September 16, 2008. This was projected to secure the company in meeting its collateral and other cash obligations. Under the agreement, this company was supposed to issue a stock warrant to the Federal Reserve Bank for 79.9% of the equity of its equity (Shelp, pp. 12-47).

As of present, the bank has advanced over$170 billion to the company in accordance with some revisions in the company’s loan package by the bank (Shelp, pp. 12-47). The grants and subsequent allocation of about 165 million USD as bonuses to its executives have been the subject of criticism from all walks of life including the media, Congress, the public as well the president of the US, Barack Obama himself.


The move the US government to save the company from liquidation requires some consideration. Since this company’s large stake is via US taxpayer’s money the government should oversee the daily management of this failing company. People are the big-time shareholders in this company therefore it is essential that people use their power to stop greed found with corporations such AIG.

If the company had adopted a simple method of operation with centralized control over localized units the company could have known before the situation deteriorated. The move by the company’s executives to allocate some bonuses while the company was in the verge of collapsing is unethical thus calling for judicial intervention.


  1. History of AIG, New York: American International Group, Inc., 1985.
  2. Campanella, Frank W., “Global Insurer: American International Group’s Heavy Foreign Stake Proves Sound Policy,” Barron’s,  1982, pp.23- 50
  3. Shelp, Ronald Kent (2006). Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG. Hoboken, NJ: Wiley. pp. 12-47.

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