Aig CompanyEssay Preview: Aig CompanyReport this essayAmerican International Group, Inc. (AIG)BackgroundAmerican International Group, Inc. (AIG) is an American insurance corporation. Its corporate main office is located in the American International Building in New York City. AIG United Guaranty began its expansion into Asia with the launch of its Hong Kong operations in 1999, as part of a long-term reinsurance agreement with the HKMC, a government entity created to support the residential mortgage market.
Even to this day American International Group (AIG) is one of the worlds largest insurance firms. While it held the spotlight for staggering losses and government bailouts, the companys subsidiaries are still providing general property/casualty insurance, life insurance and retirement services, and some financial services to commercial, institutional, and individual customers in the US and more than 130 countries around the world. Some of its non-insurance activities include financing commercial aircraft leasing and port operations in the US. After $182 billion in bailouts, the US government held more than 80% of the company, but an exit plan involving repayment and stock sales is shrinking that number.
The CEO of the companys, Peter C. Siegel, has said that there is room for consolidation of their insurance and personal business models, as they did with their home insurance business, but they believe that, due to growing competition, they should continue to focus on a new investment segment and not focus on the older family-owned insurance. Cessna’s new Home Insurance Group was reported to own approximately 8% of the world’s stock market. But they did not take into consideration its “multi-layered” approach to business management that’s considered highly risky in today’s emerging American economy. Their company, S.C., has built its product and market presence on multiple technologies that are being offered by both private and publicly traded corporations.
In a blog post he wrote about the companys, the CEO of Citibank said, “The company, which we’ve valued at more than 100 times for four years, and the business model that we built together, will not change as a result of these new technologies. The technology set-up will be the first of its kind in the US and there will be no changes.” The company claims it has 50% of the assets and the market cap. This is up from 48% in 2014.
CEO Daniel K. Levitte said that, among the potential consolidation of insurance companies in the US, “We cannot see a large difference at the end of our life cycle. We have an existing market to fill – we are still recovering from 2010, and the insurance industry is very much engaged.” K. Levitte, as CEO of a global real estate investment company, said that, in the current industry, “many of us invest through different services, and there is much more risk associated with these two types of services.”
The company claims that the market is too small to provide some of its benefits to consumers in the US. A senior executive at a local healthcare provider, and a realtor from an industry leader in the healthcare space, stated, “A small group of insurers are looking at a larger group of buyers in the area, so there is huge competition between insurers and insurers competing for our business. In particular, the large number of individuals who want the same type of policy (i.e. insurance on the market) have very few options. So I think there is more competition with small groups of consumers versus big groups of insurers.”
The CEO of a large health insurance company, Robert J. R. L. Thomas III, said that, “With a large set of insurers such as the Kaiser Health News Service, there is an expectation the business model of large-single-group insurance will disappear.” He added, “We recognize that if we continue to put out coverage to small businesses, it will disrupt the business model.” The CEO of Nationwide Insurance, Andrew J. Hors
The CEO of the companys, Peter C. Siegel, has said that there is room for consolidation of their insurance and personal business models, as they did with their home insurance business, but they believe that, due to growing competition, they should continue to focus on a new investment segment and not focus on the older family-owned insurance. Cessna’s new Home Insurance Group was reported to own approximately 8% of the world’s stock market. But they did not take into consideration its “multi-layered” approach to business management that’s considered highly risky in today’s emerging American economy. Their company, S.C., has built its product and market presence on multiple technologies that are being offered by both private and publicly traded corporations.
In a blog post he wrote about the companys, the CEO of Citibank said, “The company, which we’ve valued at more than 100 times for four years, and the business model that we built together, will not change as a result of these new technologies. The technology set-up will be the first of its kind in the US and there will be no changes.” The company claims it has 50% of the assets and the market cap. This is up from 48% in 2014.
CEO Daniel K. Levitte said that, among the potential consolidation of insurance companies in the US, “We cannot see a large difference at the end of our life cycle. We have an existing market to fill – we are still recovering from 2010, and the insurance industry is very much engaged.” K. Levitte, as CEO of a global real estate investment company, said that, in the current industry, “many of us invest through different services, and there is much more risk associated with these two types of services.”
The company claims that the market is too small to provide some of its benefits to consumers in the US. A senior executive at a local healthcare provider, and a realtor from an industry leader in the healthcare space, stated, “A small group of insurers are looking at a larger group of buyers in the area, so there is huge competition between insurers and insurers competing for our business. In particular, the large number of individuals who want the same type of policy (i.e. insurance on the market) have very few options. So I think there is more competition with small groups of consumers versus big groups of insurers.”
The CEO of a large health insurance company, Robert J. R. L. Thomas III, said that, “With a large set of insurers such as the Kaiser Health News Service, there is an expectation the business model of large-single-group insurance will disappear.” He added, “We recognize that if we continue to put out coverage to small businesses, it will disrupt the business model.” The CEO of Nationwide Insurance, Andrew J. Hors
According to the 2008 Forbes Global 2000 list, AIG was once the 18th-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.
AIG history dates back to 1919, when Cornelius Vander Starr 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 Peoples 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.
The Problem, how it will affect the organization, and its solutionThe AIG managementWhat began as an investigation into two reinsurance transactions has mushroomed into a growing scandal that has tarnished the reputation of one of Americas premier corporations. On Mar. 30, AIG acknowledged that it had improperly accounted for the reinsurance transaction to bolster reserves, and detailed numerous other examples of problematic accounting. It also announced the delay of its annual 10-K filing, and said the moves may have inflated its net worth by up to $1.7 billion. While AIG says it does not yet know if the review will force a restatement of prior results, its stock dropped 2.1% on the news; all together, AIG shares have dropped 22%, to $57 apiece, since the company was served with subpoenas by state and federal regulators six weeks ago. The announcement also caused Standard & Poors (MHP ) to downgrade AIGs debt rating from AAA to AA+.
Pre-September 2008: The AIG CrisisOver the years, AIG built upon its premier global franchises in life and general insurance by expanding into a range of financial services businesses. One of these, created in 1987, was AIG Financial Products Corp. (AIGFP), a company that engaged as principal in a wide variety of financial transactions for a global client base. In 1998, AIGFP began to sell credit default swaps to other financial institutions to protect against the default of certain securities. At the time, many of these securities were rated AAA, the highest rating possible. However, in late 2007, as the U.S. residential mortgage market began to deteriorate, the valuation of these securities declined severely. As a result, AIG recorded significant unrealized market valuation losses, especially on AIGFPs credit default swap portfolio, which led to substantial cash requirements.
The Company’s most significant investment to date, in a merger of AIGFP with AIG Financial Solutions, has been a contract to purchase, develop, and manage AIG Financial Products, which together constitute the AIGPREFIX, an integrated payment technology network that is part of our strategy to generate new market segmentation, market segmentation, and financial services and payment processing opportunities for AIG Financial Solutions. We began in the early 1990s in New York City, as part of our AIG Financial Products Corp. project. We established our AIG Partnerships as our AIGFinance Partnerships in the following year, and are continuing our effort to improve our AIG Financial Products team to provide greater opportunities for AIG Financial Solutions to work with other AIGFinance Partnerships, such as AIG Financial Operations Operations, or as a Service Provider to a third party and enhance our AIGFinancial Products team as a result, in order to grow our revenue streams, maintain AIG Financial Products’ competitiveness and, by providing an integrated payment system that extends the value-added capabilities of our AIG Financial Products platform. In October 2003, in conjunction with AIGFinance, we formed a new AIG Partnerships that included two AIGFinance Partnerships totaling approximately $721 million. Of the estimated $12 billion in outstanding AIG Financial Products issued for AIGFIT.com and AIGFinance.com, $4.5 billion in cash flows have been generated.
AIG Financial Products is a suite of products designed to help the health care and other industries, with focus on developing and enhancing the most effective products and services to fulfill their goals for enabling higher health and energy efficiency, reducing health care expenditures and reducing the risk of serious injury to consumers. The Company also developed and designed new product elements in order to facilitate our continued execution of our mission of building companies that create the health care industry.
AIG Financial Products is made up of approximately $9 billion of value, which is equal as of January 20, 2007. The Company has been investing in building our new strategic communications networks through all stages including the formation of AIG Partnerships, and in our investment management plans, and in implementing AIGFinance Capital. One of the key areas in which the Company is investing in new investments in this capacity is AIG Network Engineering Networks, or NEIGs. This new entity will have the ability to support the Company’s investment in a wide range of NEIGs through AIG Networks, including: providing technical infrastructure and other expertise to AIG Financial Products, by leveraging a range of high quality, scalable and cost effective products from our existing network of approximately 11 000 NEIGs (to be developed based on our acquisition of AIG Holdings; and
providing the backbone for AIG Networks to support and provide other high quality NEIGs and other products); providing support services to our existing network and from within AIG Networks, including providing product security and software for AIG Networks to support our strategic communications strategy and identify and address the critical needs for our existing network and other product. These NEIGs will operate concurrently by building as-needed infrastructure and other resources.
The company’s other activities include acquiring, developing and maintaining high quality consumer information and content products that have become critical components of our product, integrating them into AIG Networks as part of a future product offering, and assisting to develop and enhance information technology products as part of AIG Networks, including
At the same time, AIG reported large unrealized losses in its securities lending program. Through this program, AIG made short-term loans of certain securities it owned to generate revenues by investing in high-grade residential mortgage backed securities. These and other AIG real estate-related investments suffered sharp decline in fair value as well.
It is important to reiterate that throughout the crisis, AIGs insurance businesses were–and continue to be–healthy and well capitalized. The losses that occurred as a result of AIGFPs ctions have no direct impact on AIG policyholders. AIGs insurance companies are closely regulated, and their reserves are protected with adequate assets to meet policyholder obligations.
The collapse of respected financial institutions such as Bear Stearns and Lehman Brothers sent shock waves throughout the world economy. The crises at the U.S.-sponsored mortgage companies Fannie Mae and Freddie Mac added to the financial disruption. Credit markets deteriorated rapidly, making it virtually impossible to access capital. In September, AIGs credit ratings were downgraded once again, triggering additional collateral calls and cash requirements in excess of $20 billion. Although solvent, AIG suddenly faced an acute liquidity crisis.
The proposed change methodology, an explanation of the choice and the implementation approachOrganization Development is the attempt to influence the members of an organization to expand their candidness with each other about their views of the organization and their experience in it, and to take greater responsibility for their own actions as organization members. The assumption behind OD is that when people pursue both of these objectives simultaneously, they are likely to discover new ways of working together