AIG Insurance, Inc.
AIG INSURANCE INC.
70 Pine Street
New York NY 10028
United States
Tel: 1-908-679-3150 (Worldwide)
1-877-638-4244 (U.S.)
American International Group, Inc. or AIG is currently a leader in insurance services. It operates in over 130 countries and employs over 96,000 people worldwide, with about 35,000 of them based in the United States.
AIG provides services to individual, commercial as well as institutional clients through a network of insurers such as American General Insurance, American International Assurance Company, Ltd. (AIA), American Life Insurance Company (ALICO), Chartis Insurance, International Lease Financing Corp., Nan Shan Life, SunAmerica Financial Group, and United Guaranty Corporation.
In 1987, the company created AIG Financial Products Corp. (AIGFP) to handle a number of financial transactions for clients all over the world. To shield the company against defaulting of securities, AIGFP closed deals with other financial institutions and sold a number of credit default swaps. But what was supposed to be a safeguard for the company became its waterloo when in 2007 the United States market for residential mortgages began to plummet. In effect, the securities devaluated and AIG had to invest in alternative real estate mortgages that were support by securities.
Despite the problems that AIGFP encountered with regards to its investments, AIG maintained that its insurance corporations were doing well and that policy holders were assured that their investments were protected from these financial difficulties that the financial arm was suffering from.
AIG began to recover in 2008 when the US government intervened in AIG’s financial trouble. The Government acknowledged that due to AIG’s dealings with other financial institutions, its decline will have effects on the country’s economic situation. AIG was protecting banks and other global clients through $400 billion worth of investments. This is apart from the insurances provided to individuals and other clients. To prevent the ripple effect, the Federal Reserve Bank of New York (FRBNY) lent AIG about $85 billion. The loan kept AIG afloat and it is in the process of repayment.
Despite the cash influx from the loan, AIG still has to tighten its belt and sell some of its businesses all over the world to pay back FRBNY the principal plus interest of the loan and raise some capital to support its operations.
AIG continues to face trying times for the past two years mainly attributable to the global financial crisis. It reported a net loss of about $7.2 billion by the fourth quarter of 2009, majority due to amortization and interest expenses. However, AIG CEO Robert H. Benmosche stated in his 2009 message to AIG’s shareholders that the company is starting to recover.
During the second quarter of 2010, AIG was able record an adjusted net income of $1.3 billion compared to $1.1 billion during the same period last year. This is a good indication that AIG is well on its way towards recovery and regaining footing in the financial market.
AIG is currently under a process of rebuilding and restructuring, focusing on four main priorities: “(i) Building AIG’s enterprise value by strengthening its international property and casualty and domestic life insurance businesses; (ii) repaying loans from the U.S. government by divesting and monetizing appropriate assets; (iii) reducing operating costs by conducting a comprehensive review of AIG’s cost structure; and (iv) reducing excessive risk by winding down AIG’s exposure to certain financial products and derivatives trading activities”.
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