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Introduction

American International Group, Inc. (AIG) is an American insurance company. Its business headquarters are situated in the American International Building of New York City. The British headquarters is located on the Fenchurch Street of London while the European headquarters is situated in La Défense, Paris, while the Asian main office is situated in Hong Kong. Reports from the 2008 Forbes Global 2000 listing highlighted that AIG was by then the 18th-biggest public corporation worldwide, and also appeared in the reports of the Dow Jones Industrial survey between April 8, 2004 and September 22, 2008. AIG experienced a liquidity catastrophe when its financial ratings dropped below "AA" rankings around September 2008. The U. S. Federal Reserve Bank on September 16, 2008 formed an $85 billion credit capacity to allow the company to overcome its increased collateral requirements following the credit ranking downgrade, in a swap over for the issuance assets merit to the Federal Reserve Bank for 79.9% equity of the AIG. The Federal Reserve Bank along with the U. S. treasury around May 2009 extended the potential monetary boost to the AIG, with the enhancement support in form of $70 billion investment, of which $60 billion was channeled on credit line as well as $52.5 billion to purchase mortgage-based properties belonging to or insured by AIG, raising the total sum available to around $182.5 billion. AIG later sold some of its subsidiaries as well as other assets in order to settle down loans, and carry on with enticing buyers of its properties.
American International Group

AIG origin can be traced from 1919, when Cornelius Vander Starr located an insurance corporation in Shanghai, China. Starr became the first Westerner to offer insurance services to the Chinese in Shanghai, which he sustained until AIG moved out of China in 1949 since Mao Zedong introduced the Communist People's Liberation Army on Shanghai. Starr relocated the corporation’s headquarters to its present base in New York City. The company continued with its expansion, frequently using subsidiaries, venturing in other markets, together with other regions of Asia, Europe, Latin America, and the Middle East (Lipman, 3-5). In 1962, Starr handed over the running of the company's stagnant U.S. assets to Maurice R. "Hank" Greenberg, who changed its focal point from individual insurance to bigger-margin corporate insurance. Greenberg introduced offering insurance utilizing independent brokers instead of company agents to terminate agent salaries. By dealing with brokers, AIG could charge insurance taking into consideration the potential profit even if it experienced reduced sales of some products for a longer period of time with very minimal additional expense. In 1968, Starr nominated Greenberg as his heir, and the business became famous in 1969. From 2005, AIG have been involved in a sequence of fraud inquiries accomplished by the New York State Attorney General's Office along with the U.S. Justice Department, the Securities and the Exchange Commission. Greenberg was expelled in relation to a scandal in February 2005, though he is still struggling to overcome the charges being carried out by the New York state. The New York Attorney General's inquiry imposed charges of $1.6 billion bond for AIG plus scandalous charges to some of its managers. Greenberg was replaced as a chief executive by Martin J. Sullivan, who started his profession as a clerk with AIG in 1970 at its London branch. Commencing from 15, 2008, following the discovery of monetary losses and consequent to a declining stock price, Sullivan quitted and was substituted by Robert B. Willumstad, a former serving Chairman in the AIG Board of administrators ever since 2006. Willumstad was ordered by the US administration to resign and was succeeded by Edward M. Liddy on September 17, 2008. AIG's executive boards nominated Robert Benmosche CEO on August 3rd 2009 succeeded Liddy, who retired earlier in the year (Shelp, 13-17).
Business holdings of AIG Within the United States, AIG is the biggest sponsor of commercial and manufacturing insurance, and AIG obtained American General Life Insurance in August 2001. AIG also supplies auto insurance policies using its subsidiary sector known as the AIG Direct. The policies they presented incorporated insurance for personal automobiles, commercial vehicles, recreational automobiles and motorcycles. AIG purchased the outstanding 39% which it did not posses via the online auto insurance experts 21st Century Insurance by 2007 costing $749 million. With the shortcomings of the parent business and the ongoing downturn in 2008, AIG renamed its insurance section as the 21st Century Insurance. By April 2009, AIG advertised its sales for the 21st Century Insurance cover to Farmers Insurance Group costing $1.9 billion. AIG also operates in travelers insurance worldwide using the Travel Guard, situated in Stevens Point of Wisconsin (Wankel, 2-4).
Crisis of the AIG By September 16, 2008, AIG underwent a liquidity catastrophe subsequent to the drop in its credit rankings. Industry practice allows firms possessing best credit ratings to participate in exchanges without applying guarantee with their commercial counter-parties. When its financial rating was dropped, the corporation was obligatory to post extra deposits with its business partners, and this resulted in an AIG liquidity problem. AIG's London branch sold credit security using the system of financial default shifts on collateralized arrears obligations which by that period had reduced in cost (Lipman, 3-5). The U. S. Federal Reserve Bank advertised the formation of a protected credit facility costing up to US$85 billion, to avoid the associations collapse by allowing AIG to achieve its mandate to deliver extra collateral to its financial default shifting trading associates. The credit facility offered a structure to credit over US$85 billion, protected by the assets in AIG- possessed subsidiaries, in swap for merit of 79.9% equity venture, and the authority to postpone dividends before issued frequent and favored stock. AIG advertised the very day that its executive established the conditions of Federal Reserve Bank's salvage package and protected credit facility. This was the biggest federal rescue of a private corporation in the U.S. account, however less important than the help of Fannie Mae plus Freddie Mac one week before.
Additional Bailouts of 2008 Between September and November of 2008, AIG's credit-default developments were gradually mounting, showing that the company was facing a default. By November 10, 2008, the U.S. Treasury decided to acquire $40 billion in fresh issued AIG superior preferred stock, over the power of the Emergency financial Stabilization Act's Troubled Asset Relief Program (Duncan, 9-13). The FRBNY decided to amend the September 16 protected credit facility; the Treasury speculation would allow a decrease in its amount from $85 billion to $60 billion, and the extension of the existence of the property between three and five years, and diverse the interest range from 8.5% and the three-month London interbank supplied rate of the general financial facility, to 3% and LIBOR for resources drawn losing, and 0.75% and LIBOR for money not drawn, plus that AIG could change two off- balance-sheet Limited Liability Companies to take AIG properties: with one acting as an AIG Residential Mortgage-Backed Securities Facility along with the second to perform as an AIG Collateralized Debt Requirement Facility. On October 22, 2008, sponsors of Lehman Brothers who purchased credit default shifted to evade them beside Lehman bankruptcy to clear those financial statements. The total expenses were $5.2 billion however the initial approximations of the quantity of the resolution ranged around $100 billion and $400 billion. By December 2008, AIG cleared over $18.7 billion to numerous financial societies, to leave obligations connected to credit default shifts (Shelp,7-10).
Conclusion
American International Group is a well known international insurance and monetary services association, with gross quantity of $86,535 million by 2006. AIG is among the top two biggest insurance companies globally after the China Life Insurance, as reported by the market capitalization of December 2007. The corporation is a major supplier of retirement services, monetary services as well as asset supervision services. AIG´s home brokerage system is among the best asset and casualty association of the US. AIG´s revenues originating from the home market, of the US, reduced in 2006. AIG´s presentation in the US moreover worsened in 2007 on as a result of the sub-prime problems. Worldwide credit of the AIG cover has been developed using AIG´s corporate publicity and brand-developing sponsorships such as the AIG´s protection of Manchester United Football Club. AIG currently completed its first manifestation on commercial Week´s 2007 ´Top 100 Brands´ report.

Works cited

Duncan, Julie, Anne. Faith displayed as science: the role of the "creation museum" in the modern American creationist movement. Massachusetts, MA: Julie A. Duncan, 2009.

Lipman, Frederick, D. International and US IPO Planning: A Business Strategy Guide. New York, NY: John Wiley and Sons, 2008.

Shelp, Ronald, Kent & Al Ehrbar. Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG. New Jersey: John Wiley and Sons, 2009.

Wankel, Charles. Encyclopedia of business in today's world, Volume 1. Carlfonia, CA: SAGE, 2009.