on
the Bund,
Shanghai (elevation): the original home of what became AIG; now the AIA building. was known as the American International Building.
1919–1945: early years AIG was founded December 19, 1919 Business grew rapidly, and two years later, Starr formed a life insurance operation. By the late 1920s, AAU had branches throughout
China and Southeast Asia, including the
Philippines,
Dutch East Indies, and
Malaya. In 1926, Starr opened his first office in the United States, American International Underwriters Corporation (AIU). He also focused on opportunities in
Latin America and, in the late 1930s, AIU entered
Havana, Cuba. The steady growth of the Latin American agencies proved significant as it would offset the decline in business from Asia due to the impending World War II.
1945–1959: international and domestic expansion After World War II, American International Underwriters (AIU) entered Japan to provide insurance for American military personnel. Throughout the late 1940s and early 1950s, AIU continued to expand in Europe, with offices opening in France, Italy, In 1952, Starr began to focus on the American market by acquiring Globe & Rutgers Fire Insurance Company and its subsidiary, American Home Fire Assurance Company. By the end of the decade, C.V. Starr's general and life insurance organization included an extensive network of agents and offices in over 75 countries. Two years later, Greenberg reorganized one of C.V. Starr's U.S. holdings into a successful multiple line carrier. In 1968, Starr named Greenberg his successor. The company went public in 1969. The 1970s presented many challenges for AIG as operations in the Middle East and Southeast Asia were curtailed or ceased altogether due to the changing political landscape. However, AIG continued to expand its markets by introducing specialized energy, transportation, and shipping products to serve the needs of niche industries.
1979–2000: new opportunities and directions During the 1980s, AIG continued expanding its market distribution and worldwide network by offering a wide range of specialized products, including pollution liability There continued to be an ongoing trend within the industry for insurers to offer coverage through different but interrelated groups, something that could be especially beneficial when it came to consolidating and managing effective
insurance underwriting practices, which were the underpinning of any successful insurance business. In 1983, a spokesman for AIG criticized other companies for "sloppy underwriting", saying those companies did not fully comprehend the policies they were offering and often were mostly interested in writing policies quickly to bring in premiums in order to fund the investment side of their business, without regard for the risks being taken. In 1984, AIG listed its shares on the New York Stock Exchange (NYSE). Throughout the 1990s, AIG developed new sources of income through diverse investments, including the acquisition of International Lease Finance Corporation (ILFC), a provider of leased aircraft to the airline industry.
2000–2012: further expansion and decline .
Growth The early 2000s saw a marked period of growth as AIG acquired American General Corporation, a leading domestic life insurance and annuities provider, and AIG entered new markets including India. In February 2000, AIG created a strategic advisory venture team with the
Blackstone Group and
Kissinger Associates "to provide financial advisory services to corporations seeking high level independent strategic advice". AIG was an investor in Blackstone from 1998 to March 2012, when it sold all of its shares in the company. Blackstone acted as an adviser for AIG during the
2008 financial crisis. In March 2003 American General merged with Old Line Life Insurance Company. In the early 2000s, AIG made significant investments in Russia as the country recovered from the
1998 Russian financial crisis. In July 2003, Maurice Greenberg met with Putin to discuss AIG's investments and improving U.S.-Russia economic ties, in anticipation of Putin's meeting with U.S. President George W. Bush later that year." In November 2004, AIG reached a $126 million (~$ in ) settlement with the
U.S. Securities and Exchange Commission and the
Justice Department partly resolving a number of regulatory matters, and the company needed to continue to cooperate with investigators continuing to probe the sale of a non-traditional insurance product.
Accounting scandal 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. The New York Attorney General's investigation led to a $1.6 billion fine for AIG and criminal charges for some of its executives. On May 1, 2005, investigations conducted by outside counsel at the request of AIG's Audit Committee and the consultation with AIG's independent auditors,
PricewaterhouseCoopers LLP resulted in AIG's decision to restate its financial statements for the years ended December 31, 2003, 2002, 2001 and 2000, the quarters ended March 31, June 30 and September 30, 2004, and 2003 and the quarter ended December 31, 2003. On November 9, 2005, the company was said to have delayed its third-quarter earnings report because it had to restate earlier financial results, to correct accounting errors.
Expansion to the credit default insurance market Martin J. Sullivan became CEO of the company in 2005. He began his career at AIG as a clerk in its London office in 1970. AIG then took on tens of billions of dollars of risk associated with mortgages. It insured tens of billions of dollars of derivatives against default, but did not purchase reinsurance to hedge that risk. Secondly, it used collateral on deposit to buy mortgage-backed securities. When losses hit the mortgage market in 2007–2008, AIG had to pay out insurance claims and also replace the losses in its collateral accounts. 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. 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. 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
Ed Liddy on September 17, 2008. AIG's board of directors named
Bob Benmosche CEO on August 3, 2009, to replace Liddy, who earlier in the year announced his retirement.
2008 liquidity crisis and government bailout In late 2008, the federal government bailed out AIG for $180 billion, and technically assumed control, because many stated a belief that its failure would endanger the financial integrity of other major firms that were its trading partners--
Goldman Sachs,
Morgan Stanley,
Bank of America and
Merrill Lynch, as well as dozens of European banks. In January 2011, the Financial Crisis Inquiry Commission issued one of many critical governmental reports, deciding that AIG failed and was rescued by the government primarily because its enormous sales of
credit default swaps were made without putting up the initial collateral, setting aside capital reserves, or hedging its exposure, which one analyst considered a profound failure in corporate governance, particularly its risk management practices. Illustrating the danger of an AIG bankruptcy, a September 17, 2008,
CNN Money article stated, "But in AIG's case, the situation is even more serious. The company is much larger and complex than
Lehman Brothers and its assets hitting the market all at once would likely cause worldwide chaos and send values plummeting. Experts question whether there are even enough qualified buyers out there to digest the company and its subsidiaries." AIG had sold credit protection through its London unit in the form of
credit default swaps (CDSs) on
collateralized debt obligations (CDOs) but by 2008, they had declined in value.
AIG's 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. As a result, AIG's credit rating was downgraded and it was required to post additional collateral with its trading counter-parties, leading to a liquidity crisis that began on September 16, 2008, and essentially bankrupted all of AIG. The New York United States Federal Reserve Bank (led by
Timothy Geithner who would later become Treasury secretary) stepped in, announcing creation of a secured credit facility, initially of up to $85 billion to prevent the company's collapse, enabling AIG to deliver additional collateral to its credit default swap trading partners. The credit facility was secured by the stock in AIG-owned subsidiaries in the form of warrants for a 79.9% equity stake in the company and the right to suspend dividends to previously issued common and preferred stock. The AIG board accepted the terms of the Federal Reserve rescue package that same day, making it the largest government bailout of a private company in U.S. history. In March 2009, AIG compounded public cynicism concerning the "
too big to fail" firm's bailout by announcing that it would pay its executives over $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. Newly inaugurated President Barack Obama, who had voted for
TARP 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?" Both Democratic and Republican politicians reacted with similar outrage to the planned bonuses, as did political commentators and journalists in the
AIG bonus payments controversy. AIG began selling some assets to pay off its government loans in September 2008 despite a global decline in the valuation of insurance businesses, and the weakening financial condition of potential bidders. In December 2009, AIG formed international life insurance subsidiaries,
American International Assurance Company, Limited (AIA) and
American Life Insurance Company (ALICO), which were transferred to the
Federal Reserve Bank of New York, to reduce its debt by $25 billion. AIG sold its
Hartford Steam Boiler unit on March 31, 2009, to
Munich Re for $742 million. On April 16, 2009, AIG announced plans to sell its 21st Century Insurance subsidiary to
Farmers Insurance Group for $1.9 billion. In June 2009 AIG sold its majority ownership of reinsurer Transatlantic Re.
The Wall Street Journal reported on September 7, 2009, that Pacific Century Group had agreed to pay $500 million for a part of AIG'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. AIG then sold its American Life Insurance Co. (ALICO) to MetLife Inc. for $15.5 billion in cash and MetLife stock in March 2010.
Bloomberg L.P. reported on March 29, 2010, 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.
Fortress Investment Group purchased 80% of the interest in financing company
American General Finance in August 2010. In September 2010 AIG sold AIG Starr and AIG Edison, two of its Japan-based companies, to
Prudential Financial for $4.2 billion in cash and $600 million in assumption of third party AIG debt by Prudential. On November 1, 2010, AIG raised $36.71 billion from both the sale of ALICO and its IPO of AIA. Proceeds went to repay some of the aid it received from the government during the
2008 financial crisis. AIG sold its Taiwanese life insurance company Nan Shan Life to a consortium of buyers for $2.16 billion in January 2011. Due to the Q3 2011 net loss widening, on November 3, 2011, AIG shares plunged 49 percent year to date. The insurer's board approved a share buyback of as much as $1 billion. Nine years after the initial bailout, in 2017, the U.S. Financial Stability Oversight Council removed AIG from its list of too-big-to-fail institutions.
2012–2016: modern era The
United States Department of the Treasury announced an offering of 188.5 million shares of AIG for a total of $5.8 billion on May 7, 2012. The sale reduced Treasury's stake in AIG to 61 percent, from 70 percent before the transaction. Four months later, on September 6, 2012, AIG sold $2 billion of its investment in
AIA to repay government loans. The board also approved a $5 billion stock repurchase of government-owned shares in AIA. The next week, on September 14, 2012, the Department of Treasury completed its fifth sale of AIG common stock, with proceeds of approximately $20.7 billion, reducing the Treasury's ownership stake in AIG to approximately 15.9 percent from 53 percent. Government commitments were fully recovered, and Treasury and the
FRBNY to date had received a combined positive return of approximately $15.1 billion. On October 12, 2012, AIG announced a five and a half year agreement to sponsor six New Zealand–based rugby teams, including the world champion
All Blacks. The AIG logo and the Adidas logo, the league's primary sponsor, were displayed on the league's team jerseys. The U.S. Department of the Treasury in December 2012 published an itemized list of the loans, stock purchases, special purpose vehicles (SPVs) and other investments engaged in with AIG, the amount AIG paid back and the positive return on the loans and investments to the government. The Treasury said that it and the Federal Reserve Bank of New York provided a total $182.3 billion to AIG, which paid back a total $205 billion, for a total positive return, or profit, to the government of $22.7 billion. In addition, AIG sold off a number of its own assets to raise money to pay back the government. On December 14, 2012, the Treasury Department sold the last of its AIG stock in its sixth stock sale for a total of approximately $7.6 billion. In total, the Treasury Department realized a gain of more than $22 billion from the sale of AIG common stock and $0.9 billion from the sale of AIG preferred stock. AIG began an advertising campaign on January 1, 2013, called "Thank You America", in which several company employees, including AIG President and CEO Robert Benmosche, talked directly to the camera and offered their thanks for the government assistance.
Peter Hancock succeeded Benmosche as president and CEO of AIG in September 2014. While Benmosche stayed on in an advisory role, In June 2015,
Taiwan's Nan Shan Life Insurance acquired a stake in AIG's subsidiary in Taiwan for a fee of $158 million. Later that year, activist investor
Carl Icahn called for a breakup of AIG, describing the company as "too big to succeed". AIG announced plans for an
initial public offering of 19.9 percent of United Guaranty Corp., a
Greensboro, North Carolina–based provider of
mortgage insurance for lenders in January 2016. Later that year, Icahn won a seat on the board of directors and continued to pressure the company to split up its major divisions. AIG also began a
joint venture with
Hamilton Insurance Group and Two Sigma Investments to serve the insurance needs of small- to medium-sized enterprises. Industry veteran
Brian Duperreault became the chairman of the new entity, and Richard Friesenhahn, the executive vice president of U.S. casualty lines at AIG, became CEO. In August 2016, AIG sold off United Guaranty, its mortgage-guarantee unit, to
Arch Capital Group, a
Bermuda-based insurer, for $3.4 billion.
2017 Brian Duperreault was appointed CEO of AIG on May 15, 2017. was hired as CEO from Hamilton Insurance Group following Hancock's announcement in March 2017 that he would step down as AIG CEO under pressure after a period of disappointing financial results. Due to previous calls in 2015 and 2016 to shrink or break up AIG, Duperreault announced his intention to grow AIG and maintain its multiline structure outlining a strategy to focus on technology, "
underwriting discipline", and diversification. 2017 saw AIG hire a number of new upper level executives. In 2017, Duperreault named
Peter Zaffino later also naming him CEO of AIG's General Insurance business. Zaffino succeeded Duperreault as president of AIG in January 2020, with Duperreault remaining AIG's CEO. The company announced plans in 2017 to reorganize its Commercial and Consumer segments into General Insurance and Life & Retirement, respectively. determined that AIG was no longer considered a nonbank
systemically important financial institution (SIFI). That July, AIG acquired Validus Holdings Ltd., a provider of reinsurance based in
Bermuda. The company was also a
Lloyd's of London syndicate, involved in insurance-linked securities, a specialist in US small commercial excess and surplus underwriting, and a provider of
crop insurance. The deal "brought in fresh underwriting talent", particularly in property risk and catastrophe risk. from
Munich Re. In November 2019, a Carlyle-managed fund and
T&D Holdings acquired a majority interest in Fortitude Re, leaving AIG with a 3.5% stake "subject to required regulatory approvals and other customary closing conditions." Duperreault and Zaffino set out a turnaround strategy for the General Insurance business in 2017 and began execution. In 2019, In 2019, Duperreault and Zaffino announced "AIG 200", a multi-year program to improve operations by shedding legacy processes and excess manual interventions, modernizing and digitizing workflows, and unifying operations. Also during that month, AIG reported its second consecutive quarter of underwriting profits, and AIG's Life and Retirement business, led by CEO Kevin Hogan, delivered "solid growth" and returns despite a volatile credit and equity market. In January 2020, AIG announced it was ending its decade-long sponsorship of the
All Blacks in 2021. On March 1, 2021, Peter Zaffino succeeded Brian Duperreault as AIG's CEO, with Duperreault becoming executive chairman of the board. Then, in January 2022, Zaffino also became chairman of the AIG board. As part of AIG's 2020 plan to
form an independent company of its life and retirement insurance business with a 2022 IPO, the company announced, in July 2021, that
Blackstone Group would acquire 9.9% of the new unit for $2.2 billion cash. Blackstone and AIG also entered a long-term asset management agreement for about one quarter of AIG's life and retirement portfolio, set to increase in subsequent years. After the spin-off,
Corebridge Financial became an independent entity, raising $1.68 billion in the largest U.S. IPO of 2022. In February 2023, AIG and Stone Point Capital entered into an agreement to establish an independent managing general agency and relocate AIG's current private client group to the independent new company, Private Client Select Insurance Services (PCS). That May, AIG agreed to sell subsidiary Crop Risk Services to
American Financial Group for $240 million, as well as Validus Re, including AlphaCat and the Talbot Treaty reinsurance business, to
RenaissanceRe for $2.985 billion, in cash and RenaissanceRe common shares.
2024 In March 2024, British regulators cleared the sale of the UK arm of AIG Life Ltd to British insurer
Aviva for £460 million. == Business ==