American International Group Inc.

1247 WordsApr 17, 20175 Pages
Introduction American International Group Inc. or simply AIG specializes in the insurance industry. It is engaged in a range of insurance related businesses in the United States and across the borders. It maintains and operates four main business segments: General Insurance, Domestic Life Insurance & Retirement Services, and Foreign Life Insurance & Retirement Services. AIG also offers financial services to its customers (one source, 2011). The company holds 11th position in the Forbes 1000 companies list (One source, 2011) and it is ranked at number 29 in the list of largest public company in the Forbes Global 2000 companies list (Forbes, 2011). AIG, with asset of 556 billion, provides insurance service for more than 150 different…show more content…
The severity of crisis caused AIG to bear huge losses on “Credit Default Swaps” (CDS). Unable to pay up to those losses would have driven it out of the global financial sector which meant huge losses not only to the people but to the investors and a greater catastrophe for the government had it allowed AIG to fail. The federal government had to protect the market from an even greater collapse, so it issued a 180 billion bailout and took control of the lamentable situation. Initially, the amount was 100 billion, but it proved out to be increasingly insufficient which made the US Treasury on a predictable path towards bankruptcy when another 80 billion were extracted from which the US government gained 80% equity interest in AIG (Gethard, 2009). The first formal form of government assistance was carried out when the Financial Treasury provided AIG with $40 billion from TARP (Trouble Asset Relief Program) funds. TARP was an initiated by George W Bush during the 2008 financial crisis on 3rd October 2008. It was signed into law for the government to buy toxic assets and equity reserves from different financial institutions to bolster the financial sector ultimately. TARP was regulated under the SSFI (Systemically Significant Financial Institution Program), and AIG was the only beneficiary of the funds under it. TARP also created a capital equity program to allow AIG to access up to $30 billion. The NY Fed for further assistance
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