American International Group

{{Infobox_Company |
company_name = American International Group, Inc |
company_logo = |
company_type = Public|
company_slogan = |
foundation = |
location = New York, New York|
key_people = TBD|
num_employees = 86,000|
industry = Insurance |
products = Insurance|
revenue = $81.3 Billion USD (2004) |
homepage = www.aig.com

}}

American International Group, Inc. (AIG) is an insurance corporation, ranked number 4 on the Forbes 500 list for 2003, and 10 on the Fortune 500 list in 2004. The company made a component of the Dow Jones Industrial Average on April 8, 2004.

History

AIG was founded in 1919 by Cornelius Vander Starr in Shanghai, China. Starr was the first Westerner in Shanghai to sell insurance to the Chinese. When his business was successful there, he expanded to Asia, Latin America, Europe, and the Middle East.

In 1962, Starr gave management of the company's unsuccessful U.S holdings to Hank Greenberg, who shifted the company's U.S. focus from personal insurance to high-margin corporate coverge. In 1968, Starr named Greenberg as his successor. While the company went public in 1969, Greenberg resigned as the company's CEO in February 2005 amid concern from regulatory inquiries. See also: Greenberg scandal

Holdings

AIG owns ILFC, the world's largest aircraft leasing company, with hundreds of aircraft ranging from regional jets to Boeing 747-400s.

Business

It is the world's leading international insurance and financial services organization, with operations in more than 130 countries and jurisdictions. AIG member companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In the United States, AIG companies are the largest underwriters of commercial and industrial insurance and AIG American General is a top-ranked life insurer. AIG's global businesses also include financial services, retirement services and asset management. AIG's financial services businesses include aircraft leasing, financial products, trading and market making. AIG's growing global consumer finance business is led in the United States by American General Finance. AIG also has one of the largest U.S. retirement services businesses through AIG SunAmerica and AIG VALIC, and is a leader in asset management for the individual and institutional markets, with specialized investment management capabilities in equities, fixed income, alternative investments and real estate. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.

Litigation

In November of 2004 AIG reached a $US126 million settlement with the SEC and the Justice Department that resolved the matter in part, but the insurer must still co-operate with investigators who are continuing their probe into the sale of a "non-traditional insurance product". The settlement was related to a so called "finite insurance" product.

Accounting Fraud

In 2005, after a scandal on insurance and mutual funds the year before, AIG is under investigation for accounting fraud. The company already lost over 45 billion US dollars worth of market capitalisation because of the scandal. This was the fastest decrease since the Worldcom and Enron scandals. Investigations also discovered over a billion US dollars worth of errors in accounting transactions. One such error involves a supposedly 500 million US dollar transaction with Berkshire Hathaway that drastically inflated AIG's revenues. This error involved reinsurance transactions. Reinsurance supposedly is used only for spreading out risk, but it may also be used for the questionable purpose of polishing a company's financial statements in the same way the manner of accounting for revenue did for Enron. See also: Greenberg gives wife shares

Future outcome for the company is still pending. See also: Buffett and AIG scandal