American International Insurance Group (AIG) is the largest insurance company in the world. It ranks 35th in the recent ranking of the largest global companies, prepared by Fortune magazine, with four million customers in the world, the vast majority of them in the United States, and 116,000 employees in 130 countries.
The group has assets of one thousand billion dollars, and achieved net profits of 6.2 billion dollars in 2007. On the other hand, the value of its shares on the stock exchange declined during 2008 by 93%.
The history of the group dates back to 1919 when Cornelius Vander Starr (an American contractor) established an insurance agency in Shanghai, China, which he called American Aesthetic Underwriters, before he chose its current name in 1967.
Within ten years, the company expanded in the entire region, then moved to the Japanese market with the presence of the American occupation forces, as well as to Germany.
The company did not move to the United States until 1926 before it flourished in it, and Morris (Hank) Greenberg, the son of a confectioner from New York, joined the company in 1962 and brought about a radical transformation.
In 1969, Greenberg was appointed chairman of the company’s board of directors, and he remained in that position until 2005.
Under Greenberg’s management, the group developed many products and services, thus becoming, along with the insurance sector, a very large group in the field of financial services (asset management and financial advisory).
In parallel, Greenberg developed the geographic expansion of the group. It became the first global insurance company to establish joint ventures with Hungary, Poland and Romania. In 1980, it was formed in the precedent of a joint enterprise with the People’s Insurance Company of China.
But an embezzlement scandal forced Greenberg in 2005 to quit managing the group at the age of 80.
The company was exposed to a severe financial crisis following the US mortgage crisis that hit the country in mid-2007, which exposed it to the risk of collapse, raising concerns about the stability of the financial sector and the future of the US economy.
All these repercussions prompted the Federal Reserve (the Central Bank) to announce on 16/9/2008 a package of measures to save the group, revealing that it would provide an $ 85 billion loan to the group in exchange for controlling about 80% of it.
US President George W. Bush commented on the Fed’s action by saying that saving the company was “to support stability in financial markets.”