American International Group Inc.
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Case Details:
Case Code : BSTR115
Case Length : 34 Pages
Period : 1875 - 2002
Organization : American International Group Inc.
Pub Date : 2002
Teaching Note :Not Available Countries : USA
Industry : Financial Services
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"AIG shouldn't be all about Greenberg. The insurer's legendary 77-year-old CEO, is reluctant to name a successor, fostering the false notion that he's irreplaceable."
- BusinessWeek, May 2, 2002.
Introduction
With revenues of $62.402 billion in 2001, the US-based American International Group Incorporation (AIG) was the world's leading insurance and financial services company. It was the largest underwriter1 of commercial and industrial insurance, and the second largest life insurer in the US.
The company reported a net income of $7.67 billion and had assets worth $492.98 billion in 2001 (Refer Exhibit I). AIG was ranked 12th by Fortune magazine's list of America's 500 largest companies based on revenues in 2002. The company was ranked 2nd in the 'Insurance (Property and casualty)' section of Fortune's survey of 'America's Most Admired Companies. Founded in 1921, AIG's shares were listed on the New York Stock Exchange (NYSE) and on the stock exchanges of London, Paris, Switzerland and Tokyo. AIG served commercial, institutional and individual customers in more than 130 countries in the world. AIG's global businesses included insurance, financial services, retirement savings2 and asset management3. The company offered a wide variety of general and life insurance products to its customers.
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Its financial services businesses included leasing of aircraft, financial products, trading and market making4 and consumer finance.
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AIG's expanding global network and its strong presence in commercial insurance, financial services and life insurance businesses made it one of the global leaders in insurance and financial services business. However, analysts said that in recent years, it had been facing problems. The September 11, 2001 attacks on the World Trade Centre in the US costed AIG more than $800 million in claims. The company also incurred losses of $69 million owing to the collapse of Enron.5 By early-2002, the share price of AIG had fallen by 30% from a 2000 high of $104 to $69, despite strong earnings. With so much going against AIG, industry observers expressed doubts about AIG's ability to perform well in the future. AIG
had also been criticized as it lacked a succession plan. |
American International Group Inc.
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