AIG: The Problem of Disclosures
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Code : GOV0027C
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Region : US |
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About AIG AIG’s origins could be traced to China when Cornelius Vander Starr founded American Asiatic Underwriters (AAU) in 1919 in Shanghai. Initially, AAU represented a number of American insurance companies offering fire and marine coverages. The company continued to expand in China and also to other countries like Hong Kong, Jakarta, Indochina, Kuala Lumpur and Philippines... The deal with Brightpoint In early 1998, Brightpoint Inc, an Indiana based cell phone distributor, estimated that its trading unit in UK would suffer losses ranging from $13 million to $18 million. The company decided to close the unit with losses in the said range. But by end of 1998, it was found that losses would be about $30 million. Brightpoint did not want to disclose the additional loss and sought the help of an AIG subsidiary, Loss Mitigating Unit of National Union Fire Insurance Company... The deal with General Reinsurance Corporation In the year 2000, the property and casualty insurance market and the economy as a whole, faced a recessionary trend. Investors were anxious whether AIG’s reserves were sufficient to pay out claims. To give an inflated picture of its reserves, AIG entered into a deal with General Reinsurance Corporation, a unit of Warren E. Buffet’s Berkshire Hathaway. A reinsurance company normally issued policies to cover risks of insurance companies... |
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Other accounting irregularities AIG’s internal review exposed a number of other irregularities the company had indulged in. Starr International (SICO), a private holding company based in Panama, was largely managed and owned by AIG executives, past and present. As of 2004, Greenberg, the chairman of Starr, owned 8.33% of Starr International's common stock. Also 37 AIG executives and directors owned nearly 34% of Starr's shares...
