American International Group

Strategic Management

Case study 3—American International Group

Pei-Lin Wu

Introduction

American International Group, Inc. (AIG) is an American insurance corporation. It had 116,000 employees and revenue was US$77.301 billion in 2010. Its corporate headquarters are located in the American International Building in New York City. The British headquarters office is on Fenchurch Street in London, continental Europe operations are based in La Défense, Paris, and its Asian headquarters office is in Hong Kong. According to the 2008 Forbes Global 2000 list, AIG was once the 18th-largest public company in the world. It was listed on the Dow Jones Industrial Average from April 8, 2004 to September 22, 2008.

AIG suffered from a liquidity crisis when its credit ratings were downgraded below "AA" levels in September 2008. The United States Federal Reserve Bank on September 16, 2008 created an $85 billion credit facility to enable the company to meet increased collateral obligations consequent to the credit rating downgrade, in exchange for the issuance of a stock warrant to the Federal Reserve Bank for 79.9% of the equity of AIG. The Federal Reserve Bank and the United States Treasury by May 2009 had increased the potential financial support to AIG, with the support of an investment of as much as $70 billion, a $60 billion credit line and $52.5 billion to buy mortgage-based assets owned or guaranteed by AIG, increasing the total amount available to as much as $182.5 billion. AIG subsequently sold a number of its subsidiaries and other assets to pay down loans received, and continue to seek buyers of its assets (Wikipedia, AIG).

SWOT Analysis

Strengths

1. It was known as the world fourth largest company in Global Forbes list.

2. The leading insurance and international financial services company in the world.

3. The customer base consists of individuals, commercial and institutional customers.

4. AIG offers its services in more than 130 countries.

5....