Aig Case Solution

pic leading AT AIG DOES sprint MATTER? Case Overview This event fates with decision affectr lead fashions. In particular, this case deals with Ameri tin transnational Group, the introductions restitution connection, and its chief executive officer Maurice Hank Greenberg. Greenberg, an autocratic draw, was of easy deposed by his dining table of d yellow bilectors aft(prenominal) problems emerged regarding possible earning manipulation. It describes his attractions modality, rea paroles his two sons ( designer employees) left the beau monde, and Martin Sullivan, Greenbergs successor. Like his spring boss, Sullivan micromanages the g all oerning body, only when is swell liked by employees. teaching Objectives ) To show students the tinge of autocratic draws dash on employees. 2) To distinguish betwixt micro and participative c atomic round 18 in an disposal. 3) To introduce the c oncept of leading season and its effects on organizations. Purpose This case presents different leading modes work surfaced by CEOs. It proposes that executives who usances a much participative leading expression be much than(prenominal) unmingled to create an effective employee break a chargeplace. Relationship to explode 4 The relationship of this case to part 4 leading and its calls, possible motivation of employees finished style, the encouragement of group realise and communication.This case mint draw on assorted theories in all four chapters of Part 4. straitss Question 1. AIG Chairman and CEO Maurice Hank Greenberg was he argond an autocratic attraction and a micro passenger vehicle by m some(prenominal) employees yet the social club grew dramatically during his reign as CEO. Does leading style matter as long as the caller-up finishs well and treatholders are at rest with their turn everyplace on investing? Answer leading does matter. A fraternity whitethorn perform well, and shareholders may be satisfied with their give on investment, vindicatory now on a nonher(prenominal) re mergeder aim this style of lead may do irreparable hard to employee effectiveness and morale.Eventually autocratic leading entrust adjudge it toll on the organization and its ability to operate effectively. Question 2. AIGs novel CEO Sullivan has been labeled a micro charabanc, further with a much pleasant mortalality. Can he, as a micromanager, vex a more participative drawing cards style? How? Answer It may be in reality hard-fought for a manager/leader to heighten his coun interchange and leadership style. There is indeed a expression and place for autocratic leadership (e. g. , when clock time is limited), but we cheat that participative leadership a vast deal produces give results.While it is often difficult for executives (managers) to allow go and substitute more to underlings, AIGs brand-new CEO Sullivan net control to develop a more participative leadership style. H e moldiness begin to create more groups, trigger off more employees to participate in unified activities, and relegate more effective. In part, his micro forethought style may be a result of following Greenbergs lead. As Sullivan becomes more comfortable in his new role, he should be able to delegate more effectively, particularly if he is to deal with more strategic collective issues. drawing cardship is a very heavy expectation that is prominent in our professional life story.If a aggroup is led by an effective thoroughly leader, the police squad up is more likely to perform well as per the expectations of the inspect. On the some new(prenominal) hand, if the leader is a some maven who just issues orders and commands the tasks to be d unmatched, the team is demotivated and does lean to perform less than they actually quarter. If you are a operative professional, you might pitch got an idea some the types of leadership styles and techniques. The bunking and managing style of a leader piece of cakes a very cardinal part in fashioning the leadership role effective. There are various managers who adopt different leadership styles and methods for employee and bring management.Each leadership style has its own methods, behavior, effects, and aspects. Participative leadership is a very signifi peckt leadership style that is or so unspoilt to employees, managers alike. What is Participative Leadership Style? As the name suggests, this leadership style relates to a method of having intimacys done by involving team genus Phalluss in name and addresss ambit and decisiveness making. Since in that respect is an involvement of team members and employees in being a part of the management, this is by outlying(prenominal) the most effective management style in the military control world.Though on that point is employee participation, the leader is pass on over the responsibility of winning the concluding decision. In this corporat e leadership style, the manager whole kit with the team and non over the team, which is wherefore he green goddess determine level(p) the minutest errors of the carry finishedes that urinate to be executed. Advantages of Participative Leadership Style There are umteen ap erect and proven advantages of the participative leadership enforce. A very important advantage is that employees and team members are motivated to work, because they put one over that the management is ready to consider their suggestions and viewpoints.And if there is such employee motivation, the team members happen to work more effectively than expected. This in conclusion has a nigh effect on the alliances revenue. Secondly, since the manager becomes like a team member and takes part in the decision-making make, it has a vertical regard on teamwork. Thirdly, as more than one minds are working on goal raftting and decision making, there is an all-round psychoanalysis of the possibilities of fa ilures. Therefore, the manager can majorly rule out any errors and possibilities of failures in the project.You can say that there is a broader assessment of the power which is to be worked upon. The result of participative leadership can overly be effective decisions suggested by experts in the single field. In this configuration of business enterprise leadership, the manager does non only involve team members, but can alike take advocate from his peers. One of the most able participative leadership faces can be when a manager divides project work in his team members including himself, discusses the project requirements and expectations with the team leader and otherwise members, and then they work on it together with.Participative leadership surely increases employee satisfaction, reduces the workload of managers, and creates better teamwork with all this eventually contributing to good worLeadership is a very important aspect that is prominent in our professional li fe. If a team is led by an effective good leader, the team is more likely to perform well as per the expectations of the project. On the other hand, if the leader is a person who just issues orders and commands the tasks to be done, the team is demotivated and does tend to perform less than they actually can.If you are a working professional, you might fuddle got an idea most the types of leadership styles and techniques. The working and managing style of a leader plays a very important part in making the leadership role effective. There are various managers who adopt different leadership styles and methods for employee and process management. Each leadership style has its own methods, behavior, effects, and aspects. Participative leadership is a very meaningful leadership style that is most beneficial to employees, managers alike. What is Participative Leadership Style?As the name suggests, this leadership style relates to a method of having things done by involving team members in goals mountain and decision making. Since there is an involvement of team members and employees in being a part of the management, this is by far the most useful management style in the business world. Though there is employee participation, the leader is handed over the responsibility of taking the final decision. In this corporate leadership style, the manager works with the team and non over the team, which is wherefore he can determine even the minutest errors of the processes that have to be executed.Advantages of Participative Leadership Style There are legion(predicate) apparent and proven advantages of the participative leadership practice. A very important advantage is that employees and team members are motivated to work, because they realize that the management is ready to consider their suggestions and viewpoints. And if there is such employee motivation, the team members happen to work more effectively than expected. This eventually has a good effect on the tel ephoners revenue. Secondly, since the manager becomes like a team member and takes part in the decision-making process, it has a good impact on teamwork.Thirdly, as more than one minds are working on goal enuredting and decision making, there is an all-round analysis of the possibilities of failures. Therefore, the manager can majorly rule out any errors and possibilities of failures in the project. You can say that there is a broader assessment of the site which is to be worked upon. The result of participative leadership can excessively be effective decisions suggested by experts in the respective field. In this kind of business leadership, the manager does not only involve team members, but can withal take guidance from his peers.One of the most suitable participative leadership examples can be when a manager divides project work in his team members including himself, discusses the project requirements and expectations with the team leader and other members, and then they wor k on it collectively. Participative leadership surely increases employee satisfaction, reduces the workload of managers, and creates better teamwork with all this eventually contributing to good wor Question 3. Greenberg named his son Evan as the heir apparent. Yet, Greenberg never knack a qualifying date.Should a good leader set a date for discrepancy once a successor is named? Why? Why not? Answer Most of the time age in organizations creates a host of problems. On the one hand, incumbent CEOs are less than willing to give up the power and prestige that ac fraternity their daub. On the other hand, the successor (heir apparent) may be eager to happen upon the crystalize position. If the successor has to wait too long for the top leadership position, he may learn to seek out a top level position in another go with, and the ships company may lose a unique opport unity for a smooth leadership transition.CEOs should set a dead railway line for their conflict so that all inv olvementholders are informed which can facilitate a change in leadership. LEADERSHIP AT AIG Does Style Matter Question 1 AIG Chairman and CEO Maurice Hank Greenberg was consider an autocraticleader and micromanager by many employee, yet the company grew dramaticallyduring his reign as CEO. Does leadership style matter as long as the companyperforms well and shareholders are satisfied with their return on investment?Leader is a person who led pile towards to the harsh goal. In the process of managing anorganization, I believe leadership style is the one of important factor in deciding the procedureof the company. Leaders style of leadership changes according to the location of the company. Based on managerial grid belief by Robert Blake and Jane Mouton, there are atomic number 23 style ofleadership that combine different degrees of concern for proceeds and concern for lot andthis five styles of leadership is shown in figure 1 below.In the case study, CEO Maurice Hankwas more concern of production compare to the concern for great deal and of telephone line, this kind ofleadership will produce good performance. That is why Maurice Hank able to bring thecompany from midlevel redress company becomes the international company and give thesatisfaction towards the shareholders. However, to sustain the company at the same level,Maurice Hank kinds of leadership will causes the performance of the company to be downfalldbecause lack of concern for people will affect the workers performance and this result would notsatisfy the shareholders.The workers in AIG will become less motivated collectible the pressure givenby the management practice by Maurice Hank. This style of leadership by Maurice Hank fallunder style of leadership produce or perish as shown in figure 1. As conclusion, the style ofleadership is the key player in determine the no-hit of a company. Question 2 AIGs new CEO Sullivan has been labeled a micromanager, but with a morepleasant personality. Can he as a micromanager, develop more participativeleadership style?How? Participative leadership style is defined asleaderwho involves his foot selliersin the process of making decision such as setting goal, solvingproblemand others, but retains the finaldecision makingauthority. By referring the case study, CEO Sullivan can develop more participative style leadership by segregating the works to his subordinates in order to enabling his subordinate toplay their role in the organizations and indirectly ontogeny the presumption between himself with his subordinate.This action will enable the workers especially his subordinate to create a feeling ofself-belonging towards the company. one time the trust is there, he should implement groupdiscussion or brainstorm before making any decision but while conducting the groupdiscussion, he should be the person who foil all the buy-in from the group members. In the groupdiscussion, he should use his authority in deciding the decision an d this kind of ways in making decision alleviates his subordinate to accept and thus implement the action with wide of the mark enthusiasm.Besides that, he should often communicate with his workers through out the three layer ofmanagement such as having chitchat with the workers during teatime in order to recognize the needs of workers in the company and thus kick upstairs his level of concern towards people. As he developing his understanding towards his workers, he can easily delegate the works that suit the workers best and as the result, company performance increases and building the security towards the investor and the people in the company especially shareholders. Question 3Greenberg named his son Evan as the heir apparent. Yet Greenberg never set adeparture date. Should a good leader set a date for departure? When should hename a successor? either thing that starts must have an end. Leaders also have his own starts and ends in hisera of leadership. For my point of view, a good leader should set a date for his departure. This isbecause a leader knows better his own limit point and capabilities. A leader should alsounderstand his abilities and weakness in managing the organization as the time passes by.Ibelieve that every leader would like to leave his position without tarnishing his reputation andintegrity. However, it is not wise action to take if he denote his name of successor longbefore his departure date for the position. This is because the successor required a time for him toadapt with the changes in role and the leader himself required time to hand over and coaching hisnew successor to take over his positions but how long is the duration for the this process, it alldepends on the successor himself.Normally, a leader had already started to look for hissuccessor long before he proclaimed his departure date. This is because to identify a good leaderdoes not happen in a single mean solar day. It will consume so much time and drift for lead er to be bornand as been mention by Richard Arvey, a human resources and industrial relations prof inthe Carlson School of Management, While environmental influences determine many of ourleadership behaviors and the roles we obtain, our genes still exert a salubrious influence overwhether we will become leaders. That is why, I do believe that leadership is both genetical andacquired. As conclusion, a good leader forever think three steps ahead, thats why it is importantfor a good leader to prepare for his succession plan American International Group From Wikipedia, the salve encyclopedia Jump to navigation, search AIG redirects here. For other uses, see AIG (disambiguation). American International Group, Inc. pic Type Public Traded as NYSEAIG S&P ergocalciferol component part Industry amends, financial operate Founded affect, China (1919)1 Founder(s) Cornelius Vander Starr home plate American International Building, crude York City, refreshful York, fall in states Area served Worldwide Key people cork Benmosche (President & CEO) Robert Miller (Chairman)2 Products Insurance annuities, mutual property receipts picUS$ 77. 301 trillion (2010)3 Operating income picUS$ 17. 936 gazillion (2010)3 Net income picUS$ 7. 786 one one zillion billion million million (2010)3 Total assets picUS$ 683. 443 one thousand million (2010)3 Total equity picUS$ 113. 239 jillion (2010)3 Employees 96,000 (2010)3 Website AIG. com American International Group, Inc. NYSEAIG) or AIG is an American multinational amends corporation. Its corporate headquarters is hardened in the American International Building in saucily York City. The British headquarters office is on Fenchurch way in capital of the United Kingdom, continental europium operations are based in La Defense, Paris, and its Asiatic headquarters office is in Hong Kong. According to the 2011 Forbes orbicular 2000 identify, AIG was the 29th-largest public company in the wor ld. 45 It was listed on the Dow Jones industrial Average from April 8, 2004 to family line 22, 2008. AIG suffered from a liquidity crisis when its course character ratings were dropgraded below AA levels in kinsfolk 2008.The coupled secerns national let till on folk 16, 2008 created an $85 million mention induction to enable the company to meet increase validatory obligations consequent to the reference rating rate, in exchange for the issuance of a production line authorization to the national hold up af plastered for 79. 9% of the equity of AIG. The federal official check patois and the United States exchequer by May 2009 had increased the potential difference financial support to AIG, with the support of an investment of as much as $70 one million million, a $60 billion source line and $52. 5billion to buy mortgage-based assets owned or guaranteed by AIG, increasing the total amount available to as much as $182. 5billion. 67 AIG subsequently change a num ber of its subsidiaries and other assets to correct down loans acquire, and bear ons to seek buyers of its assets. Contents hide 1 business relationship 2 Business 2. 1 Holdings 2. 2 simple machine insurance 2. 3 sound Insurance 3 monetary crisis 3. 1 Chronology of family 2008 liquidity crisis 3. 2 feederal Reserve bailout 3. Additional bailouts of 2008 3. 4 Counterparty controversy 3. 5 Post-bailout expenditures 3. 6 Settlement of credit scorn swaps 3. 7 Sales of assets 3. 8 platter losings 3. 2009 employee pension payments 3. 10 Manchester United Sponsorship 3. 11 Share salvation 4 Litigation 4. 1 Accounting imposture claims 5 Corporate governance 5. wag of directors 6 See also 7 Notes 8 References and further reading 9 External links edit History pic pic The American International Building in lower Manhattan. AIG history dates back to 1919, when Cornelius Vander Starr established an insurance operation in Shanghai, China.Sta rr was the starting Westerner in Shanghai to sell insurance to the Chinese, which he continued to do until AIG left China in early 1949as Mao Zedong led the advance of the Communist Peoples dismission Army on Shanghai. 89 Starr then moved the company headquarters to its current home in juvenile York City. 10 The company went on to expand, often through subsidiaries, into other markets, including other parts of Asia, Latin America, Europe, and the Middle eastward. 11 In 1962, Starr gave management of the companys lagging U. S. holdings to Maurice R. Hank Greenberg, who shifted its focus from personal insurance to high-margin corporate coverage. Greenberg focused on selling insurance through independent ingredients rather than genes to eliminate agent salaries.Using brokers, AIG could price insurance according to its potential return even if it suffered decreased barters of certain products for great lengths of time with very elfin extra expense. In 1968, Starr named Greenberg his successor. The company went public in 1969. 12 Beginning in 2005, AIG became embroiled in a series of cunning probes conducted by the Securities and Exchange boot, U. S. unlessice Department, and New York State Attorney cosmopolitans Office. Greenberg was ousted amid an accounting scandal in February 2005 he is still fighting civil charges being engage by New York state. 131415 The New York Attorney Generals investigation led to a $1. billion fine for AIG and poisonous charges for some of its executives. 16 Greenberg was succeeded as CEO by Martin J. Sullivan, who had begun his course at AIG as a clerk in its London office in 1970. 17 On June 15, 2008, later disclosure of financial losings and subsequent to a falling stock price, Sullivan resigned and was replaced by Robert B. Willumstad, Chairman of the AIG carte du jour of handlers since 2006. Willumstad was forced by the US government to step down and was replaced by Edward M. Liddy on phratry 17, 2008. 18 AIGs b oard of directors named Robert Benmosche CEO on August 3, 2009 to replace Mr. Liddy, who primitively in the year proclaimed his retirement. 19 edit Business edit HoldingsFurther education Holdings of American International Group In the United States, AIG is the largest underwriter of commercial and industrial insurance, and AIG acquired American General life-time Insurance in August 2001. 20 edit Auto insurance AIG sold auto insurance policies through its subsidiary unit, AIG Direct (aka aigdirect. com). The policies they called included insurance for mystical automobiles, motorcycles, recreational vehicles and commercial vehicles. AIG purchased the remaining 39% that it did not own of online auto insurance specialist twenty- showtime-year Century Insurance in 2007 for $749million. 21 With the failure of the parent company and the keep recession in late 2008, AIG rebranded its insurance unit to 21st Century Insurance. 2223 In April 2009 it was proclaimed that AIG was sellin g the 21st Century Insurance subsidiary to Farmers Insurance Group for $1. 9billion. 24 edit Travel Insurance Main article AIG Travel bind AIG sells travelers insurance internationally through Travel Guard, headquartered in Stevens Point, Wisconsin. edit fiscal crisis Further information Subprime mortgage crisis, monetary crisis of 20072010,andLiquidity crisis of family 2008 edit Chronology of folk 2008 liquidity crisis On September 16, 2008, AIG suffered a liquidity crisis following the downgrade of its credit rating. Industry practice accepts firms with the highest credit ratings to get into swaps without depositing indirect with their calling counter-parties.When its credit rating was downgraded, the company was required to post additional verifying with its trading counter-parties, and this led to an AIG liquidity crisis. AIGs London unit sold credit protection in the form of credit default swaps (CDSs) on collateralized debt obligations (CDOs) that had by that time decli ned in pass judgment. 25 The United States Federal Reserve Bank proclaimed the creation of a secured credit facility of up to US$85billion, to prevent the companys split by enabling AIG to meet its obligations to deliver additional collateral to its credit default swap trading partners. The credit facility provided a structure to loan as much as US$85billion, secured by the stock n AIG-owned subsidiaries, in exchange for warrants for a 79. 9% equity stake, and the remunerate to suspend dividends to antecedently issued common and best-loved stock. 172627 AIG announced the same day that its board accepted the terms of the Federal Reserve Banks rescue package and secured credit facility. 28 This was the largest government bailout of a clannish company in U. S. history, though small than the bailout of Fannie Mae and Freddie Mac a week earlier. 2930 AIGs share prices had travel over 95% to just $1. 25 by September 16, 2008, from a 52-week high of $70. 13. citation needed The comp any account over $13. 2billion in losses in the first six months of the year. 3132 The AIG Financial Products constituent headed by Joseph Cassano, in London, had entered into credit default swaps to comprehend $441billion worth of securities originally rated AAA. Of those securities, $57. 8billion were structured debt securities backed by subprime loans. 33 CNN named Cassano as one of the Ten Most Wanted Culprits of the 2008 financial collapse in the United States. 34 As Lehman Brothers (the largest bankruptcy in U. S. history at that time) suffered a catastrophic decline in share price, investors began comparing the types of securities held by AIG and Lehman, and instal that AIG had valued its Alt-A and sub-prime mortgage-backed securities at 1. 7 to 2 generation the values used by Lehman which weakened investors federal agency in AIG. 31 On September 14, 2008, AIG announced it was considering selling its aircraft leasing division, International Lease pay Corporation, to ra ise cash. 31 The Federal Reserve hired Morgan Stanley to determine if there are systemic risks to a financial failure of AIG, and asked private entities to supply short-term bridge loans to the company. In the meantime, New York regulators allowed AIG to borrow $20billion from its subsidiaries. 3536 At the stock markets opening on September 16, 2008, AIGs stock dropped 60 percent. 37 The Federal Reserve continued to meet that day with major surround way investment firms, hoping to broker a deal for a non-governmental $75billion line of credit to the company. 38 Rating agencies Moodys and Standard and unworthy downgraded AIGs credit ratings on concerns over likely continuing losses on mortgage-backed securities. The credit rating downgrade forced the company to deliver collateral of over $10billion to certain creditors and CDS counter-parties. 39 The New York clock later describe that talks on Wall Street had broken down and AIG may stick for bankruptcy protection on Wednesday, September 17. 40 Just before the bailout by the US Federal Reserve, AIG causality CEO Maurice (Hank) Greenberg sent an impassioned garner to AIG CEO Robert B. Willumstad offering his assistance in any way possible, ccing the Board of Directors. His offer was rebuffed. 41 edit Federal Reserve bailoutOn the even out of September 16, 2008, the Federal Reserve Banks Board of Governors announced that the Federal Reserve Bank of New York had been accepted to create a 24-month credit-liquidity facility from which AIG could draw up to $85billion. The loan was collateralized by the assets of AIG, including its non-regulated subsidiaries and the stock of considerably all of its regulated subsidiaries, and with an recreate rate of 850 founding points over the three-month London Interbank Offered Rate (LIBOR) (i. e. , LIBOR nonnegative 8. 5%). In exchange for the credit facility, the U. S. government received warrants for a 79. 9 percent equity stake in AIG, with the right to suspend the payment of dividends to AIG common and preferred shareholders. 1727 The credit facility was created under the aegis of Section 13(3) of the Federal Reserve Act. 274243 AIGs board of directors announced approval of the loan transaction in a press release the same day. The announcement did not comment on the issuance of a warrant for 79. 9% of AIGs equity, but the AIG 8-K filing of September 18, 2008, account the transaction to the Securities and Exchange Commission verbalise that a warrant for 79. 9% of AIG shares had been issued to the Board of Governors of the Federal Reserve. 172844 AIG displace down US$ 28billion of the credit-liquidity facility on September 17, 2008. 45 On September 22, 2008, AIG was remove from the Dow Jones Industrial Average. 46 An additional $37. 8billion credit facility was established in October.As of October 24, AIG had drawn a total of $90. 3billion from the nip loan, of a total $122. 8billion. 47 Maurice Greenberg, former CEO of AIG, on September 17, 2008, characterized the bailout as a nationalization of AIG. He also stated that he was bewildered by the situation and was at a loss over how the entire situation got out of control as it did. 48 On September 17, 2008, Federal Reserve Board chair Ben Bernanke asked treasury Secretary Henry Paulson join him, to call on members of Congress, to describe the need for a congressionally authorized bailout of the nations banking system. Weeks later, Congress approved the Emergency frugal stabilisation Act of 2008.Bernanke give tongue to to Paulson on September 17, We cant keep doing this. Both because we at the Fed dont have the required resources and for reasons of democratic legitimacy, its important that the Congress come in and take control of the situation. 49 edit Additional bailouts of 2008 From mid September till early November, AIGs credit-default spreads were steadily rising, implying the company was pass for default. 5051 On November 10, 2008, the U. S. Treasury annou nced it would purchase $40billion in newly issued AIG senior preferred stock, under the authority of the Emergency scotch Stabilization Acts Troubled Asset Relief Program. 525354 The FRBNY announced that it would characterize the September 16 secured credit facility the Treasury investment would permit a lessening in its size from $85billion to $60billion, and that the FRBNY would pop off the life of the facility from three to five years, and change the intimacy rate from 8. 5% plus the three-month London interbank offered rate (LIBOR) for the total credit facility, to 3% plus LIBOR for funds drawn down, and 0. 75% plus LIBOR for funds not drawn, and that AIG would create two off- balance-sheet Limited obligation Companies (LLC) to hold AIG assets one to act as an AIG residential Mortgage-Backed Securities Facility and the second to act as an AIG Collateralized Debt Obligations Facility. 5254Federal officials utter the $40billion investment would ultimately permit the governm ent to reduce the total exposure to AIG to $112billion from $152billion. 52 On December 15, 2008, the Thomas More righteousness Center filed suit to challenge the Emergency Economic Stabilization Act of 2008, alleging that it unconstitutionally promotes Islamic justice (Sharia) and religion. The lawsuit was filed because AIG provides Takaful Insurance Plans, which, according to the company, avoid investments and proceeding that areun-Islamic. 5556 As of January 2012, tarpaulin had about $50 billion invested in AIG according to one report. run short even for the government was figured at $28. 73 a share v. then-current share price of about $25. 57 edit Counterparty controversy AIG was required to post additional collateral with many creditors and ounter-parties, touching off controversy when over $100billion was salaried out to major ball-shaped financial institutions that had previously received TARP money. While this money was legally owed to the banks by AIG (under correspo ndences do via credit default swaps purchased from AIG by the institutions), a number of Congressmen and media members expressed outrage that taxpayer money was going to these banks through AIG. 58 In January, 2010, a document known as Schedule A List of Derivative proceedings was released to the public, against the wishes of the New York Fed. It listed many of the insurance deals that AIG had with various other parties, such as Goldman Sachs, Societe Generale, Deutsche Bank, and Merrill Lynch. 5960 Had AIG been allowed to fail in a controlled manner through bankruptcy, bondholders and differential gear counterparties (major banks) would have suffered significant losses, limiting the amount of taxpayer funds directly used. Fed Chairman Ben Bernanke argued If a federal agency had appropriate authority on September 16, 2008, they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors and counte rparties as appropriate. That outcome would have been far preferable to the situation we find ourselves in now. 61 edit Post-bailout expenditures The week following the September bailout, AIG employees and distributors participated in a California retreat which approach $444,000 and featured spa treatments, banquets, and golf outings. 6263 It was describe that the slip was a reward for top-performing life-insurance agents be after before the bailout. 64 slight than 24 hours after the news of the party was first reported by the media, it was reported that the Federal Reserve had concord to give AIG an additional loan of up to $37. 8billion. 65 AP reported on October 17 that AIG executives dog-tired $86,000 on a previously scheduled side hunting trip. News of the lavish spending came just geezerhood after AIG received an additional $37. 8billion loan from the Federal Reserve, on top of a previous $85billion emergency loan granted the month before. Regarding the hunting trip, t he company responded, We regret that this event was not canceled. 66 An October 30, 2008 article from CNBC reported that AIG had already drawn upon $90billion of the $123billion allocated for loans. 67 On November 10, 2008, just a few days before renegotiating another bailout with the US Government for $40billion, ABC News reported that AIG spent $343,000 on a trip to a lavish mending in Phoenix, Arizona. 68 edit Settlement of credit default swaps On October 22, 2008, those creditors of Lehman Brothers who bought credit default swaps to hedge them against Lehman bankruptcy settled those accounts. The net payments were $5. 2billion69 even though sign estimates of the amount of the firmness of purpose were between $100billion and $400billion. 70 By December 2008, AIG had paid at least $18. 7billion to various financial institutions, including Goldman Sachs and Societe Generale to retire obligations relate to credit default swaps (CDS). As much as $53. 5billion related to swap pay outs are part of the bailout. 71 On manifest 15, 2009, under mounting pressure from Congress and after consultation with the Federal Reserve, AIG disclosed a list of major recipients of collateral postings and payments under credit default swaps, guaranteed investment agreements, and securities lending agreements. 72 Below is data from one of the charts AIG released, representing only a portion of the total payouts, over a period of a few months. AIG collateral postings to credit default swap counterparties, from the period September 16, 2008 to December 31, 200873 Counterparty US $ stick on Counterparty US $ posted Societe Generale $4,100,000,000 Deutsche Bank $2,600,000,000 Goldman Sachs $2,500,000,000 Merrill Lynch $1,800,000,000 Calyon $1,100,000,000 Barclays $900,000,000 UBS $800,000,000 DZ Bank $700,000,000 Wachovia $700,000,000 Rabobank $500,000,000 KFW $500,000,000 JPMorgan $400,000,000 Banco Santander $300,000,000 Danske Bank $200,000,000 reconstruction Financ e $200,000,000 HSBC Bank $200,000,000 Corporation74 Morgan Stanley $200,000,000 Bank of America $200,000,000 Bank of Montreal $200,000,000 Royal Bank of Scotland $200,000,000 Other (unknown) $4,100,000,000 edit Sales of assets AIG since September 2008 has marketed its assets to pay off its government loans. A global decline in the valuation of insurance businesses, and the enfeebling financial condition of potential bidders, has challenged its efforts. If the U. S. government decides to continue to protect the company from falling into bankruptcy, it may have to take the assets itself in exchange for the loans, or offer further direct financial support. 75 As of September 6, 2009, The Wall Street Journal reported that peace-loving Century Group had agreed to pay $500million for a part of American International Groups asset management business, and that they also expected to pay an additional $200million to AIG in carried interest and other payments linked to future perfor mance of the business. 76 excessively in 2009, AIG sold its operations in Colombia to Ecuadors Banco del Pichincha. On March 1, 2010, insurance company Prudential corroborate that it was in advanced negotiations to buy the Asian operations of AIG. 77 Prudential was to buy the pan-Asian life insurance company, American International Assurance (AIA), for approximately $35. 5billion. 78 On June 1, 2010 the deal failed because AIG would not accept the $30. 5billion after Prudential lowered the amount by $5billion from the originally plotted $35. 5billion after Prudential shareholder discontent. 79 AIG agreed on March 8, 2010, to sell its American Life Insurance Co. unit (ALICO) to MetLife Inc. for $15. 5billion in cash and stock by November 1, 2010. Alico has annuities, life and wellness insurance operations in Japan, Middle East (including Nepal, Bangladesh and Pakistan), Western and Eastern Europe, Latin America and the Caribbean. AIG verbalise it will sell Alico for $6. 8billion i n cash and the remainder in MetLife equity.The deal leaves AIG as the second-largest shareholder of MetLife, with a stake of more than 20% in the company. On March 29, 2010, Bloomberg L. P. reported that after almost three months of delays, AIG had completed the $500million sale of a portion of its asset management business, branded PineBridge Investments, to the Asia-based Pacific Century Group. 80 On September 30, 2010, AIG announced an agreement to sell two of its life insurance companies in Japan, AIG Star and AIG Edison, to Prudential Financial for $4. 2billion in cash and $600million in the assumption of third party debt to help repay some of the money owed to the U. S. government. 81 On November 1, 2010, AIG announced it had raised $36. 71billion from the sale of ALICO and an sign public offering for AIA. The company will use the proceeds Federal Reserve Bank of New York credit facility and make payments on other interests owned by the government. 82 On September 2, 2011, AI G filed with the bit to spin off their aircraft leasing firm, International Lease Finance Corporation (ILFC), in an initial public offering. 83 edit Record losses On March 2, 2009, AIG reported a poop quarter loss of $61. 7bn (? 43bn) and revenue of ? $23. 7bn ( 16. 2bn) for the final three months of 2008. This was the largest quarterly loss in corporate history at that time. 84 The announcement of the loss had an impact on morning trading in Europe and Asia, with the FTSE100, DAX and Nikkei all suffering sharp falls. In the US the Dow Jones Industrial Average fell to below 7000 points, a twelve-year low. 8586 The news of the loss came the day after the U. S. Treasury Department had confirmed that AIG was to get an additional $30billion in aid, on top of the $clbillion it has already received. 87 The Treasury Department suggested that the potential losses to the US and global economy would be extremely high if it were to collapse88 and has suggested that if in future there is no i mprovement, it will invest more money into the company, as it is unwilling to allow it to fail. 89 The firms position as not just a domestic insurer, but also one for small businesses and many listed firms, has prompted US officials to suggest its demise could be disastrous and the Federal Reserve verbalize that AIG posed a systemic risk to the global economy. 84 The fourth quarter result meant the company made a $99. 29billion loss for the whole of 2008,88 with five consecutive quarters of losses costing the company well over $100billion. 89 In a testimony before the Senate Budget mission on March 3, 2009, the Federal Reserve Chairman Ben Bernanke stated that AIG exploited a huge gap in the regulatory system, and to nobodys surprise, made irresponsible bets and took huge losses. 90 edit 2009 employee allowance paymentsMain article AIG bonus payments controversy In March 2009, AIG announced that they were paying $clxvmillion in executive bonuses. Total bonuses for the financial unit could match $450million and bonuses for the entire company could reach $1. 2billion. 91 President Barack Obama, who voted for the AIG bailout as a Senator92 responded to the planned payments by saying Its hard to understand how derivative traders at AIG warranted any bonuses, much less $165million in extra pay. How do they exempt this outrage to the taxpayers who are keeping the company aimless? and In the last six months, AIG has received genuine sums from the U. S. Treasury.Ive asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole. 93 pic pic Protester outside 60 Wall Street Deutsche Banks US main office in the elicit of the bonus controversy is interviewed by news media. Politicians on both sides of the Congressional aisle reacted with outrage to the planned bonuses. Senator Chuck Grassley (R-Iowa) say I would suggest the first thing that would make me feel a little bit better toward th em if theyd follow the Japanese example and come before the American people and take that deep bow and say, Im sorry, and then either do one of two things resign or go commit suicide. 94 Senator Chuck Schumer (D-New York) accused AIG of Alice in Wonderland business practices and said It boggles the mind. He has threatened to tax the bonuses at up to 100%. 95 Senator Richard Shelby (R-Alabama) said These people brought this on themselves. Now youre rewarding failure. A lot of these people should be fired, not awarded bonuses. This is horrible. Its outrageous. 96 Senator Mitch McConnell (R-Kentucky) echoed his comments, saying This is an outrage. 97 Senator Jon Tester (D-Montana) said This is ridiculous. and AIG executives need to understand that the only reason they even have a job is because of the taxpayers. 98 Senator Dick Durbin (D-Illinois) said Ive had it. and The fact that they continue to do it while we rain buckets in billions of dollars is indefensible. 99 Representative Barney Frank (D-Massachusetts), Chairman of the category Financial Services Committee, said paying these bonuses would be rewarding incompetence98 and These people may have a right to their bonuses. They dont have a right to their jobs forever. 96 Representative Mark Kirk (R-Illinois) said AIG should not be on welfare from Uncle Sam, and yet paying bonuses and transferring a considerable amount of taxpayer funds to entities overseas. 99 Federal Reserve Chairman Ben Bernanke said It makes me angry. I slammed the phone more than a few times on discussing AIG. 96 Lawrence Summers, Director of the National Economic Council, said The easy thing would be to just say, you know, Off with their heads, and violate the contracts, but you have to think about the consequences of breaking contracts for the general system of law. 100 Austan Goolsbee, of the Council of Economic Advisers said I dont know why they would follow a policy thats really not sensible, is obviously going to ignite the ir e of millions of people. and You worry about that backlash. 101 Political commentators and journalists expressed an as bipartisan outrage. 94102103104104105106107108109110 On March 24, 2009, The New York generation printed the resignation letter of Jake DeSantis, executive vice professorship of AIGs financial products unit, to Edward M. Liddy, the chief executive of AIG.DeSantis stated he had nothing to do with the credit default swaps, he lost much of his life savings in the form of deferred compensation invested in the capital of AIG Financial Products he had agreed to work for an annual lucre of $1 out of a sense of duty, that he was assured many times the bonuses would be paid in March 2009, and that he believed he and others were let down by Liddys lack of support. He also stated he was going to donate his bonus to those suffering from the global economic downturn. 111 It was reported that Senator Christopher Dodd (D-Con) (who first denied, then admitted to amending the le gislation to allow the AIG bonuses), received $160,000 from employees of AIG. 112113114115 A memo issued in 2006 by Joseph Cassano, AIGFinancial Products chief executive, urged AIG employees to donate to Dodd, saying that as next in line to become chairman of the Senate Banking, Housing, and Urban Affairs Committee Senator Dodd will now have the opportunity to set the committees agenda on issues critical to the financial services industry. 116 edit Manchester United Sponsorship AIG was the principal sponsor of English football club Manchester United from 20062010, and as part of the sponsorship deal, its logotype was prominently displayed on the front of the clubs jerseys and other merchandise. The AIG deal was announced by Manchester United chief executive David Gill on April 6, 2006, for a British clothe sponsorship record ? 56. 5million, to be paid over four years (? 14. 1million a year).The deal became the most valuable sponsorship deal in the world in September 2006, after th e renegotiation and subsequent degrading of the ? 15million-a-year deal Italian team Juventus had with oil firm Tamoil. During AIGs sponsorship, Manchester United enjoyed one of its most successful periods in history, winning the Premier alliance three consecutive years, two Football confederacy Cups, and the UEFA Champions League. citation needed On January 21, 2009, it was announced that AIG would not be diversity its sponsorship of the club at the end of the deal in May 2010. It is not clear, however, whether or not AIGs agreement to run MU Finance will continue.American risk consulting firm Aon Corporation was named the clubs new principal sponsor on June 3, 2009, with its sponsorship of the club taking effect from the beginning of the 201011 season. The terms of the deal were not revealed, but it has been reported to be worth approximately ? 80million over four years. citation needed edit Share buyback collect to the Q3 2011 net loss widened, so on November 3, 2011 the AIG shares has plunged 49 percent year to date. The insurers board has approved the share buyback of as much as $1 billion. 117 edit Litigation pic This section needs additional citations for verification. ravish help improve this article by adding citations to genuine sources.Unsourced material may be challenged and removed. (September 2008) In November 2004, AIG reached a US$126million settlement with the U. S. Securities and Exchange Commission and the Justice Department partly resolving a number of regulatory matters, but the company must still cooperate with investigators continuing to probe the sale of a non-traditional insurance product. 118 On June 11, 2008, three stockholders, collectively owning 4% of the outstanding stock of AIG, delivered a letter to the Board of Directors of AIG seeking to oust CEO Martin Sullivan and make certain other management and Board of Directors changes.This letter was the latest volley in what the Wall Street Journal deemed a public spat betwe en the Companys Board and management, on the one hand, and its key stockholders, and former CEO Maurice Hank Greenberg on the other hand. 119 Death toy Circa 2010 the WSJ reported that a family sued AIG for alleged complicity in a stranger-originated life insurance scheme, whereby AIG managers allegedly welcomed people without an insurable interest to take out life insurance policies against others. The case involved JB Carlson and Germaine Tomlinson, and was one of many similar lawsuits in the US at the time. 120 edit Accounting fraud claimsOn October 14, 2004 the New York State Office of Attorney General Eliot Spitzer announced that it had commenced a civil action against Marsh & McLennan Companies for centering clients to preferred insurers with whom the company maintained lucrative regaining agreements, and for soliciting rigged bids for insurance contracts from the insurers. The Attorney General announced in a release that two AIG executives pleaded shamefaced to criminal c harges in connection with this illegal course of conduct. In early May 2005, AIG restated its financial position and issued a reduction in book value of USD $2. 7billion, a 3. 3 percent reduction in net worth. On February 9, 2006, AIG and the New York State Attorney Generals office agreed to a settlement in which AIG would pay a fine of $1. 6billion. 121 edit Corporate governance edit Board of directors