AIG Company

Grade 12 ABM – 7
Group 2: Afril Kaye Arpia, Caroline Maghinay, Chrystal Belle Cuñada, Gie Grace Cesar,
May Ann Ontong, Jowelyn Nambatac, Marichegail Nagac, Scently Catequista, and Dexter Panes

August 08, 2018

Company Profile:
AIG Company also known as American International Group, Inc is a multinational finance
and Insurance Corporation that provides financial services to its clients in over 130 countries.
Has the capital of over $186 billion and $1 trillion of assets, more than 63000 employees all over
the world and declared the second largest insurance group across U.S.

SWOT Analysis of AIG

Strengths
1. The group has extensive number of staff over 63,000 across the globe.
2. The group enjoys the strong and powerful brand name and its financial position is stable
globally.
3. AIG group provides huge number of services to its clients.
4. The group has strong and tremendous brand building and the visibility of the company across
the world.
5. AIG is the leading financial services provider across the globe.
6. The group involves in corporate advertising and gets the sponsorships for brand building of
the group.
7. The group has tremendous global reach, which has made it excellent group to earn more
revenue.

Weaknesses
1. AIG group has the fluctuating global residential market, which needs to be addressed.
2. The financial position of the group depends on the local market, which is significant weakness
of the group.
3. During the economic recession, AIG has to suffer huge losses.
4. There is controversy in the group for the employees on non-payment issue.
5. The group is facing the issue of reducing cost efficiencies
6. The group has the poor history of regulatory investigations.

Opportunities
1. AIG group has to expand its business in various other countries of the world.
2. The group has presented the diversifying portfolios for their clients.
3. The group needs to look the emerging economies of the world like China & India, which are
still untapped and they can become tremendous market for this company.
4. The group needs different mergers and they need to have acquisitions from different
companies.
5. The company needs to look for the joint ventures, which they can do with the local companies
in order to enhance their insurance business.
6. The group needs to make alliance with Japan Postal insurance.
7. The company needs to focus on the demographics in US and UK.
8. The company has growth in the asset management industry.

Threats
1. The company has to face different government policies and regulations, which can hinder the
progress of the group.
2. The financial crisis like economic recessions can be disastrous for the group.
3. Natural disasters and calamities can add its difficulties in its financial activities.
4. The company faces the regulations on the contingent commission which reduces the margin of
profit.
AIG’s near-failure was a prominent and iconic event in the financial crisis, The Company’s
credit default swaps are generally cited as playing a major role in the collapse, losing AIG $30
billion.
There was this idea that real estate investments were safe because the securities had a AAA
credit rating.
AIG focus on its selling of credit default swaps, which are financial instruments that act like
insurance contracts on bonds.

AIG was accruing unpaid debts—collateral it owed its credit default swap partners, but did not
have to hand over due to the agreements’ collateral provisions.

On September 15, 2008, the day all three major agencies downgraded AIG to a credit rating
below AA-, calls for collateral on its credit default swaps rose to $32 billion

Securities lending lost the company a massive amount of money as well. People were worried
about AIG in the summer of 2008, when an analyst report suggested the company was in for
trouble. people started to terminate their agreements asking for their collateral back.

The values of the securities underlying these transactions were falling, due to falling real estate
prices and higher foreclosures.

But AIG was considered too big to fail. Because of an incredible amount of institutional
investors -- mutual funds, pension funds and hedge funds -- both invested in and also were
insured by the company.