American International Group (AIG)

History of the Company

American International Group, commonly known as AIG, is a New York City-based insurance company with operations in over 130 countries. AIG provides life insurance, mortgage insurance, property casualty insurance, and retirement services. The company’s founder, Cornelius Vander Starr, started a general insurance agency in 1919 in Shanghai, China. The company quickly grew throughout Asia, and in 1926, Starr opened an office in the U.S., under the name American International Underwriters (AIU). In 1939, the company’s headquarters moved from China to New York City. 

AIG was incorporated in 1967 as an umbrella organization for Starr’s various insurance businesses, and the company went public in 1969. 

AIG was bailed out by the Federal Reserve after the events following the subprime mortgage crisis in 2008. AIG held billions of dollars in securities that were backed by subprime loans. When their credit rating was downgraded as a result, it triggered a series of events that essentially bankrupted the company and prompted the U.S. Reserve Bank to step in and prevent the company from collapsing. The government “bailout” of AIG was the largest in U.S. history, and meant that the government essentially owned AIG.  

After the bailout, AIG focused on downsizing and selling off portions of its business to pay back the bailout loan. In 2012, when the Treasury sold its shares in AIG with a series of offerings, the U.S. government was fully repaid and actually profited on their investment. 

Trading AIG: What You Need to Know

  • The government bailout caused share prices to drop and gave AIG a lot of bad publicity. This negative image led to an undervaluation of the company. Share prices are still undervalued compared to the average, meaning that now is a good time to buy. 
  • In the years since the bailout, AIG repaid the money and used good management and restructuring to post steady growth rates afterwards. AIG is now a favorite of hedge fund managers, demonstrating that they have made a full recovery from the crisis of 2008. 
  • Interest rates are likely to increase after years of low rates. Any increase in interest rates means that AIG will benefit.

Anyone who wants to trade AIG stock should carefully research the latest developments on the company and perform an analysis before trading.

Trade AIG