American International Group – AIG – SWOT Analysis

American International Group, Inc. listed in NYSE as AIG is an American insurance corporation. Although being an American firm, it has its origins in China in 1919. Its corporate headquarter is located in the American International Building in New York City. It is a holding company that is engaged primarily in insurance-related activities in the US and abroad. The company’s four segments are: General Insurance, Domestic Life Insurance & Retirement Services, Foreign Life Insurance & Retirement Services, and Financial Services.

Strengths:

• Ranked as 16 in fortune 500, from last year’s rank 245 (2010).

• It was known as the world fourth largest company in Global Forbes list (2000).

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

• Renowned for being the largest industrial insurance and underwriter company.

• It operates in life-insurance and retirement services, financial services, general-insurance and asset-management.

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

• It has direct employees of about 116,000 people, and has over 714,000 brokers worldwide.

• It holds it core competency in customer satisfaction; hence the company tries to keep its customer base in close contact.

• It offers its services in more than 130 countries.

• The company owns ILFC, known to be the largest aircraft leasing company.

• The stocks of AIG are gaining momentum after a long hibernation.

• It owns more than 4000 units.

Weaknesses:

• The company suffered from the degradation regarding its credit ratings (2008).

• The company strike a deal with the US Fed Reserve Bank, to get a $85 billion credit facility and issue a stock warrant that signifies that the FRB will get 79.9% of the equity of AIG.

• It had to sell a number of its subsidiaries in order to fulfill the loaned amount.

• The company is highly dependant on the US market.

• Legal obligations and Government regulations.

• Lawsuit on behalf of AIG policyholders for securing a sound account by operating in California.

• Holds the biggest federal bailout in the US history with a rescue package of total $182 billion.

Opportunities:

• Positive rhyme of the company can soothe off the high level loan that it has acquired.

• According to the deal that the Treasury Dept made with the company, it is a temporary ownership till the company can hold its own.

• Fed Govt. plans to sell part of the company’s stake 1/5th.

• Pay back $20 billion to Fed from sales of a life insurance unit MetLife, the sale amounting to yield $6.8 billion cash and $8.7 billion in stock.

• Public offering from on Hong Kong Exchange that would make the company cash in earlier and help in repayment of the debts.

• A $26 billion unused emergency portion was made available for the company in 2009 that can be used for assistance means.

Threats:

• The massive amount of bailout loan still lingering on AIG’s shoulder.

• Govt. regulators and policy makers regarding the loan payment plan.

• The negative impact on the company creating a plague on the customers mind regarding the insured amount.

• The company’s ability to pay back the loaned amount, and the firms that are counting against it in order to succeed.

References:
http://www.insuranceusa.com/AIG-Insurance.php
http://www.nytimes.com/2009/07/31/business/31aig.html
http://money.cnn.com/magazines/fortune/fortune500/2010/snapshots/2469.html
http://www.royalgazette.com/article/20101228/BUSINESS01/712289949/-1/BUSINESS
http://topics.nytimes.com/top/news/business/companies/american_international_group/index.html
http://www.managementparadise.com/forums/principles-management-p-o-m/208227-swot-analysis-american-international-group-inc-aig.html
http://stockalerts.co/earnings/surprise-aig-is-a-hot-stock-again-seriously/
http://www.yousigma.com/comparativeanalysis/americaninternationalgroup.html
http://dealbook.nytimes.com/2010/12/08/a-i-g-plans-big-sale-of-treasurys-shares-next-quarter/?scp=2&sq=aig&st=cse