The document discusses the systemic risk posed by AIG and how its failure could impact the US and global economy. It notes that AIG operates in over 140 countries, has over $1 trillion in insurance and financial services businesses, and its failure in 2008 threatened to trigger further failures around the world. The summary concludes that AIG's vast interconnected operations, if allowed to fail, would cause turmoil in the US economy and global markets with potentially catastrophic and unforeseen consequences.
The document discusses the systemic risk posed by AIG and the insurance industry. It states that AIG's vast, global operations spanning insurance and financial services exposes it to correlated risks across multiple sectors. If AIG were to fail, it could trigger further failures and turmoil in U.S. and global markets due to its extensive interconnections. The failure of AIG would also threaten consumer and business confidence worldwide.
The document discusses the systemic risk posed by an AIG failure and its potential consequences. It summarizes that an AIG failure would:
1) Have devastating impacts on the global economy due to AIG's extensive business operations and interconnections.
2) Potentially trigger a "run on the bank" for AIG's $1.9 trillion in life insurance policies and cause turmoil in credit markets beyond the Lehman fallout.
3) Negatively impact the U.S. government's efforts to stabilize the economy by crushing confidence and increasing borrowing costs.
Flood risk in New Jersey poses a serious threat to its economy and insurance market. On average, the state experiences 1.5 flood events per year resulting in $138 million in insured losses. Recent decades have seen above average losses, with annual losses averaging $240 million since 1990. The current National Flood Insurance Program is unsustainable and does not adequately account for flood risk zones or climate change impacts. Public-private partnerships and alternative risk transfer products are needed to help prepare New Jersey's economy and make the insurance industry more resilient to increasing flood risks.
The document discusses the subprime crisis. It defines subprime loans as high-risk loans given to borrowers who do not qualify for standard interest rates due to factors like income, down payment size, credit history, or employment status. The key causes of the crisis were securitization of subprime mortgages, adjustable rate mortgages, inaccurate credit ratings, and excessive risk taking by government sponsored enterprises. The impacts included losses for financial institutions in 2007-2008 that wiped out capital and led to the failure of Lehman Brothers. Years later, there were still over a million homes in foreclosure.
Presentation by Shukri Ahmed, Rene Gommes , Craig McIntosh and Alexander Sarris at the Index insurance for agriculture in Ethiopia, Addis Ababa, Ethiopia, 9 December 2010.
This complete deck can be used to present to your team. It has PPT slides on various topics highlighting all the core areas of your business needs. This complete deck focuses on Financial Crisis PowerPoint Presentation Slides and has professionally designed templates with suitable visuals and appropriate content. This deck consists of total of twenty eight slides. All the slides are completely customizable for your convenience. You can change the colour, text and font size of these templates. You can add or delete the content if needed. Get access to this professionally designed complete presentation by clicking the download button below. https://bit.ly/3fyIZc7
For Immediate Release State Regulators Aig Insurers Able To PayAIGdocs
State insurance regulators have taken steps to ensure that AIG's insurance subsidiaries remain solvent and able to pay claims, despite financial troubles at AIG's non-insurance parent company. The regulators have established oversight of AIG insurance interests during this financial situation. State insurance regulators have tools like investment regulations and capital requirements that have kept the subsidiaries solvent, unlike the federally regulated parent company. If an insurer were to fail, policyholders are protected by state guaranty funds that would help pay claims. The insurance subsidiaries did not cause the crisis and will play a role in the solution.
The Economic Crisis of 2008 (US Housing Bubble) - Inside Job Movievalliappan1991
This document clearly narrates the events that led to the economic crisis of 2008 resulting in a global recession. In 2008, many global banks collapsed and had to be bailed out by the US government.
The document discusses the systemic risk posed by AIG and the insurance industry. It states that AIG's vast, global operations spanning insurance and financial services exposes it to correlated risks across multiple sectors. If AIG were to fail, it could trigger further failures and turmoil in U.S. and global markets due to its extensive interconnections. The failure of AIG would also threaten consumer and business confidence worldwide.
The document discusses the systemic risk posed by an AIG failure and its potential consequences. It summarizes that an AIG failure would:
1) Have devastating impacts on the global economy due to AIG's extensive business operations and interconnections.
2) Potentially trigger a "run on the bank" for AIG's $1.9 trillion in life insurance policies and cause turmoil in credit markets beyond the Lehman fallout.
3) Negatively impact the U.S. government's efforts to stabilize the economy by crushing confidence and increasing borrowing costs.
Flood risk in New Jersey poses a serious threat to its economy and insurance market. On average, the state experiences 1.5 flood events per year resulting in $138 million in insured losses. Recent decades have seen above average losses, with annual losses averaging $240 million since 1990. The current National Flood Insurance Program is unsustainable and does not adequately account for flood risk zones or climate change impacts. Public-private partnerships and alternative risk transfer products are needed to help prepare New Jersey's economy and make the insurance industry more resilient to increasing flood risks.
The document discusses the subprime crisis. It defines subprime loans as high-risk loans given to borrowers who do not qualify for standard interest rates due to factors like income, down payment size, credit history, or employment status. The key causes of the crisis were securitization of subprime mortgages, adjustable rate mortgages, inaccurate credit ratings, and excessive risk taking by government sponsored enterprises. The impacts included losses for financial institutions in 2007-2008 that wiped out capital and led to the failure of Lehman Brothers. Years later, there were still over a million homes in foreclosure.
Presentation by Shukri Ahmed, Rene Gommes , Craig McIntosh and Alexander Sarris at the Index insurance for agriculture in Ethiopia, Addis Ababa, Ethiopia, 9 December 2010.
This complete deck can be used to present to your team. It has PPT slides on various topics highlighting all the core areas of your business needs. This complete deck focuses on Financial Crisis PowerPoint Presentation Slides and has professionally designed templates with suitable visuals and appropriate content. This deck consists of total of twenty eight slides. All the slides are completely customizable for your convenience. You can change the colour, text and font size of these templates. You can add or delete the content if needed. Get access to this professionally designed complete presentation by clicking the download button below. https://bit.ly/3fyIZc7
For Immediate Release State Regulators Aig Insurers Able To PayAIGdocs
State insurance regulators have taken steps to ensure that AIG's insurance subsidiaries remain solvent and able to pay claims, despite financial troubles at AIG's non-insurance parent company. The regulators have established oversight of AIG insurance interests during this financial situation. State insurance regulators have tools like investment regulations and capital requirements that have kept the subsidiaries solvent, unlike the federally regulated parent company. If an insurer were to fail, policyholders are protected by state guaranty funds that would help pay claims. The insurance subsidiaries did not cause the crisis and will play a role in the solution.
The Economic Crisis of 2008 (US Housing Bubble) - Inside Job Movievalliappan1991
This document clearly narrates the events that led to the economic crisis of 2008 resulting in a global recession. In 2008, many global banks collapsed and had to be bailed out by the US government.
The financial crisis of 2008 originated from the collapse of the US housing market and subprime mortgage crisis. Risky mortgage loans were bundled into securities that were given high credit ratings and sold widely. When housing prices declined and mortgage defaults increased, the value of these securities plummeted. This caused the failure of major financial institutions, a stock market decline, and a recession around the world.
The document summarizes the causes and effects of the 2008 global financial crisis, known as the global meltdown. It discusses how loose lending standards for subprime mortgages in the US housing market led to a housing bubble. Complex financial products distributed these risky mortgages globally. The bubble eventually burst, leading to the collapse of major financial institutions in the US. The crisis spread worldwide and caused a global economic slowdown, rising unemployment, and government bailouts totaling $2.4 trillion. India's economy was also impacted through weakened sectors like IT, real estate, and exports.
American International Group (AIG) is a major American insurance corporation headquartered in New York City. It was founded in 1919 in Shanghai, China and provides insurance, financial services, and other products worldwide. AIG suffered a liquidity crisis during the 2008 financial crisis due to losses on mortgage-backed securities, requiring a $182 billion bailout from the U.S. Federal Reserve to avoid bankruptcy.
US Recession 2008 Powerpoint Presentation SlidesSlideTeam
Be prepared for both natural and unnatural fluctuations in the economy by employing these US Recession 2008 PowerPoint Presentation Slides. Take assistance from these global depression PPT slides, to fully dissect the impact and financial crisis cost of the economic downturn. Exhibit the plan of action and the roadmap to safeguard your business through this content-specific economic-stagnation PowerPoint presentation. Analyze the factors that led to this economic recession and the key figures that aggravated the downfall using our professionally created universal slump PPT theme. Understand the strategies that helped the businesses who bought CDO survive by using our stagflation PPT layouts. Prepare a well-structured and in-sequence timeline of the leading events to keep track of the changing economic factors with the assistance of our global downturn PPT templates. This economic decline PPT deck will assist you in formulating a detailed and thoughtful business plan for your company. Download this global recession PPT deck and educate your audience about major economic events in an accessible way. https://bit.ly/3ccMmGl
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
The document discusses the 2008 financial crisis and the role of AIG. It explains that AIG sold credit default swaps to insure collateralized debt obligations (CDOs), effectively taking on insurance risks without sufficient reserves. This led AIG to require a government bailout when the housing market collapsed and many CDOs failed. The document also discusses the roles of other institutions like Lehman Brothers, Morgan Stanley, and Goldman Sachs in selling toxic assets and profiting until the crisis hit. Rating agencies are criticized for giving high ratings that did not accurately capture risk.
This document is a term paper analyzing factors that made the 2007-2008 financial crisis, recession, and recovery unique. It discusses how loose lending standards for subprime mortgages led to a housing bubble and crisis. New complex financial products spread risk but also lacked transparency. A lack of regulation exacerbated problems. The Federal Reserve also contributed by keeping interest rates unusually low for years, fueling risky lending and a housing boom. This led to a severe crisis unlike previous recessions and a very slow recovery.
Moody's Credit Ratings & the Subprime Mortgage MeltdownKoyi Tan
Moody's ratings of mortgage-backed securities contributed to the 2008 financial crisis. Moody's underestimated the risks of subprime mortgages and assigned high credit ratings to securities backed by subprime mortgages. This misled investors and allowed the flawed mortgage market to grow substantially. Multiple parties share blame for the crisis, but Moody's inaccurate ratings were a key factor that enabled the crisis. New regulations were implemented through the Dodd-Frank Act, but it did not fully address the root causes and has been criticized for favoring large banks over other entities.
American International Group, Inc., also known as AIG, is an American multinational finance and insurance corporation with operations in more than 80 countries and jurisdictions. As of December 31, 2016, AIG companies employed 56,400 people.The company operates through three core businesses: General Insurance, Life & Retirement, and a standalone technology-enabled subsidiary
American International Group (AIG) failed due to excessive risk taking in credit default swaps without proper collateral or oversight. AIG's Financial Products unit sold over $2.7 trillion in swaps and could not pay out when the housing market collapsed. AIG exploited gaps in regulation and lacked oversight of its risky activities. When credit ratings declined and losses mounted, AIG required an $85 billion government bailout to avoid bankruptcy.
The document provides a monthly financial sector trends report covering September and October 2012. It summarizes five key trends:
1) U.S. foreclosure activity decreased nationally but increased in Florida, frustrating homeowners there. This may increase demand for assistance with loan modifications.
2) Americans feel increasingly optimistic about their own finances and local economies but maintain low savings rates, representing an opportunity for financial advising.
3) Cash-strapped baby boomers have little discretionary income left after expenses, relying heavily on Social Security. They would benefit from retirement planning assistance.
4) Many consumers admit to costly financial mistakes in the past and remain wary of risk despite renewed optimism. Clear explanations of services can
The US recession of 2008 was caused by the collapse of the housing bubble fueled by predatory lending practices and deregulation of the financial industry. Subprime mortgages were provided to borrowers who could not afford them, and these risky loans were repackaged and sold as secure investments. When borrowers began to default, the value of these investments collapsed, triggering a global financial crisis as major banks and institutions faced huge losses. The recession had widespread impact around the world and governments spent trillions bailing out failing banks.
P&C Market Outlook: 2020 Insurance Planning Insights CBIZ, Inc.
After approximately 20 years of a soft, buyer-friendly insurance market, we are facing a hardening market – one that is less friendly to insurance buyers. This article discusses trends to be aware of, rate forecasts, factors you can manage that affect your rates and tips for insurance buyers.
The document discusses Solvency II certification programs for professionals and legal challenges around implementing Solvency II regulations before the deadline. It also discusses debates around how much capital insurers should hold to meet life insurance guarantees. The document then discusses natural catastrophes, their increasing costs, and how risk is transferred through the insurance sector from policyholders to reinsurers to other financial institutions.
The documentary Inside Job examines the 2008 financial crisis. It analyzes the changes in the financial industry that led to the crisis, including political moves toward deregulation. This allowed large risks to be taken and regulations to be circumvented. The crisis began with rampant lending and investing on Wall Street. Banks financed subprime mortgages and mortgage-backed securities became very profitable. However, the housing prices were inflated in a bubble that eventually burst in 2006-2007 when homeowners began defaulting on loans. Despite signs of growing risks, regulators refused to intervene and the financial system crisis ensued in 2008.
The document discusses deposit insurance schemes that have been established in many countries around the world. It notes that over 50% of countries have established such schemes to increase depositor confidence and stability in the banking system by guaranteeing deposits. However, deposit insurance also creates moral hazard by removing depositor discipline over bank risk-taking. The document analyzes differences in features of deposit insurance schemes, such as coverage limits, funding structures, use of risk-adjusted premiums, and membership types. Effective bank regulation and supervision are needed to mitigate the moral hazard created by deposit insurance.
The document summarizes the global financial crisis of 2008. It describes how the crisis originated from the collapse of the US housing bubble and subprime mortgage crisis. Risky subprime mortgages were bundled into securities and spread throughout the global financial system. This led to the bankruptcy of major financial institutions like Lehman Brothers and the near failure of insurance giant AIG. Governments around the world implemented bailout packages totaling over $2 trillion to stabilize their financial systems and stimulate economic recovery. The crisis had significant impacts on trade, unemployment, and economic growth worldwide.
1) Microinsurance in India has grown rapidly in recent years but over 90% of the population remains uninsured. Key developments include the 2005 microinsurance regulation by IRDA and growth of government schemes like RSBY.
2) Life insurance, especially credit-life, dominates the microinsurance sector in India. New products like Max Vijay are emerging but savings-linked microinsurance remains underdeveloped. Health and crop insurance have also grown but face challenges around implementation and basis risk.
3) Innovations include index-based crop insurance partnerships and programs to expand micro-pensions to informal sectors. However, most microinsurance remains supply-driven and seeks subsidies over designing sustainable customer-centric products. Strategic perspectives and
The document summarizes arguments about the causes of the 2007-2008 global financial crisis. It discusses how a combination of easy credit, rising housing prices, subprime mortgages, and systemic linkages between financial institutions led to a crisis larger than expected losses could explain. The regulatory framework failed to mitigate moral hazard or consider how interlinkages could spread shocks, while quantitative models underestimated risks. Overall, globalization and asymmetric information exacerbated systemic risk in the financial system.
This document appears to be the results listing for the III Gran Fondo Ciudad de Oliva 2009 bicycle race. It lists the rankings of participants with their dorsal number, official and actual times, split times, name, category, club, and category number. The winner was Tomas Sanchis with an official time of 50 minutes even.
The document summarizes a workshop on how to build a business using social media. It discusses what social media is, who is using it, and how businesses can use different types of social media like blogs, microblogs, forums, networks, games, media sharing, wikis, tags and aggregators to communicate, build relationships and be successful. It provides statistics on popular social media platforms and tools and case studies of how companies like Best Western Hotels and Kenneth Cole have used blogs and social networks to increase sales and engage customers.
The financial crisis of 2008 originated from the collapse of the US housing market and subprime mortgage crisis. Risky mortgage loans were bundled into securities that were given high credit ratings and sold widely. When housing prices declined and mortgage defaults increased, the value of these securities plummeted. This caused the failure of major financial institutions, a stock market decline, and a recession around the world.
The document summarizes the causes and effects of the 2008 global financial crisis, known as the global meltdown. It discusses how loose lending standards for subprime mortgages in the US housing market led to a housing bubble. Complex financial products distributed these risky mortgages globally. The bubble eventually burst, leading to the collapse of major financial institutions in the US. The crisis spread worldwide and caused a global economic slowdown, rising unemployment, and government bailouts totaling $2.4 trillion. India's economy was also impacted through weakened sectors like IT, real estate, and exports.
American International Group (AIG) is a major American insurance corporation headquartered in New York City. It was founded in 1919 in Shanghai, China and provides insurance, financial services, and other products worldwide. AIG suffered a liquidity crisis during the 2008 financial crisis due to losses on mortgage-backed securities, requiring a $182 billion bailout from the U.S. Federal Reserve to avoid bankruptcy.
US Recession 2008 Powerpoint Presentation SlidesSlideTeam
Be prepared for both natural and unnatural fluctuations in the economy by employing these US Recession 2008 PowerPoint Presentation Slides. Take assistance from these global depression PPT slides, to fully dissect the impact and financial crisis cost of the economic downturn. Exhibit the plan of action and the roadmap to safeguard your business through this content-specific economic-stagnation PowerPoint presentation. Analyze the factors that led to this economic recession and the key figures that aggravated the downfall using our professionally created universal slump PPT theme. Understand the strategies that helped the businesses who bought CDO survive by using our stagflation PPT layouts. Prepare a well-structured and in-sequence timeline of the leading events to keep track of the changing economic factors with the assistance of our global downturn PPT templates. This economic decline PPT deck will assist you in formulating a detailed and thoughtful business plan for your company. Download this global recession PPT deck and educate your audience about major economic events in an accessible way. https://bit.ly/3ccMmGl
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
The document discusses the 2008 financial crisis and the role of AIG. It explains that AIG sold credit default swaps to insure collateralized debt obligations (CDOs), effectively taking on insurance risks without sufficient reserves. This led AIG to require a government bailout when the housing market collapsed and many CDOs failed. The document also discusses the roles of other institutions like Lehman Brothers, Morgan Stanley, and Goldman Sachs in selling toxic assets and profiting until the crisis hit. Rating agencies are criticized for giving high ratings that did not accurately capture risk.
This document is a term paper analyzing factors that made the 2007-2008 financial crisis, recession, and recovery unique. It discusses how loose lending standards for subprime mortgages led to a housing bubble and crisis. New complex financial products spread risk but also lacked transparency. A lack of regulation exacerbated problems. The Federal Reserve also contributed by keeping interest rates unusually low for years, fueling risky lending and a housing boom. This led to a severe crisis unlike previous recessions and a very slow recovery.
Moody's Credit Ratings & the Subprime Mortgage MeltdownKoyi Tan
Moody's ratings of mortgage-backed securities contributed to the 2008 financial crisis. Moody's underestimated the risks of subprime mortgages and assigned high credit ratings to securities backed by subprime mortgages. This misled investors and allowed the flawed mortgage market to grow substantially. Multiple parties share blame for the crisis, but Moody's inaccurate ratings were a key factor that enabled the crisis. New regulations were implemented through the Dodd-Frank Act, but it did not fully address the root causes and has been criticized for favoring large banks over other entities.
American International Group, Inc., also known as AIG, is an American multinational finance and insurance corporation with operations in more than 80 countries and jurisdictions. As of December 31, 2016, AIG companies employed 56,400 people.The company operates through three core businesses: General Insurance, Life & Retirement, and a standalone technology-enabled subsidiary
American International Group (AIG) failed due to excessive risk taking in credit default swaps without proper collateral or oversight. AIG's Financial Products unit sold over $2.7 trillion in swaps and could not pay out when the housing market collapsed. AIG exploited gaps in regulation and lacked oversight of its risky activities. When credit ratings declined and losses mounted, AIG required an $85 billion government bailout to avoid bankruptcy.
The document provides a monthly financial sector trends report covering September and October 2012. It summarizes five key trends:
1) U.S. foreclosure activity decreased nationally but increased in Florida, frustrating homeowners there. This may increase demand for assistance with loan modifications.
2) Americans feel increasingly optimistic about their own finances and local economies but maintain low savings rates, representing an opportunity for financial advising.
3) Cash-strapped baby boomers have little discretionary income left after expenses, relying heavily on Social Security. They would benefit from retirement planning assistance.
4) Many consumers admit to costly financial mistakes in the past and remain wary of risk despite renewed optimism. Clear explanations of services can
The US recession of 2008 was caused by the collapse of the housing bubble fueled by predatory lending practices and deregulation of the financial industry. Subprime mortgages were provided to borrowers who could not afford them, and these risky loans were repackaged and sold as secure investments. When borrowers began to default, the value of these investments collapsed, triggering a global financial crisis as major banks and institutions faced huge losses. The recession had widespread impact around the world and governments spent trillions bailing out failing banks.
P&C Market Outlook: 2020 Insurance Planning Insights CBIZ, Inc.
After approximately 20 years of a soft, buyer-friendly insurance market, we are facing a hardening market – one that is less friendly to insurance buyers. This article discusses trends to be aware of, rate forecasts, factors you can manage that affect your rates and tips for insurance buyers.
The document discusses Solvency II certification programs for professionals and legal challenges around implementing Solvency II regulations before the deadline. It also discusses debates around how much capital insurers should hold to meet life insurance guarantees. The document then discusses natural catastrophes, their increasing costs, and how risk is transferred through the insurance sector from policyholders to reinsurers to other financial institutions.
The documentary Inside Job examines the 2008 financial crisis. It analyzes the changes in the financial industry that led to the crisis, including political moves toward deregulation. This allowed large risks to be taken and regulations to be circumvented. The crisis began with rampant lending and investing on Wall Street. Banks financed subprime mortgages and mortgage-backed securities became very profitable. However, the housing prices were inflated in a bubble that eventually burst in 2006-2007 when homeowners began defaulting on loans. Despite signs of growing risks, regulators refused to intervene and the financial system crisis ensued in 2008.
The document discusses deposit insurance schemes that have been established in many countries around the world. It notes that over 50% of countries have established such schemes to increase depositor confidence and stability in the banking system by guaranteeing deposits. However, deposit insurance also creates moral hazard by removing depositor discipline over bank risk-taking. The document analyzes differences in features of deposit insurance schemes, such as coverage limits, funding structures, use of risk-adjusted premiums, and membership types. Effective bank regulation and supervision are needed to mitigate the moral hazard created by deposit insurance.
The document summarizes the global financial crisis of 2008. It describes how the crisis originated from the collapse of the US housing bubble and subprime mortgage crisis. Risky subprime mortgages were bundled into securities and spread throughout the global financial system. This led to the bankruptcy of major financial institutions like Lehman Brothers and the near failure of insurance giant AIG. Governments around the world implemented bailout packages totaling over $2 trillion to stabilize their financial systems and stimulate economic recovery. The crisis had significant impacts on trade, unemployment, and economic growth worldwide.
1) Microinsurance in India has grown rapidly in recent years but over 90% of the population remains uninsured. Key developments include the 2005 microinsurance regulation by IRDA and growth of government schemes like RSBY.
2) Life insurance, especially credit-life, dominates the microinsurance sector in India. New products like Max Vijay are emerging but savings-linked microinsurance remains underdeveloped. Health and crop insurance have also grown but face challenges around implementation and basis risk.
3) Innovations include index-based crop insurance partnerships and programs to expand micro-pensions to informal sectors. However, most microinsurance remains supply-driven and seeks subsidies over designing sustainable customer-centric products. Strategic perspectives and
The document summarizes arguments about the causes of the 2007-2008 global financial crisis. It discusses how a combination of easy credit, rising housing prices, subprime mortgages, and systemic linkages between financial institutions led to a crisis larger than expected losses could explain. The regulatory framework failed to mitigate moral hazard or consider how interlinkages could spread shocks, while quantitative models underestimated risks. Overall, globalization and asymmetric information exacerbated systemic risk in the financial system.
This document appears to be the results listing for the III Gran Fondo Ciudad de Oliva 2009 bicycle race. It lists the rankings of participants with their dorsal number, official and actual times, split times, name, category, club, and category number. The winner was Tomas Sanchis with an official time of 50 minutes even.
The document summarizes a workshop on how to build a business using social media. It discusses what social media is, who is using it, and how businesses can use different types of social media like blogs, microblogs, forums, networks, games, media sharing, wikis, tags and aggregators to communicate, build relationships and be successful. It provides statistics on popular social media platforms and tools and case studies of how companies like Best Western Hotels and Kenneth Cole have used blogs and social networks to increase sales and engage customers.
The document provides advice from various authors on writing. It emphasizes that writing requires effort and detail to be engaging. Details bring writing to life like a painting. Good writing also avoids being vague and ensures the reader understands without needing additional context. Concise writing uses words and details efficiently to clearly convey ideas.
This document introduces Ruby on Rails as a web framework that uses the Ruby language and is easy to write, understand, and maintain. It notes that major websites like Twitter and GitHub use Rails and provides a quick example of generating a memo pad application. The document also explains that Rails can be installed using the gem package manager after first installing Ruby.
Rational numbers include any numbers that can be made by dividing one integer by another, such as 1/2 or 0.75. Integers are whole numbers that can be positive, negative, or zero, including 10, 0, 25, and 5,148. Real numbers encompass all rational numbers along with numbers like 1, 2, 3, 4, and 5 that have no negatives or fractions.
The document appears to be a website menu or catalog listing various categories of clothing including women's items, men's items, accessories, pants, and hats. It repeats these same categories over multiple lines without providing any additional context or information.
The document discusses a student film project titled "Day Break". The film would follow a group of friends watching a horror film, with one friend becoming deranged and killing the others one by one. Primary research found that horror and comedy appeal most to the target 18-25 demographic. Secondary research on teaser trailers and the use of hand-held camera techniques would influence the filmmaking process.
The document discusses potential photos to use in a music magazine focused on rock and indie genres. Several photos are described that could work well: 1) A black and white photo that would allow colorful fonts to stand out. 2) A photo set in a normal environment with a guitar to link to the music genre. 3) A photo of an artist singing and playing guitar that directly relates to the genre, though limited colors may not work well. 4) A photo of an artist playing guitar that could benefit from a more rock/indie style background. Overall, natural photos showing music artists and instruments are seen as fitting best.
The demand, supply and composition of food over the next decade faces major challenges from demographics, obesity, hunger, globalization, sustainability, and consumer choice. There are three main certainties: demographic changes as the population grows, environmental constraints as resources diminish, and technological advances in areas like biotechnology. To address these challenges, we need increased global investment in agriculture technology research to boost food production efficiency through another "green revolution." Regulations and public-private partnerships will also be needed to develop solutions and direct resources appropriately. How these challenges are navigated globally will significantly impact world economics, politics, and societies over the coming years.
Global warming is defined as the increase in the average temperature of Earth. It is caused by industrialization and the emission of greenhouse gases from burning fossil fuels. The effects of global warming include a drastic rise in temperatures, rising sea levels, wild weather conditions, and melting glaciers. To prevent further global warming, we must adopt alternative energy sources, conserve energy through efforts like recycling, and engage in reforestation. Urgent action is needed now to address this threat.
Diane Coyle discusses the challenges of authenticity in the digital age. New technologies have made it easy to create multiple online identities and copies of digital content. This has increased the value of authenticity while also enabling the spread of inauthentic information. Maintaining authentic identities and verifying information online will require credible digital identities, intellectual property protections, and widespread access to communications. Technology can both restrict and enable authentic experiences, so balancing these issues will be important going forward.
The document discusses how tablets like the iPad are revolutionizing professional sports by allowing teams to access materials from anywhere, sharing information more easily for collaboration, and providing up-to-date data on opponents. It also outlines how tablets provide increased flexibility, mobility, and opportunities for real-time response compared to traditional computers. Examples are given of how the Tampa Bay Buccaneers now use iPads to access game plans and materials rather than hauling around paper binders.
The document discusses choosing a font for a music magazine focused on modern rock and indie music. It considers several fonts that could fit the genre by looking edgy or like a band logo. It mentions exploring different colors as well to see which pair best with the selected font. The document concludes it will try out the various fonts being considered for the magazine splash page to see which looks best.
This document outlines the requirements for a 10th grade research writing project. Students must write a 3-4 page research paper on a self-selected topic, incorporating at least 3 credible sources. They must include a works cited page with internal citations. Additionally, students must create a research poster and give a 3-4 minute oral presentation. The project is worth 300 total points and accounts for about 10% of students' grades. The document provides guidance on topic selection, research methods, formatting, and answers frequently asked questions.
The document summarizes the results of a questionnaire given to 20 people aged 15-20 to gather feedback on an animatic for a music video. The questionnaire used closed questions to collect qualitative data about the narrative clarity, motif, use of performance shots, effectiveness of a sign during lyrics, and potential improvements. The responses were analyzed using tables, graphs, pie charts and bar charts to understand opinions in each area and identify aspects that could be enhanced for the final music video.
This document discusses the verb "to be" in English grammar. It introduces the present tense forms of the verb to be for the first, second, and third person singular pronouns. It also covers the negative and interrogative forms of the verb to be using examples.
The document discusses how mobile technology is revolutionizing productivity and businesses must adapt, providing examples of how the iPad and mobile apps can be used for daily management, content access, dashboards, and improving processes. It also lists resources for using iPads more productively in business and predicts that by 2015 half of all web sales and most workforces will utilize mobile apps and personal devices.
Credit Crisis - The Story of AIG's Financial Mismanagement and BailoutRovarovaivalu Vesikula
1) AIG's securities lending business and credit default swap business through its AIGFP subsidiary led to huge losses during the financial crisis, recording $21 billion and $20 billion in losses respectively.
2) AIG's securities lending business invested cash collateral heavily in mortgage-backed securities, which declined in value during the crisis. Its CDS portfolio insured multi-sector CDOs that were backed by subprime mortgages and also declined.
3) The US government bailed out AIG with an initial $85 billion loan and later additional assistance. It set up special purpose vehicles like Maiden Lane II and III to acquire troubled assets from AIG and ease its liquidity problems. The bailout
1. American International Group (AIG) was bailed out by the US government during the 2008 financial crisis after facing bankruptcy from risky bets on mortgage-backed securities.
2. A new study found that AIG executives were wrong to claim the underlying mortgage assets were "money good" or safe long-term investments, as they actually incurred substantial losses.
3. AIG's risky bets through credit default swaps and securities lending, as well as a liquidity crunch when counterparties demanded payment, left the insurance giant vulnerable when the housing market collapsed.
Credit Crisis And Insurance Regulation In AsiaAshok Antony
The document summarizes regulatory responses to the financial crisis across Asian insurance markets. It finds that Asian insurers were relatively unaffected due to conservative investment regulations limiting exposure to risky overseas assets. However, stock market declines impacted investment yields and sales of investment-linked products. Regulators increased supervision of weak insurers and tightened rules on complex products. Regulatory responses varied, with some countries relaxing requirements while others increased supervision. Overall, regulation plays a key role in industry growth by restoring consumer confidence.
The document discusses insurance industry leaders' predictions for 2009 in light of the financial crisis. They predict:
- Sales will be flat or increase slightly while profits will be lower. Term and Medicare products may see increases while variable products will be weak.
- The financial crisis will lead to some industry consolidation and lower earnings. It may cause companies to rethink product guarantees. Insurers will focus on restoring consumer confidence.
- Products with guarantees like universal life and fixed annuities will perform better as consumers seek stability. Variable products may slow as markets remain volatile. Insurers will focus on hedging risks from guarantees in variable annuities.
This document discusses the potential impacts of COVID-19 on insurers. It finds that life insurers could be hit particularly hard by increased mortality claims if death rates reach levels seen in past pandemics. Widespread bond downgrades and lower interest rates would add to difficulties. If insurers' risk appetite declines significantly, it could reduce their credit supply to the broader economy. The impact varies by type of insurer, with life insurers most exposed to mortality risk and property and casualty insurers facing pressure over business interruption claims.
Insurance M&A activity in the US rose to unprecedented levels in 2015, surpassing what had been a banner year in 2014. There were 476 announced deals in the insurance sector, 79 of which had disclosed deal values with a total announced value of $53.3 billion. This was a significant increase from the 352 announced deals in 2014, of which 73 had disclosed deal values with a total announced value of $13.5 billion. Furthermore, unlike prior years where US insurance deal activity was isolated to specific subsectors, 2015 saw a significant increase in deal activity in all industry subsectors.
American International Group (AIG) is a major global insurance company founded in 1919 in Shanghai, China. It has operations worldwide and a diverse portfolio that includes insurance, asset management, and real estate holdings. AIG ran into significant financial troubles in 2008 when its credit default swap portfolio incurred large losses, leading to a downgrade in its credit rating. This put pressure on AIG and threatened its solvency.
China's reinsurance market is growing rapidly due to the expansion of the primary insurance market. While overall profitability is satisfactory due to investment income, underwriting profitability is low and volatile due to competition. The regulatory environment is promoting growth through reforms like C-ROSS, which may increase capital requirements. Opportunities for growth exist through the developing market and expanding risks, but competition is high and challenges include volatile investment returns and implementing more sophisticated products.
D&O insurance policies offer liability cover for company managers to protect them from claims which may arise from the decisions and actions taken within the scope of their regular duties. D&O cover was first conceived in the late 19th century, and after a long period of obscurity has spread rapidly throughout the industrialized world since the 1980s. Such policies cover the personal liability of company directors and officers as individuals, reimbursement of the insured company if it pays a claim on behalf of its managers, and cover for securities claims against publicly listed companies. The document discusses why companies purchase D&O insurance, how D&O cover functions in terms of who and what is covered, and developments in the D&O insurance market globally.
The document discusses the impact of COVID-19 on the insurance sector. It outlines key impacts such as reduced customer interactions due to lockdowns, economic pressures increasing policy lapses and cancellations, and reduced activity in lines like travel and events insurance. Insurers have responded by increasing digital services, providing payment deferrals, and reallocating resources. The pandemic may accelerate digital transformation and changes to products. Insurers face financial challenges from reduced premiums and investment volatility that could threaten profitability.
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TNI Mar 30 AIG Series of Unfortunate EventsJoann Weiner
- AIG failed after losing over $100 billion in 2008 despite receiving $150 billion in bailouts from the US government. It needed another bailout to avoid bankruptcy.
- AIG's credit default swap business, which insured mortgage-backed securities, led to its downfall as the securities began defaulting in 2007. AIG had to pay out increasingly on the swaps.
- AIG's counterparties, including major banks, benefited greatly from the taxpayer bailouts as they received payments from AIG totaling over $100 billion to cover losses on credit default swaps.
The document discusses how European leaders are focused on addressing the liquidity problems facing European banks from Greek and other countries' debt, rather than the underlying solvency issues. A liquidity problem means short-term cash flow issues, while a solvency problem means the business model itself is unsustainable. Greece has both problems, and European banks heavily invested in weak countries may have solvency issues if more capital is not raised. Until tough decisions are made to solve both the liquidity and solvency problems, markets may remain volatile.
This document provides information about insurance companies, including life insurance companies and property-casualty insurance companies. It discusses the primary functions of insurance companies, types of insurance policies, major assets and liabilities of life and property-casualty insurers, regulation of the insurance industry, and recent trends in underwriting ratios for property-casualty insurers. It also provides examples of calculating annuity payments and analyzes balance sheets and financial ratios of life and property-casualty insurers.
Systemic Risk in Banking : Systemic risk is the possibility that an event at the company level could trigger severe instability or collapse an entire industry or economy.
The document discusses forecasts for the insurance industry in 2010 from various industry leaders. They predict modest growth in life insurance sales of 3-5% but flat or negative growth for annuities and profits. Products with guarantees will be strongest. Consolidation may continue due to economic challenges including low interest rates and investment losses. The outlook is cautiously optimistic but the recovery will be gradual.
AIG: The Missing Piece of Its Failure Narrative & Why It MattersMercatus Center
The failure of American International Group Inc. was one of the main narratives from the financial crisis, prompting the push for greater financial market regulation and the adoption of Dodd-Frank. But what if the generally accepted account—that AIG’s supposedly unregulated derivatives activities sank the company—doesn’t actually tell the full story?
AIG Third Quarter 2008 U.S. Treasury, Federal Reserve and AIG Establish Comp...finance2
The U.S. Treasury, Federal Reserve, and AIG established a comprehensive solution for AIG that included:
1) The Treasury purchasing $40 billion in preferred shares and warrants to help pay down AIG's credit facility.
2) Revising AIG's credit facility with the Federal Reserve to extend the term and reduce costs.
3) Creating entities to purchase assets from AIG's securities lending program and credit default swap portfolio to reduce its exposure.
This solution was designed to resolve AIG's liquidity issues and create a durable capital structure to enable repayment of loans over time.
The U.S. Treasury, Federal Reserve, and AIG established a comprehensive solution for AIG that included:
1) The Treasury purchasing $40 billion in preferred shares and warrants to help pay down AIG's credit facility.
2) Revising AIG's credit facility with the Federal Reserve to reduce rates and extend the term.
3) Creating entities to purchase assets from AIG's securities lending program and credit default swap portfolio to reduce its exposure.
Similar to 13112282 Aig Risk Bankruptcy Report (20)
1. DRAFT – February 26, 2009
STRICTLY CONFIDENTIAL
AIG: Is the Risk Systemic?
2. What is Systemic Risk?
Systemic risk is the risk imposed by inter-linkages and interdependencies in a system
or market, which could potentially bankrupt or bring down the entire system or market if
one player is eliminated, or a cluster of failures occurs at once.[
Systemic financial risk occurs when contingency plans that are developed individually
to address selected risks are collectively incompatible. It is the quintessential “knee
bone is connected to the thigh bone…” where every element that once appeared
independent is connected with every other element.
AIG’s business model – a sprawl of $1 trillion of insurance and financial services
businesses, whose AAA credit was used to backstop a $2 trillion dollar financial
products trading business – has many inherent risks that are correlated with one
another. As the global economy has experienced multi-sector failures, AIG’s vast
business has been weakened by these multi-sector failures.
AIG’s original problem – an over-reliance on U.S. residential mortgage-backed
securities (RMBS) in its investment portfolios – has now been deepened by weakness
in the commercial mortgage-backed securities market, the global real estate market,
the global equities market, slowing business and consumer spending activity and the
concomitant demand for higher liquidity by regulators and customers around the world.
Systemic risk afflicts all life insurance and investment firms around the world. Thus,
what happens to AIG has the potential to trigger a cascading set of further failures
which cannot be stopped except by extraordinary means.
2
3. Risk Assessment Summary
• In the fall of 2008, the Federal Reserve and Department of the Treasury determined that
the systemic risk of a failure of AIG was so great that they should provide a support
program by injecting liquidity and equity capital into AIG.
• To repay the debt and reduce the degree of financial risk to the firm, AIG has instituted a
wind-down of its Financial Products business and a massive divestiture process to sell
businesses, despite the increasingly difficult M&A and credit environment.
•The previously provided solution addressed short-term liquidity needs and AIG’s over-
concentration in the RMBS market. But AIG still faces massive investment losses and
credit downgrades. Without additional federal tools being deployed in the AIG situation,
AIG will not be able to repay its obligations. Despite adequate current security against the
U.S. government’s investment, that investment may not be recovered.
• AIG operates in more than 140 countries around the world, whose customers,
regulators, and governments have thus far been refrained from liquidating or seizing
assets based largely on the support given to AIG by the U.S. government.
• The failure of AIG would cause turmoil in the U.S. economy and global markets, and
have multiple and potentially catastrophic unforeseen consequences.
•The inability of AIG to immediately secure additional assistance from the Federal
Reserve and the Department of the Treasury threatens not only AIG’s sales process, but
also consumer and business confidence around the world.
3
4. How Big is the Systemic Risk in Insurance ?
While the term “insurance” is used, AIG and its industry brethren sell and service
not just the traditional property and casualty and death benefit life insurance
policies, but accident and health coverage, pension and retirement policies, and a
variety of wealth accumulation vehicles, such as annuities.
The systemic risk is principally centered in the “life insurance” business because it
is this subsector that has the greatest variety of investments and obligations that
are subject to loss of value of the underlying investments.
The life insurance industry employs approximately 2.3 million people in the U.S.
who sell individual and group policies. There are over $19 trillion of face value
“life” policies in force in the U.S. and 375 million policies.
Over the past decade, the voluntary termination rate on individual policies
declined remarkably (to six percent by 2007) as consumers could obtain liquidity
from numerous other sources.
A significant rise in surrender rates – inspired by consumers’ needs for cash or
because of rumored or real failure of insurance companies – could be disastrous.
Because of widespread loss of liquidity, the industry would struggle to raise
adequate cash to meet surrender requests. A “run on the bank” in the life and
retirement business would have sweeping impacts across the economy in the
U.S. In countries around the world with higher savings rates than the U.S., the
failure of insurance companies like AIG would be a catastrophe.
4
5. Impact on U.S. Government’s Efforts to Stabilize Economy
If AIG were to fail notwithstanding the previous substantial government support, it is likely
to have a cascading impact on a number of U.S. life insurers already weakened by credit
losses. State insurance guarantee funds would be quickly dissipated, leading to even
greater runs on the insurance industry.
Given AIG’s insurance companies’ relative size compared to other U.S. insurance
companies, there is no ability for an “arranged marriage” of AIG’s largest units with other
U.S. insurance companies.
In addition, the government’s unwillingness to support AIG could lead to a crisis of
confidence here and abroad over other large financial institutions, particularly those that
have thus far remained viable because of government support programs.
This loss of confidence is likely to be particularly acute in countries that have large
investments in U.S. companies and securities and whose citizens may suffer significant
losses as a result of the failure of AIG’s foreign insurance subsidiaries.
This could lead directly to a decrease in the attractiveness of U.S. government securities
and a consequent increase in borrowing costs for the U.S. government and related
issuing entities.
5
6. Impact on U.S. Government’s Efforts to Stabilize Economy
Moreover, permitting AIG to fail would be even more serious today than in September,
especially in view of the support of the U.S. government. Public confidence in financial
institutions is at a nadir and it is questionable whether the economy could tolerate
another shock to the system that a failure of AIG would produce.
The extent and interconnectedness of AIG’s business is far-reaching and encompasses
customers across the globe ranging from governmental agencies, corporations and
consumer to counterparties. A failure of AIG could create a chain reaction of enormous
proportion.
While some of these potential consequences are inherently judgmental and, to an extent,
speculative, if there is one conclusion that can be unquestionably drawn from the failure
of Lehman, it is that the adverse consequences of the failure of a major financial
institution cannot be foreseen.
Just as the government was unable to predict that the failure of Lehman would lead to the
collapse of the Reserve Fund, followed by much of the money market industry, the
government would be even less capable of predicting the fallout from the collapse of a
much larger, more global and more consumer-oriented institution such as AIG.
6
7. AIG’s Global Impact
Domestic General Domestic Life & Retirement Services
Largest U.S. underwriter of commercial and #1 retirement services provider to primary and
industrial insurance secondary education, #2 healthcare groups, #3 higher
education
#1 U.S. underwriter of D&O, EPL, Professional
Liability, Workers’ Comp, Surplus Lines, #1 in term life and ordinary life
Environmental, Aviation and many other lines Largest issuer of fixed annuities
Foreign General Foreign Life & Retirement Services
Most extensive international property-casualty Most geographically diversified life insurance
network organization
Largest foreign owned property-casualty insurance Largest life insurer in Southeast Asia and the
franchise in Japan, mainland China, Hong Kong, Middle East, Hong Kong, the Philippines,
Korea and Thailand Singapore and Thailand
Largest U.S. based general insurer in Europe # 1 foreign life insurer in Japan, with significant
cash in Japan for all insurers
Financial Services Asset Management
Highest fleet value of any aircraft lessor Largest investor (including all of AIG’s
2nd largest consumer finance branch network in investments) in corporate bonds in the U.S.
U.S. Top five largest institutional asset managers in
the world
Largest independent broker-dealer organization
in the U.S.
7
8. General Impact on Economy
A failure of AIG would have a devastating impact on the U.S. and global economy.
The economic effects may include:
• Potential unemployment for a large portion of the 116,000 employees, including
50,000 employees in all 50 states and the District of Columbia (generating annual U.S.
salaries totaling $3.5 billion)
• Adverse impact on AIG’s 74 million customers worldwide, including 30 million U.S.
customers in its general insurance, life insurance and retirement services, and
financial services businesses
• The immediate damage to credit markets worldwide from an AIG failure would dwarf
the Lehman fallout. Possible outcomes for which the Treasury would need to be
prepared to respond:
• Fall in the foreign exchange value of the dollar
• Increase in Treasury borrowing costs
• Doubts about the ability of the U.S. to support its banking system
8
9. Life Insurance Policyholders: “Run on The Bank”
AIG has written more than 81 million life insurance policies to individuals worldwide
– Face value: $1.9 trillion
– Claims paid in 2008: more than $12 billion
If AIG fails, policyholders are likely to seek to “cash in” policies, placing enormous
strain on the insurance system, as well as bond and equity markets as assets are
liquidated to pay policyholders
– Surrender of insurance policies at above-normal actuarial rates could impair current
policyholders as capital, along with state guarantee funds, might be insufficient to pay all
policyholder claims
– Third-party sellers of AIG products would face an unmanageable spike in customer
redemption demands, damaging consumer confidence
– Forced sales of assets would be required to cover withdrawals
Existing AIG policyholders could be unable to obtain insurance coverage from other
insurance companies
– Potential dramatic increases in policy costs and/or significant decline in available products
(e.g. fixed annuities)
– Some life policyholders may no longer be insurable at commensurate rates or as a result of
adverse health situations since purchase of original policy
9
10. Impact on Retirement Savings
AIG Retirement Services
– 6.7 million policies/accounts – including many retired Americans
• Total account value: $147.5 billion
• Many beneficiaries are middle-class Americans earning around $50,000-60,000 a year
• Income from AIG’s 403(b) plans is often the beneficiary’s only source of retirement income
– Products include defined contribution retirement accounts, such as 401(k) (VALIC), deferred fixed
annuities (AIG Annuity), variable annuities and brokerage accounts
– AIG Annuity: #1 ranked seller of fixed annuities through financial institutions
– VALIC: #1 or #3 ranked across non-profit sectors (#1 in K-12 teachers, #1 in higher education and #3 in
healthcare)
Consequences of Failure
– A VALIC/AIG Annuity failure would be one of the largest failures in the history of life insurance, putting
applicable retirement savings significantly at risk and causing a loss of confidence in the private pension
system in the U.S.
– Failure would produce an immediate “run on the bank,” which would likely lead to state seizures of local
operations, causing a lock-up in customers’ retirement accounts and payment of monthly/quarterly
annuity checks
– Seizure by state regulators would have an adverse impact on state guarantee funds, which are
unfunded, resulting in assessments against other insurance companies
– Such assessments in an already weak market could lead affected industry players to sell assets,
resulting in downward pressure on fixed income markets
– Under current market conditions and because of the capital intensive nature of the fixed annuity
business, capacity may not be picked up by peers
– Given the foregoing, there is a risk of undermining the confidence in the private pension system in the
United States
10
11. Consumer Finance Impact
An AIG failure could lead to the failure of American General Finance (AGF),
America’s second largest “Main Street” lender
– AGF:
• Prudently has helped American consumers and small businesses for
more than 85 years
• Is serving more than 2 million American families with more than $24 billion
of loans through 1,400+ offices in 40 states
• Supports more than 20,000 retail merchants
• Employs approximately 8,000 people
• Serves communities in small / medium sized cities that are underserved
by U.S. megabanks
– A failure of AGF could:
• Eliminate $12 billion to $15 billion in U.S. consumer lending over the next
3 years that is not provided by banks
• Trigger a default (and related litigation) on more than $23 billion of AGF
debt held by U.S. and European investors
Also, AIG Consumer Finance Group, Inc. (AIGCFG) operates in Latin America,
Europe and Asia
– In September, there were significant “runs on the bank” in various Asian and
European countries
– Bank runs resulting from the failure of AIG or AIGCFG may lead to systemic
risk in certain countries in which it operates
11
12. Extensive Business Disruption
AIG Commercial Insurance (AIGCI):
– Largest property casualty insurance operation in the United States
– Underwrites more than 450 insurance products and services across 83 industries
– Protects and insures approximately 180,000 entities employing over 106 million
people in the U.S.
– Nearly 1/3 of all people in the United States are employed by an entity that is
protected by insurance coverage through AIG Commercial Insurance
– Protects 20 million commercial and individual policyholders & certificate-holders
– Paid approximately $18.3 billion in U.S. claims in 2008
Worldwide, AIG writes insurance for:
– 94% of the Fortune 500 – Global, with annual premiums of over $10.5 billion
– 97% of the Fortune 500, with annual premiums of nearly $9 billion
– 97% of the Fortune 1000, with annual premiums of over $10.2 billion
– 81% of the Forbes 2000, with annual premiums of nearly $15 billion
– 90% of the Financial Times 500 – Europe, with annual premiums of $6 billion
– 77% of the Financial Times 500 – U.K., with annual premiums of $2 billion
12
13. Extensive Business Disruption (cont.)
AIGCI covers a wide range of business and non-profit organizations,
including:
– 15,000 farms and agricultural businesses
– 30,000 commercial and residential contractors, including almost every major
U.S. infrastructure project
– 5,000 schools; school boards; elementary, secondary and higher education
facilities; libraries; museums; and art galleries
– 23,000 non-profit and social service organizations
– 2,600 energy and environmental organizations, including power utilities,
superfund sites, oil and gas exploration businesses, alternative energy
concerns and electric utilities
– 21,000 healthcare providers, including doctors, medical facilities, hospitals,
and nursing homes.
– 7,000 real estate businesses including real estate agencies, commercial and
retail buildings and mobile homes
– 9,800 transportation and travel concerns, including airlines, busses, trains,
cargo ships, hotels, taxi cab companies and trucking companies
– 550 public entities including local governments, water authorities, airport
authorities, housing departments, community development administrations
and police and fire departments
13
14. Extensive Business Disruption (cont.)
Consequences of a failure of AIGCI include:
– AIGCI would immediately write less business and many businesses would cancel their existing
policies, causing a substantial impact on cash flow
– In the event of negative cash flow, AIGCI would start liquidating its investment securities, including its
municipal bonds holdings (AIGCI is the second largest U.S. investor in municipal bonds)
– As clients turn to other carriers, the loss of AIGCI’s capacity in the marketplace would significantly
drive up the cost of securing property-casualty insurance
• Given AIGCI’s higher tolerance for insuring riskier businesses, premium raises would be
especially substantial in riskier industries, including financial services and automotive, and in
riskier lines of business, such as property and terrorism
• Price increases could lead to smaller businesses “self-insuring” for some risks
– AIGCI is the primary U.S. incorporated insurer offering comprehensive global policies for
multinationals; these businesses would therefore turn to foreign-owned competitors to meet their
significant and complex insurance needs
– Residual market facilities (insurers of last resort) would see significant increases in new business,
resulting in further financial strain on states and other insurers (who would be assessed)
14
15. Extensive Business Disruption (cont.)
American International Underwriters (AIU) is a leader in providing commercial insurance
worldwide:
– AIU has a presence in approximately 85 countries, and has the unique ability to provide multi-
national coverage to U.S. and foreign companies all over the world
– In personal lines (PL), AIU insures 36 million households worldwide
– AIU is a leader in financial lines (FL):
• Covering 70% of the top 50 international banks
• Leading the writing of directors and officers (D&O) insurance for large corporations globally
• Providing significant capacity for U.S. exposures in the London market
– The AIU Lloyd’s Ascot syndicate provides significant capacity in U.S. catastrophic excess
coverage (Cat Excess)
– Combined with Cat Excess, AIU is the largest capacity provider in the world to the top 50 global
banks
– AIU insures the U.S. military, the U.N., U.S. and foreign embassies, and important commercial
and other organizations worldwide, including the Panama Canal, oil rigs, trucking, marine cargo
and Doctors without Borders
– AIU’s Defense Base Act program provides coverage to contractors in support of the rebuilding of
the infrastructure in Iraq and Afghanistan
– AIU has over 20,000 employees and over 70,000 agents globally
15
16. Extensive Business Disruption (cont.)
Consequences of a failure of AIU include:
– Increased financial stress on airlines in view of AIU’s leadership position in aviation insurance:
• AIU was a leader in putting planes back in the air after 9/11 by developing new capacity. This helped to restart the
economy and stabilize personal and business travel.
• AIU currently insures 20% of the global aviation market. If AIU exits the market, there would be an immediate
move by remaining carriers to rapidly increase rates. Airlines are already under severe financial stress and this
would add to their difficulties.
– Major disruption in accident and health (A&H) insurance markets worldwide, particularly in Asia Pacific
where AIU is a market leader in major economies (including Japan, Korea and China).
– Significant loss of capacity in commercial D&O and FL D&O:
• AIU’s total exposure is close to $500B. Commercial D&O is estimated to be $450B and FL D&O and personal
lines are approximately $33B.
• Without AIU’s capacity in FL, there would be a shortfall in capacity, which would cause a tightening of terms and
conditions and a resulting large premium increase. Many of the largest global banks would be unable, at any
price, to replace AIU’s capacity and expertise.
• The commercial D&O market would be less accessible since insurers would opportunistically increase pricing.
• It would be difficult to replicate AIU’s international network that allows AIU to issue D&O underlyer polices for
multinational customers in 85 countries, leaving many multinational customers exposed in local countries.
– A failure of AIU may disrupt international trade:
• AIU is one of the top 3 suppliers of coverage for ocean cargo, the vessels that transport goods and the ports that
receive and handle those goods.
• AIU provides product liability coverage to exporters (e.g., AIU is the number 1 provider of export product liability
coverage in China).
16
17. Impact on Global Capital Markets
An AIG failure could have similar or worse consequences on the global financial
markets as that of the Lehman bankruptcy. Similarities include:
– The large size of their derivatives books: AIG Financial Products Corp. (AIGFP) has
approximately $1.6 trillion in notional derivatives exposures
• Unwinding of the portfolio in an AIG failure would likely cause enormous downward
pressure on valuations across a wide range of associated asset classes
– The large number of counterparties involved in a wind-down of the derivatives books.
• Counterparties include top banks, sovereign wealth funds, money managers and hedge
funds
• Total client base: more than 1,500 major corporations, governments, and institutional
investors would be affected
Widespread impact of ratings downgrades
• Certain AIGFP contracts include a ratings downgrade as an “event of default;” all
AIGFP contracts include bankruptcy as an “event of default,” providing a termination
right to each counterparty
• Downward pressure on values of underlying assets resulting from terminations of and
the calls pursuant to the underlying and associated contracts
Spotlight: U.S. Municipal Market
– 2nd largest holder of U.S. municipal bonds: AIG’s commercial insurance (AIGCI)
business has more than $70 billion of invested assets, 73% in U.S. municipal bonds. A
forced sale of AIGCI’s investment portfolio would significantly stress the U.S. municipal
bond market 17
18. Direct and Indirect Impact of AIGFP failure
Effect of FP Failure Parties affected
– Inability to repay a significant portion of $30 billion of AIGFP issuances, – Institutional Investors
AIG FP / AIG debt including commercial paper issuances – Retail Investors
(issued securities) – Signal to markets that debt of other entities with government support at risk – Entities with government support
Benefit – Failure to provide a wrap on $38 billion of stable value funds could result in – Retail Investors
Responsive millions of lost value on money market positions potentially “breaking the buck” – Pension Funds
Options (“BROs”) – Massive retail investor withdrawals may occur on stable value funds and – Large Mutual Fund Complexes
damage confidence in 401(k) plans
– May in turn prompt sponsors to make individual investors whole
Credit Protection – Credit protection on ~$63 billion in CDOs / CLOs may be eliminated – Major banks
on Corporate – Major U.S. banks would lose hedges on correlation books – consequent higher – Corporate Borrowers
Arbitrage and CDS spreads for major corporates will raise funding costs across economy – Institutional Investors
CDOs / CLOs – Widening spreads and illiquidity in CDO and CLO market could lead to dramatic
further write-downs
– European Banks could need to raise additional ~$10 billion in equity capital – Major European Banks
Regulatory Capital
rapidly – could result in multiple downgrades resulting in catastrophic market • e.g. RBS, SocGen, BNP,
disruptions Banco Santander, Danske,
Rabobank, Credit Logemont,
Calyon
– Forced client terminations will result in massive spread widening and significant – Corporations
Other Derivatives unhedged positions – Supra-nationals
(Rates, FX, – Disrupted markets could cause large losses for dealer / bank counterparties as • e.g. World Bank/IFC, IBRD,
Equities, they attempt to replace lost positions with AIGFP EIB
Commodities) – Risk in individual unhedged portfolios could jump by 20-30x from current levels – Dealers
– Municipalities
Guaranteed – Failure to collateralize $2 billion in GICs / Leases would lead to downgrades,
Investment and further disruption to the municipal bond markets
Contracts (“GICs”)
/ Leases
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19. Impact of Failure of ILFC
International Lease Finance Corporation (ILFC) is the largest aircraft lessor in the world, with more
than 950 aircraft
ILFC’s role in U.S. Economy:
– Since 1978, ILFC has purchased more new Boeing aircraft (approximately 670 units) than any
other airline or leasing company
– ILFC is the largest commercial customer of General Electric (engines), Honeywell, Rockwell
Int’l (avionics) and United Technologies (engines/APU)
– ILFC is the largest buyer of U.S. made engines and components for new Airbus aircraft
– ILFC has 102 new jets on order from Boeing as of December 2008, with a value of $12.5
billion, for deliveries in 2009 and beyond
– ILFC’s new Boeing planes are primarily for export, helping U.S. balance of payments, via long
term leases to foreign airlines
A failure of ILFC may lead to:
– Loss by Boeing of its largest customer, including $12.5 billion of forward order book, which
may result in reduction in Boeing’s 183,000 strong workforce
– ILFC may be forced to liquidate its 1,000-plane aircraft portfolio at distressed prices, severely
impacting the already weak aircraft industry
– Losses to U.S. banks and U.S. institutional holders of ILFC debt (currently $30 billon+ )
– Less taxable income due to distressed sale prices (current potential taxable gain of $13.1
billion)
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20. Seizure of foreign assets
An AIG failure would likely result in the immediate seizure of certain
insurance businesses of AIG by domestic and foreign regulators.
– The seizure by one regulator in a given region (e.g., Asia) would almost
certainly have a domino effect and lead to the seizure of insurance businesses
in multiple jurisdictions across the region
– Once these assets were effectively nationalized they would be out of the reach
of the U.S.
– Given the substantial “footprint” of AIG’s insurance presence in these regions,
the consequence of a seizure would significantly impair, if not cripple, the entire
insurance industry within certain regions
– Even if there is not an immediate seizure of the insurance businesses, there will
be significant policy cancellations which will likely lead to seizures
Seizure of foreign assets could lead to:
– Loss of assets to repay the Federal Reserve
– Collapse of AIG’s public debt
– Loss of value of the U.S.Treasury’s Preferred Shares
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21. Conclusion
• Insurance is the oxygen of the free enterprise system. Without the promise of
protection against life’s adversities, the fundamentals of capitalism are undermined.
• The failure of the world’s largest insurer at a time of major global financial and
economic instability will exacerbate the challenge of reigniting consumer
confidence.
• Since life insurance has changed greatly in character over the last two decades –
from just a basic provision of death and disability benefits to a vehicle for retirement
savings and wealth accumulation – the effects of disrupting the industry are wide-
ranging and significant.
• There is a legitimate public policy rationale for regulatory reform of the industry,
and the federal government’s continuing role in AIG’s destiny would be consistent
with such a policy direction.
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