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AIG: 1 Year After its Bailout

One year ago today, "too big to fail" became a key topic of debate. As the markets were already digesting the Lehman Brothers bankruptcy, the insolvency of Bear Stearns, Bank of America's buyout of Merrill Lynch, and the government takeover of Freddie Mac and Fannie Mae, the possibilities that no company was safe or too big to fail was on investors panic stricken minds. When AIG received its first installment of bailout funds, failure was no longer an option. The government took an 80% stake in the company on September 16, 2008.

AIG is one of the largest multi-line insurance companies in the world by asset and employee size, with its holdings divided into four sections: General Insurance, Life Insurance & Retirement Services, Financial Services and Asset Management. One would think that AIG’s business diversity would have insulated the company from bankruptcy, but poor corporate governance along with risk management and sour investments led the insurer to the brink of total failure.

AIG has had five CEO's since the company opened its doors in Shanghai in 1919, (Cornelius Starr (1919-1968), Maurice Greenberg (1968-3/2005), Martin Sullivan (3/2005-9/2008), Edward M.Liddy (9/2008-8/2009), Robert Benmosche (8/2009-Current). AIG went public in 1969.

AIG Gains/Losses per CEO tenure: (Data tracked back to 1982) :

  • AIG was up ~1904% during the last 23 years of Greenberg's tenure
  • AIG was down ~95% during Sullivan's tenure
  • AIG was down ~47% during Liddy's tenure
  • AIG is up ~35% since Benmosche's reign

A historical glance at AIG (prices adjusted for splits):

  • All-time intraday high of $2075 reached on 12/8/00 during
  • All-time intraday low of $6.6 reached on 3/6/09 & 3/9/09 during intraday
  • Highest close of $2073.8 on 12/08/08
  • Lowest close of $7 on 3/5-3/9/09
  • 52-week high of $159.7 reached on 9/15/08 during intraday
  • 52-week low of $6.6 reached on 3/6/09 & 3/9/09 during intraday
  • Biggest 1-day % gain was on 3/16/2009 when AIG gained $6.6/share or 66% to close at $16.6
  • Biggest 1-day $ gain was on 9/19/2008 when it rose $23.2/share or 43.1% to settle at $77
  • Largest 1-day % & $ drop was on 9/15/08 when AIG fell $147.6/share or -60.8% to close at $95.2, that resulted after the insurer failed to present a plan to raise capital and omit credit rating downgrades
  • AIG has posted 1-day losses of more than 20%, 14 times, mostly occurring in Sept/Oct. 2008 at the height of the financial crisis **September 16, 2008 AIG falls 21% after the company turned to the government for $85 billion “bridge loan” in exchange for an 80% stake in order to avoid bankruptcy ***July 1, 2009 AIG shares tumbled $5.12 or 22% to settle at $18.08 after it announced a 1-for-20-stock split
  • AIG was a component of the Dow Jones Industrial Average from 4/1/2004 to 9/22/2008, declining 94% over the almost four year period, and currently down ~159% since it was replaced by Kraft as a component of the DJIA
  • AIG is currently down $56.4 or ~59% one year later of the collapse of Lehman Brothers (9/15/08)
  • AIG is up $31.8 or 454.3% since its March lows of $7/share
  • AIG had its best year in 1985 when it rose 55.6%, its worst year in 2008 when it fell 97.3%

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