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Copy of CASE 6 AIG

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by Laraib Khan on 22 June 2013

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Transcript of Copy of CASE 6 AIG

Eltimon van der Merwe
National University MGT 400
Case 6
02/09/2013
AIG History
Maurice Greenberg took over as CEO in 1968
AIG by the end of 1980's:
Largest underwriter commercial and industry coverage in US
Leading international insurance agency
AIG in the 1990's:
First foreign insurance agency granted license in China
AIG History
AIG purchased American General Corporation in 2001
Four Principle Business Areas:
General Insurance
Life Insurance
Financial Insurance
Asset Management
AIG's revenue before its collapse in 2008:
$110 Billion
Total Assets of $1 Trillion
116,000 employees world wide
Case 6
Coping with Financial and Ethical Risks at American International Group (AIG)
AIG started in 1919 in Shanghai by Cornelius
The first branch in the US opened in 1926
AIG began as a representative of American insurance Companies
Charges insurance companies a premium
To spread the risk
AIG History
Case Study
Question 1
Discuss the role that AIG's corporate culture played in its downfall
Greed and corruption lead by Greenberg
Encouraged people to take high risks
little responsibility was placed on executives
They did not disclose proper financial information to investors
38 executives offered bonus ranging from $92,500 - $4 million
AIG's Culture
What Happened at AIG to Cause its Demise
Lacked Transparency
AIG Provided Incentives to Take Risks
AIG's Crisis and Bailout
Change at AIG
Increase Transparency and Accountability
Question 2
Discuss the ethical conduct of AIG executives and how a stronger ethics program might help the company to strengthen the ethics of its corporate culture.
Q. 2
AIG executives where only looking after themselves
Maurice Greenberg trying to sue the government shows the lack of ethics
The new AIG is trying to rebuild the company's image
Not agreeing and not supporting Greenberg's lawsuit
Creating a new ethical culture
Putting stakeholders and company above executives bonus'
Questions 3
What could AIG have done differently to prevent its failures and subsequent bailout?
Q. 3
Ferrell, O. (2013). Business ethics. (9 ed.). Mason: Cenage
Huff , P. (2013, January 09). Huffingtonpost.com. Retrieved from http://www.huffingtonpost.com/2013/01/09/aig-lawsuit_n_2441618.html
References
Q. 1
Put ethical business practice ahead of BONUS
Not promoting risky behavior
Not falsefy documents and not lying to investors
Keep executives responsible for their actions
Is Greenberg Being Unethical by suing the government?
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