AIG Structured Settlement Timeline

The events of the past two weeks have been unprecedented in American financial history as well as structured settlement history. This blog post continues S2KM's coverage of AIG in the context of the current financial crisis and how to grow the structured settlement market. 

S2KM's prior AIG blog posts:

• AIG - 1: Sets forth one perspective for AIG analysis - who can you trust? If you are an AIG structured settlement recipient, agent or professional advisor, who can you trust for information and financial advice about AIG?
• AIG - 2: Looks at AIG and the current financial crisis as an historic test and opportunity for structured settlements. How strong are structured settlement promises and obligations?

This S2KM blog post introduces a first draft AIG structured settlement timeline. S2KM welcomes your comments with suggested additions or corrections.

Note: for an updated AIG structured settlement timeline, see S2KM's AIG Structured Settlement Wiki.

AIG Structured Settlement Timeline 

• 1919 - Cornelius Vander Starr originates AIG in Shanghai, China.
• 1962 - Hank Greenberg becomes head of AIG's North American operations.
• 1968 - Greenberg assumes Starr's position as CEO of AIG international.
• 1987 - AIG forms AIG Financial Products in London.
• 1998 - AIG Financial Products begins to sell collateralized debt obligations (CDO) and credit default swaps (CDS).
• August 2001 - AIG acquires American General for $23 billion of AIG stock.
• October 14, 2004 - Then New York Attorney Eliot Spitzer announces that two AIG executives have pleaded guilty to criminal charges in connection with rigged insurance bids.
• 2005 - AIG sells more than $1.3 billion of the $6.1 billion of total annual U.S. structured settlement annuity premium. The Office of Thrift Supervison, a U.S. Government regulator, begins reviewing AIG Financial Products operations. A.M. Best places AIG's financial strength "under review with negative implications" and subsequently downgrades its AIG rating from A++ to A+. Other rating agencies also downgrade AIG.
• March 15, 2005 - Greenberg resigns as Chairman, CEO and Director of AIG. Greenberg is succeeded as CEO by Martin J. Sullivan. Greenberg continues as CEO of AIG partner Starr International. Both Starr and Greenberg continue as major AIG shareholders.
• May 2005 - AIG restates its financial position including a reduction in book value.
• 2006 - AIG sells more than $1.4 billion of the $6.1 billion annual U.S. structured settlement annuity premium.
• February 9, 2006 - AIG and the New York State Attorney General's office agree to a settlement in which AIG pays a fine of $1.6 billion.
• 2007 - AIG sells more than $1.4 billion of the $5.9 billion annual U.S. structured settlement annuity premium. A.I.G. Financial Products’ holds approximately $500 billion of CDS.
• January 24-26, 2007 - NSSTA hosts its 2007 Winter Meeting in Albuerque, N.M.titled "Who Can Your Client Trust?" At the NSSTA meeting, AIG announces a new transparency initiative. Here is an excerpt from S2KM's blog report:

"Supporting Casualty Claims - Ismael Acevedo, Vice President of AIG's Structured Settlement Division delivered an educational primer for structured settlement consultants who represent (or want to represent) casualty claim departments. Acevedo's presentation summarized the results of an AIG survey of 1000 claims adjustors. In addition, Acevedo announced a new AIG initiative to make its structured settlement program "more transparent". Acevedo did not specify whether or how this new AIG initiative will apply to such issues as factoring and/or to informed consent by injured claimants for structured settlement compensation arrangements".

• September 30, 2007 - AIG announces a $352 million loss on its CDO portfolio.
• April 16-19, 2008 - NSSTA hosts its 2008 Annual Meeting in LaJolla, California. AIG announces the results of an AIG structured settlement survey. Here is an excerpt from S2KM's blog report:

"[J.P.] Steele announced the results of a Structured Settlements Survey Report sponsored by AIG and conducted in September 2007 by Esearch.com, Inc. The results of the survey, which appear on the AIG website, highlight the need to better educate plaintiff attorneys and injury victims about structured settlements."

• June 15, 2008 - Sullivan resigns as CEO and is replaced by Robert B. Willumstad.
• September 14, 2008 - New York insurance regulators approve AIG's request to borrow $20 billion from its insurance subsidiaries. AIG announces it may sell its aircraft leasing division to raise capital.
• September 15, 2008 - AIG suffers a financial downgrade by all of the credit rating agencies. A.M. Best downgrades AIG's financial strength from A+ to A.
• September 16, 2008 - AIG's stock price on the NYSE suffers a meltdown following its financial strength downgrade reaching a low of $1.25 from its 52 week high of $70.13. The Federal Reserve announces the creation of a 24-month credit facility for AIG with up to $85 billion. In exchange AIG issues the government warrants for a 79.9% equity stake plus the right to suspend dividends to previously issued common and preferred stock. The U.S. government loan is collateralized by AIG's assets, including subsidiaries, and with an interest rate of LIBOR (three month London Interbank Offered Rate) plus 8.5%. By accepting the terms of this rescue package, AIG becomes the largest government bailout of a private company in U.S. history. Edward M. Liddy replaces Willumstad as CEO.
• September 17, 2008 - The National Association of Insurance Commissioners (NAIC) announces that Eric R. Dinallo, New York's Insurance Superintendent, will oversee an NAIC task force created to expedite the approval of sales of American International Group assets.
• September 22, 2008 - Dinallo issues a news release stating AIG's insurance subsidiaries are financially sound and announcing he will issue notices to insurance companies, agents and brokers to remind them of their responsibilities under New York Insurance Law to fully inform consumers of the possible costs of switching life insurance, annuity and other policies. Other state insurance commissioners issue similar announcements and warnings. AIG CEO Liddy states AIG will begin announcing the subsidiaries AIG intends to sell during the week of September 29, 2008.
• September 24, 2008 - Chubb and Travelers announce they will no longer participate as partners with AIG on co-surety bonds. AIG publicly questions the motives of its competitors.
• September 26, 2008 - The NAIC task force for AIG hires Centerview Partners Holdings L.L.C. to help it oversee the sale of AIG insurance subsidiaries. AIG announces the New York Stock Exchange will permit it to issue "a large amount" of preferred stock to the Federal Reserve Bank of New York without obtaining AIG shareholder permission. Greenberg sells 35 million shares of the New York-based company held by Starr International Co. and 5 million shares of his personal holdings. Greenberg continues to control personally and through Starr substantial AIG stock.