, 2008). There are two formats of insurance coverage that AIG specializes in:
1. Auto Insurance
2. Travel Insurance
Auto insurance
The primary profits and insurance coverage offered by AIG for auto insurance services were through its subsidiary by the name of AIG Direct (can be accessed on aigdirect.com). The service package that they offered their clients included insurance for privately owned vehicles, motor bikes, commercially-owned vehicles and as well as the recreational transport (Schneiderman et al., 2008).
Some of the major subsidiaries of included the complete subsidization of the online auto insurance specialist called the 21st Century Insurance. This takeover took place in the year 2007 and cost AIG $749 million at purchase. This subsidiary proved to be the most beneficial move for AIG in the year 2008 where they experience the highest record of losses with the recession. They directed all of their business dealings towards the 21st Century Insurance. The following year, AIG sold the 21st Century Insurance subsidiary to the Farmers Insurance Group for a total of $1.9 billion, making a huge profit from the amount it had initially invested in the company (Schneiderman et al., 2008).
Travel Insurance
The main subsidiary that AIG utilizes to sell its travel insurance services and packages is the Travel Guard. The headquarters of the Travel Guard are in Stevens Point, Wisconsin, while it has outlets in different regions of the country (Schneiderman et al., 2008).
The company's growth
Its strongest point
The figure below illustrates the strongest show that the AIG stocks had in the most loss-prone year for them, i.e. 2008. This was definitely the turning point for the company to turn things around in the second half of the year after suffering tremendous loss for a majority of the first half of the year. The important aspect to note here is that, even though AIG stocks closed lower than their opening rate, the level of fluctuation was not as drastic as it should have been considering the humungous losses that the company was experiencing (Sjostrom, 2009).
Crisis (or weaknesses)
The year 2008 was definitely the biggest crises that AIG had to face. AIG had to sell out most of its subsidiaries and give up on its sponsors to cut down their losses. AIG did manage to come back in the second half of their most disastrous year but despite that when we compare the yearly output for the second half of 2008 to the second half of 2007, the difference can be very clearly seen (illustrated in the figure below) (Sjostrom, 2009):
The highest and the lowest peak in terms of growth
The figure below is an illustration of the overview of the highest and lowest points of the AIG stocks over the years. The figure is an average depiction of the performance of AIG in the industry and how it had grown into such a massive structure within the United States. Perhaps the highest point of growth came after the huge bailout explained earlier by the Federal Bank which allowed AIG to really expand its horizons with a guarantee of yearly loans and collaterals available against the many subsidiaries it owned (Sjostrom, 2009).
The rise of AIG
Its participation in government and President Obama
It is no secret that the Bush administration did give AIG a lot of leeway in terms of the loans that they could take through the introduction of the secured credit facility. However, the same hospitality was not give during the Obama administration that followed. The ironic aspect here is that President Obama voted in favor of the bailout as a senator. In response to the overall...
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