Ok, so this life insurance story hails from the US and not from NZ.
Still… it’s a huge story about one of the world’s largest life insurance groups with subsidiaries and related insurance companies around the world, so it’s clearly worth talking about as we watch events unfold.
AIG is one of those life insurance giants that most people take for granted. When it comes to life insurance, people have always thought that big = safe. Not so.
The story unfolded as the giant AIA’s net profit fell over the course of two short years from a $14billion profit in 2006 to an $85billion loss in 2008. To stop AIG going broke and plunging the US economy into an even greater crisis than it already is, the US government had to bail out AIG to the tune of $170billion – meaning the US taxpayer now owns around 80% of the company. (We even heard a rumour about the name changing from AIG to AGI = American Government Insurance).
As if that wasn't bad enough, the latest story is about the payment of fat cat bonuses to AIG executives of $165million!!!... after being responsible for one of the largest financial collapses in US corporate history.
Here are some video clips to watch…
Thankfully not all life insurance companies behave this badly – especially the smaller ones.