American International Group’s Humble Beginnings
American International Group didn’t start out to be as big as it is today. The incorporation’s earliest roots can be traced back to Asia, and then branched out in a series of acquisitions, mergers, and consolidations, building it up to the giant corporation that it is.
AIG first started out in Shanghai by a young American entrepreneur named Cornelius Vander Starr in 1919. He founded the AAU, or American Asiatic Underwriters, which is a small, two-room, two-clerk insurance agency that represented a few American insurance companies based in Shanghai. They offered fire and marine coverage. Seven years later, in 1926, Starr founded the American International Underwriters (AIU) in New York, his first office on American soil. The AIU wrote insurance policies for Americans working outside the United States. He brought the representation of Pittsburgh, Pennsylvania, and the Globe & Rutgers Company into his fold.
In 1939, Starr decided to move his companies’ headquarters to New York permanently after unrest spread in China and East Asia and the onset of the Second World War
AIU experienced a rapid expansion during the 1950s, as they expanded across 75 countries, most notably in Western Europe, North Africa, Australia, and the Middle East. In 1952, the company merged with several other insurance, and they collectively became known as American Home. By then, Starr already expanded his company’s operations to British and Chinese businessmen and established the International Assurance Company (INTASCO), and also towards the Central American and Caribbean businesses. When Starr joined the American Home board, he named Maurice R. Greenberg as president, and the company formed the American International Assurance Company of New York.
With Greenberg at the helm, the company focused on broker sales, which allowed the company to make its own policies and maintain underwriting control. They concentrated on industrial and commercial risks, which gave them negotiated rates instead of the usual state-controlled rates. This allowed them to develop reinsurance facilities that would cover large shares of major risks and also control insurance ratings. American Home, however, avoided medical insurance, but the new marketing strategies worked. More large corporations thought American Home for insurance.
The American International Group, Inc. as known today was formed in the late 1960s, when American Home began to be an important commercial and industrial property and casualty insurer. In 1967, AIRCO formed American International Group, which heralded the beginning of corporate re-organization. Its many acquisitions and mergers allowed it to become one of the mammoth insurance groups ever.
AIG’s Growth and Expansion
The late 1980s to mid 1990s saw AIG with continued diversification into their financial services. The subgroup, Financial Services Group, was formed in 1987, for the purpose of consolidating specialized financial operations. UNAT, which is AIG’s general insurance company in Europe, was formed in 1088 for consolidation of all the operations based in Europe. 1989 was the birth of AIG Global, which was formed in order to provide a singles source of different services for multinational companies. More and more insurance lines and financial solutions were offered by AIG as the 1990s went on. They also brought stocks from many re-insurers and insurance companies.
More and more major acquisitions were made by AIG during the 1990s, as part of their continuing expansion drive. By then, they’d already established their general insurance and life insurance policies, and they’d recently made significant financial services business, and operations in retirement savings and asset management. They’d acquired several companies, like the Sun America Inc, HSB Group, Inc, and the American General Group. All of these were major companies that also dealt with insurance.