AMERICAN INTERNATIONAL GROUP

Case Analysis

Abelgas, Chona
Homboy, Germaine
Latag, Keziah Ro
Mamad, Ogie
Tura, Realyn

In 1919, when American

Cornelius Vander Star
established the AIG, A
General Insurance
Agency. AIG was one of
the many companies
facing a meltdown in
2008, U.S. Treasury paid
$182 billion for bailing
out the insurance
company. The company
had to sell their assets to
pay their accumulating debts. The insurance company was formed
in fraud cases by the Security and Exchange Commission and U.S
Justice Department where they had to pay a fine of $1.6 billion along
with other criminal charges against their name.

Issues and Concerns

 AIG after facing a meltdown in 2008, AIG accumulated web
debts.
 After being framed in fraud cases by SEC & US Justice
Department and additional of financial problem occurred to pay
the fine of $1.6 billion.
  The delicate decision making whether to sell or not to sell their
assets.

Point of View
 Financial Analyst

Statement of the problem

How can AIG recover of surpassing/repaying all their debts?
Objectives
 to know the roots of all debts
 to resolve financial crisis in AIG
 to make strategies evade the financial crisis again

Areas of consideration
 financing resources
 industry analysis
 economic performance

Alternative Courses of Action

ADVANTAGES DISADVANTAGES
DESCRIPTION
a.Utilize well all the a. Risky, because it
1. Maximizing the resources. can lessen the
remaining resources. b. They can pay their available assets.
debts without having
another liability.
a. Erase the bad a. Investors will
2. Change the image of the doubt the company’s
company name company. credibility.
b. Time Consuming
 a. Another source to a. Investors doubts
3. Encourage more pay all the web debts. the company’s
investors. standing because of
b. Increase sales. the issue and the
crisis.

Recommendation
 We recommend the course #1 which is to maximizing the
remaining resources.

Plan of Action
Since financial statement is confidential, we assume this figure
below:
$182B – received from the US Government for their Treasury
Bills.
Assuming half of $182B is payable for all the clients in AIG and
half will be their cash on hand. Therefore, $91B add the 1.6 fine in
the case and add the assuming other expenses of $10M; all the
liabilities will be 92,610,000,000. Thus, assets will be $91B, add all
the assets that are sold which is amounting to $100B a total of
$191B.

191,000,000,000
Current Ratio =
92,610,000,00
0

= 2.06:1
In simple term, the current ratio of 2.06:1.00 means AIG has
more than enough to cover its current liabilities if they come due.
Conclusion
We conclude that AIG needs to maximize their assets than its
liabilities so that, the company will not barred down that appears to
be unfavorable. According to (Current Ratio|
Investopedia https://www.investopedia.com/terms/c/currentratio.
asp#ixzz57mMj6hsJ) February 21, 2018, The higher the current
ratio, the more capable the company is of paying its obligations, as it
has a larger proportion of asset value relative to the value of its
liabilities. However, a high ratio (over 3) does not necessarily indicate
that a company is in a state of financial well-being either. Thus, it
should be allocated properly. And to better assess whether or not
these issues are present, a liquidity ratio more specific than the
current ratio is needed. Moreover, it’s better to utilize well all the
company’s resources than sacrificing the American Group Standing.