AIG's e-business Risk Insurance Solutions

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Case Details:

Case Code : INS053
Case Length : 18 Pages
Period : 1998 - 2004
Pub Date : 2005
Teaching Note : Available
Organization : AIG Insurance
Industry : Insurance, Financial Services
Countries : United States

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Launch of Business Risk Solutions Contd...

Commenting on the need to create a separate agency to cover e-business risks, Gretchen Hayes (Hayes), President of AIG eBRS said, "We recognized that the internet would have a dramatic impact on the lives of our customers and the risks they faced. We needed to respond...The new division was necessary because we recognized that these risks were fundamentally different, and they wouldn't fit easily into our current product groups. The analysis of these risks requires specific expertise."⁷

Background Note

AIG traces its origins back to 1919 when Cornelius Vander Starr (Starr), an American entrepreneur, opened a small insurance agency called American Asiatic Underwriters (AAU) in Shanghai, China. In its early years, AAU underwrote business for many American insurance companies in China and also offered fire and marine insurance.

In 1921, AAU started selling life insurance policies to the Chinese when it incorporated the Asia Life Insurance Company (Asia Life). By the late 1920s, Asia Life had opened offices and agencies in China, Hong Kong, Indochina, Jakarta, Kuala Lumpur and Philippines.

In 1926, AAU entered the US with the formation of American International Underwriters (AIU) in New York. AIU functioned as a general agent for US insurers and specialized in foreign risks incurred by American companies. In the 1930s, AIU entered the Latin American insurance market, which was then dominated by European insurers.

As a result of the war in Europe in 1940, European insurers were forced to stop operating in Latin America, and AIU soon became a major player in the market. The company's premium income from Latin American businesses soon surpassed the income from its Asian operations. To look after its growing activities in Latin America, AIU established a regional headquarters in Havana, Cuba.

Along with general insurance, Starr also expanded AAU's life insurance operations. In 1931, Asia Life entered Southeast Asia with the incorporation of the American International Assurance Company Limited (AIA) in Hong Kong. The company expanded to Malaysia, Singapore and Thailand...

Excerpts >>

7] Eric Schoeniger, "From Risk to Reward," The CEO Guide – E-Business Transformation, Volume 23, Number 4, 2001.