Organizational Analysis For American International Group Commerce Essay

( AIG ) American international group is an American insurance company that has offices in many topographic points around the universe. AIG is one of the largest insurance companies in the universe and it ‘s domestically known as the figure one supplier in sing casualty and forte. Outside America AIG besides provides strong life insurance operations every bit good as fiscal services and plus direction ( Chiranjevi C & A ; Kumar S. 2008 p79. Basing in the market capitalisation as of Dec. 2007, this company is the 2nd largest insurance company in the universe after the china life insurance. AIG has a good record in proviso of retirement services, plus direction every bit good as fiscal services. Presently the AIGs domestic securities firm group is the largest organisation in belongings and casualty services in United States of America.

Up 2006 the public presentation of AIG in the planetary insurance and fiscal services market was making really good though the tendency appeared to alter in the twelvemonth when its grosss from the domestic market declined. In 2007 the bomber premier crisis led a farther diminution in the public presentation of AIG. This was illustrated by the low recognition derivative portfolio of the American international group which amounted to $ 513 Billion as of sep.2007. However the company ‘s corporate advertisement every bit good as trade name constructing sponsorship like the sponsorship of the Manchester united football nine, has enhanced the world-wide acknowledgment of the AIG trade name. This resulted to the visual aspect of AIG in the “ Top 100 Trade names study ” of the Americas concern hebdomad in 2007. In September 2008 the company suffered menaces of being liquidated when its recognition evaluation were downgraded below the recommended degrees but the federal modesty bank of the united provinces loaned the company to enable it run into the collateral duties ( Chiranjevi C & A ; Kumar S. 2008 p. 76 ) . Subsequently in 2009 AIG later sold a figure of its assets so as to pay its loans. In March 2009, the American International Group experienced a batch of public indignation and political recoil due to its keeping of payments. At this clip the AIG employees ‘ endured hatred and menace messages from clients due to the incommodiousnesss caused to them by the company.

Organizational Behavior Analysis of AIG

AIG is which is the commercial insurances Mother Company is confronting challenges related to unusual developments in the fiscal markets. The company has accordingly established steps to better liquidness so as to relieve the job it ‘s confronting from these hard fiscal times. Its commercial insurance companies have significant capital place such that they do n’t depend on the female parent company. They are besides good regulated to guarantee that the involvement of the policyholders is given the first consideration a characteristic that gives AIG strength over other companies. The AIG commercial Insurance liquidness has remained strong while its statutory excess has increased by approximately 50 % to $ 26.7 billion since 2005. Its ability to settle client ‘s claims every bit good as its committedness to sing disputing hazards is still strong. This alone willingness by AIG gives it much advantage over other insurance companies who are ne’er willing to compose ambitious hazards ( Chiranjevi C & A ; Kumar S. 2008 p. 77 ) . The company is has a hesitating committedness to function its clients and its agents by pull offing their demands efficaciously and besides pass oning developments as they occur.

In March 2008 the American International Group identified some of its job countries that have led to its enormous diminution. Some of these failings were minutess with some alleged independent companies that were really controlled by the company. Other deceptive minutess that led to its jobs were the bond minutess that may hold allowed the company to claim additions without really selling the bonds ( Fernando A & A ; Fridson Mp.245 ) . AIG had besides certain misclassified losingss that and unbelievable estimations on certain deferred acquisition costs. The company ‘s employees and directors had besides developed a civilization of secretiveness that made most of trades to be carried out in un crystalline mode. These minutess every bit good as other possible accounting jobs weakened the company fiscal state of affairs.

Decision and recommendations

The fiscal services commission should give precedence to the unattended public inquiries about the policies of the company alternatively of blowing more clip on the statute law covering with the Americas fiscal crisis that was voted against by all the Republicans in the house. Investigations show that the company may hold goosed its fiscal public presentation with doubtful minutess and improper accounting taking to its jobs. For case the company $ 126 million in mulcts to the securities and exchange committee section which worsened its fiscal state of affairs ( Fernando A & A ; Fridson M p.243 ) All this misdirection was as a consequence of hapless leaders who were engaged in corrupt trades within the company.

In order to come from these jobs the company should put in new directors and name independent managers and president. In add-on the company should establish its independent probes to uncover the agreements and trades that were non decently accounted for and take the responsible people to tribunal. The company should besides alter its system of accounting for compensations that are paid to the senior executives. Harmonizing to ( Chiranjevi C & A ; Kumar S. 2008 p.84 ) the America International Group board of managers was scandalously clubbish and close to Greenberg, for a figure of old ages. However due to the force per unit area from stockholders and the new administration ordinances the board has become more independent in the recent times. This has besides been achieved through the recent probes that have made the managers responsible of their ain liabilities and hence they have taken necessary actions to maintain themselves off from any dirt.

In order to wholly acquire out of the current jobs and non to see them once more the company should halt all the concern traffics with the populace and independent companies or coerce its functionaries to stop traffics in those companies. The company should besides transform the close civilization of its employees that has been engraved for a long clip. This would be a hard undertaking for any executive officer or even impossible for any leader who forces his calling there ( Fernando A & A ; Fridson M. 2002 ) In malice of all the jobs AIG still remains a human dynamo in the industry as it has a diverse mix of industries that are taking in insurance and fiscal services concerns. Furthermore the company is a planetary force that has strong holds in some of the fast turning Asiatic markets like China. However the company portion index may ne’er acquire to the bounds that it had set before the crisis.

On the other side the existent extent of the company ‘s liability is non known which implies that there could be higher charges and debts expecting the company. Harmonizing to Mackenzie S & A ; Podsakoff, P 1995 If a federal bureau had been put in topographic point by September 2008, the American international group could hold been put into receivership, and the bureau could hold unwind it easy while protecting the policyholders every bit good as enforcing haircuts on the creditors and opposite numbers. If this could hold been done the company could non hold suffered the bankruptcy that it ‘s now enduring.