Case ID: 9B12N001
Solution ID: 19029
Words: 1526
Price $ 45

The Rise and Fall of AIG

Case Solution

The Global Financial Crisis (2007-2009) has provided fertile ground for careful consideration of how the financial services industry operates. For many years it had been asserted that markets can self-police so that regulation and careful oversight are not required. The events from the crisis have caused many of the strongest proponents of this view, such as Alan Greenspan (former chairman of the Federal Reserve), to publicly acknowledge the problems with this belief. This case considers the events leading up to and following the bailout of AIG to allow for a discussion of how different internal and external factors contributed to the crisis at AIG, and the importance of studying each of them more carefully to avoid such problems in the future.

Excel Calculations

Questions Covered

1- How did the Corporate Structure of AIG contribute to its failure? 

2- Describe how the regulatory environment contributed to market reliance on AIG and how that reliance exacerbated financial market problems? 

3- Compare the operations of AIG-FP to that for insurance firms. Describe how the practices of AIG-FP contributed to its failure. 

4- Broadly describe regulations that a) would have prevented the financial market problems caused by AIG and b) can prevent a recurrence of these problems?