Skip to content
Subscriber Only

AIG: What Went Wrong

A look at how the icon of insurance got itself in such a mess -- and where all the probes are headed

Investors in embattled American International Group Inc. (AIG ) may have breathed a sigh of relief at the Mar. 28 announcement that Chairman Maurice R. "Hank" Greenberg would step aside two weeks after being pressured to give up the chief executive's role. But the complex $99 billion insurance and financial empire he leaves behind remains mired in turmoil.

What began as an investigation into two reinsurance transactions has mushroomed into a growing scandal that has tarnished the reputation of one of America's premier corporations. On Mar. 30, AIG acknowledged that it had improperly accounted for the reinsurance transaction to bolster reserves, and detailed numerous other examples of problematic accounting. It also announced the delay of its annual 10-K filing, and said the moves may have inflated its net worth by up to $1.7 billion. While AIG says it does not yet know if the review will force a restatement of prior results, its stock dropped 2.1% on the news; all together, AIG shares have dropped 22%, to $57 apiece, since the company was served with subpoenas by state and federal regulators six weeks ago. The announcement also caused Standard & Poor's (MHP ) to downgrade AIG's debt rating from AAA to AA+. Here's a look at where the AIG mess stands and where the probes are headed: