AIG sold derivatives - CDS’s without reserves to enable them to pay off the bets. They lost, and couldnt pay Goldman Sachs and others, and had to be bailed out. It wasn’t AIG’s insurance divisions that bet and lost the farm... It was their division that sold the swaps/CDO’s...
AIG was not exactly pure going way back.
AIG’s business insurance business was rotten with bid rigging, that goes way back. Benefits consulting firms, instead of truly shopping for the “best price” (this is big insurance contracts for business), they would feed customers to AIG and IIRC a couple others.
I had that on good authority back in the late 80’s from someone at a consulting firm. HR departments aren’t exactly the sharpest tools in the shed, so they welcome consultants for things like coming up with real numbers. This creates a situation where they’re primed to pay more than they should.
The case went to trial in 2004 I think.
So AIG would have extra profit out of a lot of it’s business for I don’t know, since the 70’s, 80’s ? I guess they got even more greedy and got into derivatives.
I'm not trying to be a smart guy, but your post was "insurance companies". So it sounds like if I'm going to do this type of business I should find out if they have a "division" that sells/swaps CDOs and, if they do, find another company. Because when they steal my money I will get the excuse that it was the guy's in the CDO office's fault. A bad situation when a formerly trusted industry is destroyed.