recovered from it. AIG’s stock price now is simply maintained a little below $40.That catastrophic event was rooted in the company’s practice of taking too much risk while using people’s insurance policies (Amadeo, 2020).AIG was, at that time, the biggest seller of credit default swaps just so it could boost its profit margin (Amadeo, 2020).The company almost went bankrupt in the crisis that ensued. Worse, the company ended affecting many other companies that led to the financial crisis on a global scale.The year 2019 is a turnaround for AIG as it once again saw a positive net profit margin, at 6.686. AIG was last in the black in the year 2015. From 2016 to 2018, the company had negative net profit margin. There was increased efficiency in its operations as the operating margin jumped tenfold from the 2018 operating margin (American Financial Ratios for Analysis 2005-2020 | AIG, 2020).This improvement in efficiencyis reflected in the Return on Equity, Return on Assets and Return on Investment. It also helped that the company was already checking and becoming more mindful of its risk management policies and practices.One aspect that helped bring about the turnaround is the increase in revenues, which saw a $2 billion increase from 2018 to 2019. Pretax income was up by 5x, there was also an observed substantial increase in its total assets (American International Group Inc. (AIG), 2020). These improvements were expected because the company exerted effort to enhance and increase every unit’s efficiency. For every peso that the company was spending, they made sure that it would generate the most amount of revenues. But it was also observed that the total debt of the company also grew from 2018 to 2019. Also, analysts have revealed that a big part of the turnaround was due to thelower losses brought about by catastrophes in the year of 2019 (Wallace, 2019).The improvement obviously came from the General Insurance group of AIG, which is the first to suffer when there are natural catastrophes. It also helped that the company focused on improving underwriting skills and decisions, expense discipline and an enhanced reinsurance strategy (Wallace, 2019).Its life insurance and retirement business, on the other hand, continue to bring solid results for AIG.

References

Amadeo, K. (2020). AIG Bailout, Cost, Timeline, Bonuses, Causes, Effects. The Balance.Retrieved December 1, 2020 from https://www.thebalance.com/aig-bailout-cost-timeline-bonuses-causes-effects-3305693

American International Group, Inc. (AIG). (2020). Yahoo Finance. Retrieved December 1, 2020 from https://finance.yahoo.com/quote/AIG/profile?p=AIG

AIG (2020). Trading Economics. Retrieved December 1, 2020 from https://tradingeconomics.com/aig:us