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AIG Are Very Lucky to Be Here Still

By: Musa Aykac

AIG which stands for American International Group, who are one of the largest insurance companies in the world, have dramatically survived the credit crunch, with an extraordinary bail out by US authorities in the amount of approximately $85 billion. Could you imagine what would have happened to the world if they did not get rescued? The credit crunch would spiral uncontrollably out of control and a lot of the smaller companies, who had AIG as there main business partner, would also go into liquidation. The whole world would be on its knees.

A bit of an insight about AIG, is that they are an American insurance firm, with there main building base being in New York City. AIG used to be the 18th largest company in the world. The company will now be removed from that category and Kreft Foods will take there place.

The lead up to the crisis finally came to light when the shares fell to just 95% on September 16th 2008. The company had reported an estimated average of around $13.2 billion in the first 6 months of the year.

It just goes to show you that even the major companies in the world, are vulnerable to these types of situations. But AIG have got a long way to go before they will be able to stand on there own two feet again. Firstly they will have to pay interest back, at the steep rate of 8.5 percent, therefore they will quickly have to sell some of there assets to achieve this feat.

As we all know earlier this month that another American giant company filed for bankruptcy and that what in the name of Lehman. The bailout of AIG has now stopped them from surpassing Lehman as one of the largest corporate failures ever.

The quick demise in AIG was due to the current flux in the housing market, and the amount they have lost from the mortgages. AIG employees around 120 thousand people, and this could now considerably be reduced to claim some of there profits back. Even if the staff were slashed by 40% they could potentially be saving themselves billions of pounds of wages every single year.

AIG are very lucky to have been bailed out, they have been overspending for way to long, and now they will have to pick themselves up and start again from the beginning, becoming the once dominant force that they were.

Article Source: http://www.bluearticles.com


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