Problem 1. What is AIG's stance on the allegations they are facing?
Problem 2. What further investigations do you propose to be conducted?
Problem 3. Have you researched other articles and publications about AIG and their future state?
Problem 4. What are your personal feelings about AIG and the decisions that they have made?
Case Scenario: Research Design
Through investigations conducted by the Securities Exchange Commission and other investigation bodies, American International Group (AIG) were questioned regarding financial legalities and business legalities in terms of transactions with other companies. One particular probe against AIG is issue regarding financial fraud wherein the company is said to be involved in reinsurance activities. AIG used the following data which is assumed to have illegalities, found by different research bodies such as the Morgan Stanley Equity Research, to dismiss two senior executives.
• $250 million reserves that were made to be less visible for liabilities
• AIG reinsurance transactions with other companies and housing Richmond Insurance Company without proper transfer of risk.
The consequence of AIG’s decision of firing the two senior executives gives them the following problems: strengthening the assumptions that the company intended the fraud, thus they need to eliminate people who were part of the fraud and who can reveal the truth; and the problem of who can support or defend the information found against AIG when the two executives were already fired. Because of the company’s decision, AIG is now in a serious problem with financial investigation bodies.
The financial data found on AIG is significant because they can serve as reasons for conducting further investigation on issues filed against AIG. However, such data has limitations to be able to conclude that AIG has really committed fraud. This is because the data are still not enough and further information is still to be investigated.
Reference
Hays, Daniel. Taking The Fifth A ‘Serious Problem’ For AIG, Spitzer Says.
Retrieved on August 5, 2005, from Online. Web site:
https://www.nationalunderwriter.com/pandc/nuonline/032805/p12taking_the_fifth.asp
Taking The Fifth A ‘Serious Problem’ For AIG, Spitzer Says
(Sourced Article) Reproduced from National Underwriter Edition, March 25, 2005. Copyright © 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.