Insurance Fraud at AIG.pptVIP

Insurance Fraud at AIG Rebecca Brenza Who is this man? Maurice Greenberg George Bush Warren Buffett Eliot Spitzer None of the above Eliot Spitzer is a name that will come up throughout the presentation so who do you think Eliot Spitzer is? Resigned as the Governor of New York in 2008 New York Attorney General for 8 years who was brilliant at prosecuting Wall Street fraud Client 9 of a prostitution ring Son of a multimillionaire real estate developer All of the above Fraud: Not a New Issue Other large companies have been found guilty of fraud Enron Corp. WorldCom Inc. American International Group Inc.“We Know Money” Largest U.S. commercial insurer 93,000 employees Does work from insurance to asset management in 130 countries Main customers are businesses, but it also sells life and property insurance to individuals One of the largest, most profitable companies in the world Known for its steady earnings growth CEO: Maurice “Hank” Greenberg World’s biggest reinsurance buyer AIG continued… Shareholders’ equity 2007: $95.80 billion Annual Net Income 2004: $9.84 billion 2005: $10.48 billion 2006: $14.05 billion 2007: $6.2 billion Initial Warning Signs at AIG A company founded in 1987 called Coral Reinsurance in Barbados only had one customer: AIG In 1991, Coral Re held more than $1 billion in estimated losses from AIG but only had $15 million in capital Regulator’s became convinced that Coral Re was under AIG’s control and no real risk was being transferred AIG eventually agreed to stop its business with Coral Re, but AIG never admitted Coral Re was an affiliate and never was fined Initial Warning Signs at AIG cont… Eliot Spitzer named AIG as a participant in a bid-rigging scheme with other major insurers and insurance broker Marsh McLennan Cos. 2 former AIG employees pleaded guilty in the scheme Marsh McLennan’s CEO at the time was AIG CEO Maurice R. “Hank” Greenberg’s son (Jeffrey Greenberg) AIG’s Previous Fraudulent Encounters Brightpoint Small mobile phon