In case you do not know the history of American International Group (AIG), and its financial problems, let me give you a brief summary. AIG is a a huge American insurance company, but it also maintains international branch headquarters in cities like Paris, London, and Hong Kong. In fact, Forbes listed AIG as the 18th largest public company in the world.

A Brief History Of AIG’s Recent Financial Problems

Last year, AIG’s credit ratings suffered a downgrade below AA levels, causing a massive cash liquidity crisis. In response, the government declared that AIG was “too big to fail”, and so the US Federal Reserve created a multi-billion dollar cash reserve account for AIG to draw on so they could meet their obligations. Later last year, the government increased that package to be worth almost twice as much. Even though the action was controversial in our free market, we have to keep in mind that AIG is the largest US commercial underwriter. They are also a very big player in the life insurance market.

The money did not come with out any strings attached, though, and the federal government received a large equity stake in the troubled company. In other words, we American taxpayers purchased a large stake in AIG if we wanted to or not.

Do People With AIG Insurance Need To Worry?

One of the most common questions I get is from people who are concerned about their coverage with AIG products, or even about insurance from other companies. However, I am quite certain that people who purchased coverage had no problems with their claims or policies. Drivers with AIG car insurance or individuals with AIG life insurance still have their coverage in place.

Insurance is one of the most highly regulated industries in the US, and covered individuals and businesses should be well protected. Every US state has some sort of guarantee plan for policy holders. But still, if a company as large as AIG were allowed to fail, it could do incredible damage to the states.

If you do have individual concerns about your own policy, please talk to your insurance advisor or state insurance department.

What About Investors?

Investors may not do well. In order for them to see any future returns on their investments, AIG has to begin to perform well again. On March 2, 2009, AIG reported the largest one quarter loss in corporate history. While we all hope that the economy turns around soon, investors may be pessimistic. Insurance regulations that protect insured people will not apply to individual investors.

What About American Taxpayers?

Right now, we taxpayers may be as pessimistic as investors. In addition to a huge loss, we are hearing reports of huge bonuses being paid out to the very people who were in charge during the financial problems. From my standpoint as a small business owner, it is hard to understand how losses like this get rewarded. AIG countered that they had to fulfill contract obligations that were made before the company took government credit money.

Will AIG Get More Help?

Right now, polls show that Americans are backing off on supporting more bailout measures. When large companies take taxpayer money to stay afloat, and then reward their executives with parties and bonuses, it is hard for the rest of us to stay sympathetic.

Many Americans are struggling right now. The middle class factory worker who just lost his job and is trying out how to pay his mortgage may not be eager to see his tax dollars go towards more losses and excesses. After all, unlike some of the executives at AIG, that factory worker may have actually been good at his job, and was just a victim of the recession.

Has this helped? Please let us know. In addition consider using our FREE QuoteClix.com quote service to find a cheaper car insurance policy. Insurance rates keep going up and we have contacted insurance companies in all 50 states to help find the best price for your car insurance.