Chapter 637 AIA Insurance

It seems that Jamie Dimon did get more accurate information, but this is inevitable. In the process of some things, it is almost impossible to keep it completely confidential.

When Barron met with Paulson before, he had already proposed that he would acquire some assets of American International Group (AIG) through the British Friends Insurance Group.

As early as June, American International Group suffered heavy losses in the subprime mortgage crisis - mainly because they undertook too many CDS (subprime bond swap default insurance), and was on the verge of collapse and was eventually taken over by the US government.

Initially, the US government injected $85 billion into American International Group to ensure that the largest insurance group in the United States could survive the crisis smoothly...

But then, they found that they still underestimated the scale of CDS involved in American International Group. In desperation, they could only continue to increase capital. So far, the US government has injected more than $150 billion into American International Group in two times!

Even so, AIG has not yet gotten out of its predicament - according to the news Barron received, AIG's losses in the last three months exceeded $60 billion, a figure that set the largest quarterly loss for a company in the history of the United States.

In the previous meeting, Barron could see that Paulson was still worried about the current situation of AIG.

But what to do? There is a word called "sunk cost". Since so much money has been invested in AIG, is it time to give up now?

What else can be done? Keep saving...

In addition to the funding from the US government, AIG itself is also preparing to sell some assets to obtain funds for self-rescue.

In Barron's previous life, AIG sold their private bank, Hartford Steam Boiler (HSB) engaged in machinery-related insurance business, and Canadian life insurance business at the end of this year and the beginning of next year, and obtained some funds.

They are even preparing to sell some shares of their wholly-owned subsidiary AIA to obtain funds and recover losses...

Barron's target this time is AIA.

In Barron's previous life, before his rebirth, AIA gave people the impression that it was already a HK company.

In fact, at present, AIA is still an American company, a wholly-owned subsidiary of American International Group - American International Group has many subsidiaries involved in insurance business, the two most important of which are AIA and AIU.

What many people probably don't know is that there is a deep relationship between American International Group and Huaxia - in fact, it can be said that this largest insurance group in America was founded in Huaxia...

The history of American International Group can be traced back to 1919, when the founder of the group, Shi De, established an insurance agency company in Huaxia Magic City - AIU Insurance, with 300 yen, providing fire and water insurance.

Shi De is also the first Westerner to bring the concept of insurance to the Chinese in Magic City.

Then in 1921, Shi De established AIA Life Insurance, and in just ten years, expanded its business to the whole of China and Southeast Asia...

In 1926, AIG opened a branch in New York, America. When his insurance business in China was successful, he established Sihai Insurance Company in Hong Kong in 1931, and then went to Europe and the Middle East.

Later, due to the outbreak of the Japanese invasion of China, Shi De moved the company's headquarters from Shanghai to America, and then expanded the Latin American market.

In 1949, AIG withdrew from its insurance business in China.

Shi De died of illness in 1968, and his successor was Greenberg, who developed AIG's American business.

In 1969, AIG returned to the United States for listing. After years of development, AIG's business has been distributed in more than 130 countries and regions, and has expanded from insurance business to other financial services, including pension services, non-life insurance product insurance, asset management and related investments.

American International Group member companies provide services to commercial, institutional and individual customers through the largest global property and life insurance service network in the insurance industry.

American International Group member companies are the largest commercial insurance institutions in the United States, and its subsidiary AIG American General is one of the top life insurance institutions in the United States.

Well, until the subprime mortgage crisis, American International Group was a behemoth operating in multiple fields including insurance and finance.

Now, it needs to rely on government aid and sell its own assets to survive.

In Barron's previous life, Prudential, the largest insurance company in the UK, almost bought AIA from American International...

However, the transaction was not completed in the end. After American International Group sold part of AIA's shares, AIA was finally listed in HK in 2010, and American International Group gradually reduced its holdings of AIA's shares. In the end, AIA's American color gradually faded and became a HK company.

Speaking of which, among the many insurance businesses under American International Group, Barron is most interested in AIA.

Because first of all, AIA's main business is in the Asia-Pacific region, and Barron knows that the insurance business in this region will also grow fastest in the world in the future - according to estimates by relevant institutions, 40% of the global life insurance premium growth in the next five years will occur in Asia.

Currently, AIA has more than 20 million customers and more than 200,000 insurance salesmen in Asia.

In the Chinese market, since AIA withdrew from the Chinese mainland market in 1949, they have entered the Chinese Magic City again as a wholly-owned company since 1992, becoming the first foreign company approved to operate insurance business in China.

Up to now, AIA has become the largest foreign-funded life insurance company in China, and in major cities including Beijing, Shanghai and Guangzhou, AIA's share even exceeds that of some old Chinese life insurance companies.

According to the results of Barron's contact with the management of American International Group, the other party is still willing to sell AIA.

Edward Liddy, chairman and CEO of American International Group, has also said that American International Group will refocus on its property and liability insurance business in the future.

And AIG plans to retain its domestic property and liability insurance and property insurance business abroad... Then it is obvious that between AIA, whose main business is in the Asia-Pacific region and is mainly life insurance, and AIG, which is mainly property insurance, the core business that AIG is ready to expose is AIG...

"I know that you have extensive connections in the upper echelons of America, Mr. Dimon, especially with the management and board of directors of AIG, so..."

Barron said to Jamie Dimon:

"We are friends, aren't we? You don't have an insurance business, and similarly, Standard Chartered-Merrill Lynch has achieved enough development, and it's time for us to support each other."

Even if AIG intends to sell AIA, they will definitely not be cheap in terms of asking price.

However, after receiving a huge amount of government aid, American International Group still needs to consider the government's opinions on some issues. As for JPMorgan Chase's relationship with the government, we can see how they turned decay into magic in the acquisition of Bear Stearns and Washington Mutual Bank.

So are they really willing to establish a "friendship" with themselves?

Under Barron's gaze, Jamie Dimon should give the answer...

Of course, Barron does not expect to really get the "son" treatment like JPMorgan Chase, but at least, he should give himself a "conscience price".