The AIG Effect: What Happened and Where to From Here?

As the anniversary of near total collapse of American International Group Inc. approaches, BestWeek spoke to industry experts and observers about the insurance giant's past and future.

Reaction to the Collapse

Maurice "Hank" Greenberg, former chief executive officer of AIG: To believe that company could confront the kind of financial disaster that took place and drove the stock down to where it is, is just mind boggling.

Robert Hartwig, president, Insurance Information Institute: My reaction was one of disbelief, not just associated with what had happened to AIG, but as an economist and an observer of economic phenomenon and financial crisis that this was happening in the United States today.

Ronald Shelp, author of "Fallen Giant": It was quite terrifying, and I thought [for] sure we were going to have another depression like we had in the 1930s.

The Financial Rescue Package

Maury Randall, Rider University economist: If AIG were to go under, it would have meant even greater losses to many financial institutions and it would have aggravated the situation still further, so the federal government decided to bail out AIG and lend them large quantities of money.

Hartwig: The bottom line is this, the United States was literally on the precipice of the next Great Depression, and the government really had to pull out all the stops, it was flying by the seat of its pants and guided by the fact that inaction would lead to calamity.

The Impact on the Insurance Industry

David Sampson, president, Property Casualty Insurers Association of America: It has made it difficult from a public policy perspective because there's a lot of broad confusion across America about what actually caused AIG's problems.

Ross Buchmueller, president, Privilege Underwriters Reciprocal Exchange: We probably stress models harder how, looking at tail risk a lot harder as a result.

The Greenberg Factor

Shelp: I don't think (the AIG collapse) would have happened at all (under Greenberg). Hank Greenberg is an exceptional guy. First, he had better systems to manage it. He had this committee that met weekly to look at risks all around the world. When (former CEO) Martin Sullivan succeeded him, he abolished the committee, so that's an important step.

The Future of AIG

Rep. Leonard Lance, R-N.J.: I think it can return to its position of excellence. Obviously, there been an enormous investment by the American people in the company. Only time will tell.

Buchmueller: I think people thought it would be easier to beat them in their condition than it has been. I think that customers sought alternatives, found their pricing was extremely keen and stayed. And so I think they've proven to hold up better than most people thought they would.

John Doyle, executive vice president, Chartis: We're excited about the future of Chartis. We have the best team of people in the business. We think we have a bright future and were excited about it.

Hartwig: It's too soon to say where we're going to wind up. The final chapter in the financial crisis or how AIG will emerge at the other end of this tunnel have yet to be written.