In the aftermath of the 2008 financial crisis, American International Group (AIG) found itself in dire straits, on the verge of collapse. To stave off this crisis, the U.S. government stepped in with a massive bailout totaling $182 billion. This intervention was a lifeline for AIG, yet it came with significant strings attached. One of the conditions of the bailout was that AIG had to divest itself of certain assets, including its prized subsidiary, AIA.
AIA, one of Asia’s largest insurers, was a valuable asset for AIG, but under the terms of the bailout, AIG had to undergo a significant restructuring. Selling off AIA was a strategic move to raise funds and streamline its operations. By divesting itself of AIA, AIG was able to generate much-needed capital to repay its debts to the government and stabilize its financial position. While AIA was a profitable business, the necessity to comply with the bailout terms outweighed the benefits of holding onto this asset.
The sale of AIA was not a decision made lightly by AIG. It was a crucial step in the company’s recovery process after the financial crisis. While AIA was a strong and profitable entity, the conditions of the bailout left AIG with little choice but to part ways with it. This move allowed AIG to focus on its core operations and repay its debt to the U.S. government, setting the stage for its eventual recovery and return to stability.
(Response: AIG sold AIA as part of the conditions of the $182 billion bailout it received from the U.S. government in the aftermath of the 2008 financial crisis. The sale was a strategic move to raise capital and comply with the bailout terms, allowing AIG to stabilize its financial position.)