AIG: You Bring the Nerds and the Algorithms and I’ll give you a AAA Rating…a little history from 1987
Posted Apr 02 2009 6:13pm
This is a bit of history on AIG and how the product division began. Once again, it’s back to the algorithms, it is all about software and formulas to calculate the long complicated formulas, also known as “business intelligence” to the max. In the related reading below though you can see where AIG after this deal was having problems keeping adequate reserve levels, required by law to keep an insurance company solvent. It does make me wonder how secure are the reserves that are in place today with all insurers and perhaps the SEC may have more information in that area, maybe? BD
The only catch was that, in order to arrange all these contracts on favorable terms, Sosin needed the financial backing of an extremely reliable, deep-pocketed benefactor. When Sosin went looking for one, an associate put him in touch with former Connecticut senator Abraham Ribicoff--a friend of [AIG founder Hank] Greenberg's. Ribicoff brokered an introduction, and, in early 1987, the two men settled on a joint venture: Sosin would furnish the nerds and the algorithms, Greenberg would provide his company's triple-A rating, and the two sides would share the profits.