What if you bought AIG in 2000?
US Finance · Insurance. The hindsight answer, year by year, against the only benchmark that matters.
Could you have picked it? Play0.0× · S&P 500 same money: $4,626
$1,000 in AIG at the start of 2000 would be worth about $42.11 today. A plain S&P 500 index fund over the same years would have made more — the boring option won.
The story
American International Group was for decades the world's premier insurer, built by Maurice Greenberg into a global giant with a top credit rating. The prices shown reflect a later 1-for-20 reverse split, which is why they look so lofty. Greenberg was ousted in 2005 amid accounting investigations, but the bigger problem was hidden in a small London-based unit called AIG Financial Products.
That unit had sold credit default swaps, essentially insurance, on hundreds of billions of dollars of mortgage-linked securities, without setting aside much capital. When those securities fell in value and AIG's own credit rating was cut in September 2008, counterparties demanded collateral it did not have. The government stepped in with a rescue that eventually amounted to roughly 180 billion dollars and took a nearly 80 percent stake. Shareholders were heavily diluted. AIG sold off major businesses to repay taxpayers, which it completed in 2012 at a profit for the government. The shares never came close to their old highs, and the company spent the next decade simplifying itself.
The lesson: A small, poorly understood unit with concentrated risk can sink an otherwise sound giant; tail risks matter more than average profitability.
$1,000 invested at the start of each year
| Bought in | Price then | Worth today | S&P 500 would be | Multiple |
|---|---|---|---|---|
| 2000 | $1,900 | $42.11 | $4,626 | 0.0× |
| 2003 | $1,150 | $69.57 | $7,727 | 0.1× |
| 2005 | $1,300 | $61.54 | $5,763 | 0.1× |
| 2007 | $1,400 | $57.14 | $4,789 | 0.1× |
| 2008 | $1,150 | $69.57 | $4,626 | 0.1× |
| 2010 | $30.00 | $2,667 | $6,071 | 2.7× |
| 2012 | $23.00 | $3,478 | $5,312 | 3.5× |
| 2015 | $56.00 | $1,429 | $3,301 | 1.4× |
| 2018 | $60.00 | $1,333 | $2,519 | 1.3× |
| 2020 | $51.00 | $1,569 | $2,092 | 1.6× |
green = beat the S&P 500 · red = lost money
Best entry point in our set: 2012, turning $1,000 into $3,478. The S&P 500 from that same year: $5,312.
On this day
- 2 March 2009: AIG posts the largest quarterly loss ever
- 16 September 2008: The government rescues AIG
- 10 November 2008: AIG's bailout grows to about $150 billion
Now try it without hindsight. The wheel decides the year and the asset class, you pick the position, ten seconds a pick, and we simulate to today. AIG is one of 258 positions on the wheel — including the ones that went to zero.
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