SHANGHAI — AIG's roots go deep here, all the way back to 1919 when a young and restless Californian arrived in a booming semi-colonial city that was teeming with bankers, industrialists and opium merchants.
Cornelius Vander Starr had sold auto insurance in San Francisco before serving as an infantry sergeant during the Great War. But the Fort Bragg native wasn't commissioned overseas, so when the war ended, he ventured off by himself to Asia's commercial hub at age 26.
Before long, he opened an office on Nanking Road with two Chinese clerks, underwriting ordinary life insurance policies as well as coverage for cargo ships carrying refugees from Russia's Vladivostok to Europe.
And so was born the company that would become American International Group Inc., the biggest insurance firm in the world.
Since then, AIG has had a special place in the hearts of many Chinese, who regarded the company as among the best of international brands. But after the U.S. government's $85-billion rescue of the troubled conglomerate last week, its stellar reputation has been tarnished, and at least a few customers are canceling their policies.
"It probably won't have any problems, but I don't know. I just don't feel comfortable leaving it there," said Wang Qiang, 54, an administrator for a construction company who rushed to AIG's branch in the southern city of Guangzhou as soon as he learned about the government's intervention. Despite AIG's assurances that its customers were protected, Wang didn't hesitate to cash out his $12,000 whole life policy.
Like Wang, most Chinese understand little of the turmoil that has engulfed AIG and caused it to lose $18 billion over the last three quarters -- primarily from its extensive exposure to the tottering U.S. housing and mortgage industries. But its stunning fall has hardly gone unnoticed here, illustrating the global ripple effects of the American financial crisis.
AIG has 3.7 million customers in China, according to an analyst's estimate, and millions more elsewhere in Asia -- a legacy of Starr's aggressive expansion in the region in the 1920s. About half of AIG's global workforce of 116,000 is in Asia.
The New York-based company manages $115 billion in assets in Asia and has tens of billions invested in roads and development projects from the Philippines to South Korea. AIG's operations in mainland China are more limited, mainly life, property and casualty insurance lines, reflecting the nation's tight restrictions on foreign financial service firms.
