Causes of American International Group's Bankruptcy

Causes of American International Group's Bankruptcy

1. Subprime Mortgage Exposure: AIG faced significant losses due to its exposure to risky subprime mortgage-backed securities during the 2008 financial crisis.

2. Credit Default Swaps: AIG's involvement in insuring mortgage-related assets through credit default swaps amplified its financial risk, leading to massive losses and liquidity problems.

3. Lack of Sufficient Reserves: AIG failed to maintain adequate reserves to cover potential losses from its insurance and investment activities, exacerbating its financial distress.

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