nottheaverageactuary

Actuarial news and views from Cape Town and beyond

One of the world’s largest insurers assists client companies to violate accounting principles

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AIG, considered one of the world’s largest insurers, was involved in an accounting scandal that has since been considered as one of the 10 largest accounting scandals across all industries.

AIG facilitated the transfer of $762 million in loans and investments onto its books from PNC (a large financial services company). This was done in an attempt to help PNC record higher profits than what they had actually earned. This is an example of the violation of accounting principles, not simply within a company, but between companies.

AIG was further accused of entering into contracts with companies that could be reported as insurance contracts, but in which no risk transfer took place. This is a further example of violation of accounting standards through agreements between companies.

The article can be found here:

http://www.insurancejournal.com/news/national/2004/11/24/47993.htm

 

 

 

 

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