NEW YORK - AMERICAN International Group (AIG), the insurance giant rescued on Tuesday by the US government, grew over the last 90 years from a small firm founded in China to a goliath of global finance before it ran into legal trouble and dramatic financial losses.

With some 74 million clients around the world, the bulk of them American, and 116,000 employees in 130 countries, AIG was ranked 35th in a Forbes magazine list of global companies.

The company has US$1.06 trillion (S$1.52 trillion) in assets, and posted 2007 revenues of US$110 billion, and US$6.2 billion in profit.

AIG lost US$13.16 billion in the first two quarters of 2008, after a loss of US$5.3 billion in the final quarter of 2007. A year ago, the group reported profits of US$6.2 billion compared to US$14 billion in 2006.

Shares opened on Tuesday at around US$4 and slipped 21 per cent by the close, after plunging 90 per cent in the ten preceeding sessions including a 60 per cent dive on Monday.

AIG was founded in Shanghai in 1919 under the name American Asiatic Underwriters by Cornelius Vander Starr (1892 - 1968), a young American of Dutch origin.

He was the first foreigner to sell insurance products to the Chinese, and in 10 years the company extended across the region. Links with China remain strong.

AIG did not open operations in the United States until 1926.

The firm also profited during World War II, entering strong in Latin American markets to fill in as European companies pulled out.

Starr then moved the headquarters to New York in 1949, and he managed the company until his death in 1968.

Mr Maurice 'Hank' Greenberg, the son of a New York confectioner, joined AIG in 1962 and transformed the company over the years, rising in 1969 to the position of CEO as Starr's hand-picked successor. He remained in that position until 2005.

Under his leadership AIG adopted new products and services, such as risk management services for large companies, and broadened its offerings outside of its core insurance offerings into other financial areas.

AIG became a big player in a complex parallel market called credit default swaps (CDS), financial instruments in which Wall Street companies take out a form of market insurance against the risks of bond default.

These products, often linked to the US real estate market, are at the heart of the current banking crisis and have led to massive write-downs of assets around the world.

In 2005, the company was hit by allegations of fraud, forcing Mr Greenberg to step down.

The following year, AIG agreed to pay US$1.6 billion in a settlement with the Securities and Exchange Commission and New York state authorities.

After his departure, Mr Greenberg remained an important shareholder and criticised the company's new leadership.

He was replaced by Mr Martin Sullivan, who resigned in June amid huge losses and falling share value. Mr Sullivan was succeeded by Mr Bob Willumstad, a former Citigroup executive who had served as chairman of the company's board of directors. -- AFP