This is a bit of history on AIG and how the product division began. Once again, it’s back to the algorithms, it is all about software and formulas to 
calculate the long complicated formulas, also known as “business intelligence” to the max. In the related reading below though you can see where AIG after this deal was having problems keeping adequate reserve levels, required by law to keep an insurance company solvent. It does make me wonder how secure are the reserves that are in place today with all insurers and perhaps the SEC may have more information in that area, maybe? BD
“Beware of Geeks Bearing Formulas”…Warren Buffett
Concerned over Wall Street CEO Pay – How About Health Insurance CEOs?
The only catch was that, in order to arrange all these contracts on favorable terms, Sosin needed the financial backing of an extremely reliable, deep-pocketed benefactor. When Sosin went looking for one, an associate put him in touch with former Connecticut senator Abraham Ribicoff--a friend of [AIG founder Hank] Greenberg's. Ribicoff brokered an introduction, and, in early 1987, the two men settled on a joint venture: Sosin would furnish the nerds and the algorithms, Greenberg would provide his company's triple-A rating, and the two sides would share the profits.
Related Reading:
AIG to take $1.8 billion charge
A fraud case here from 2008
Judge: AIG reserves fraud caused big investor loss
From 2005 with Reserve Levels too low…
AIG Needs New Policies - Business Week
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Health Insurance Reserves – How much is in the till, could it be 1 or 2 trillion nationwide?
A.I.G. To Get 30 Billion more in Bail Out Money from the Government
Concerned over Wall Street CEO Pay – How About Health Insurance CEOs?
Will Greed lead to Meltdown of the Health System?
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