It seems Jamie Dimon did receive relatively accurate information, but that's unavoidable. Maintaining complete secrecy during certain ongoing events is nearly impossible.
During a previous meeting with Paulson, Baron had already proposed acquiring some of AIG's assets through the British-based AIG.
Back in June, AIG, suffering heavy losses during the subprime mortgage crisis—primarily due to excessive CDS (subprime bond default swaps), was on the verge of collapse and ultimately taken over by the US government. Initially, the US government
injected $85 billion into AIG to ensure the nation's largest insurance group survived the crisis.
However, they subsequently realized they had underestimated the scale of AIG's exposure to CDS, forcing them to continue increasing their capital. To date, the US government has injected over $150 billion into AIG in two installments!
Even so, AIG hasn't escaped its predicament yet. According to Baron, AIG's losses in the last three months have exceeded $60 billion, marking the largest quarterly loss for a US company in history.
In a previous meeting, Baron could see that Paulson remained deeply concerned about AIG's current situation.
But what could be done? There's a term called "sunk cost." Having already invested so much money in AIG, is it time to abandon it now?
What else could be done? Continue to rescue it...
In addition to government aid, AIG itself is also preparing to sell some assets to raise funds for self-rescue.
In Baron's previous life, AIG had already sold its private bank, Hartford Steam Boiler (HSB), a machinery insurance business, and its Canada Life Insurance business at the end of this year and the beginning of next year, raising funds.
They're even planning to sell some shares in their wholly-owned subsidiary, AIA, to raise funds and recover losses...
And Barron's target this time is AIA.
In Barron's previous life, before his rebirth, AIA gave the impression of being a Hong Kong company.
In reality, even now, AIA is still an American company, a wholly-owned subsidiary of the American International Group—which owns numerous insurance subsidiaries, two of the most important being AIA and AIG.
What many people don't know is that AIG has a deep connection with Huaxia—in fact, arguably the largest American insurance group was founded in Huaxia...
AIG's history dates back to 1919, when its founder, Shi De, established an insurance agency, AIG Insurance, in Shanghai, China, with 300 yen, offering fire and marine insurance.
Shi De was also the first Westerner to introduce the concept of insurance to the Chinese community in Shanghai.
Then, in 1921, C.E. Smith founded AIA Life Insurance, expanding its business throughout China and Southeast Asia within a decade.
In 1926, AIG opened a branch in New York, USA. His successful insurance business in China led him to establish Sihai Insurance Company in Hong Kong in 1931, before expanding into Europe and the Middle East.
Later, due to the outbreak of the Japanese invasion of China, C.E. Smith relocated his company headquarters from Shanghai to the United States, further expanding into Latin America.
In 1949, AIG withdrew from its insurance business in China.
C.E. Smith passed away in 1968, and his successor, Greenberg, expanded AIG's American business.
In 1969, AIG was relisted in the United States. After years of development, AIG's business expanded to over 130 countries and regions, expanding beyond insurance to include other financial services, including pension services, non-life insurance products and services, asset management, and related investments.
American International Group companies serve commercial, institutional and individual clients through the insurance industry's largest global property and casualty insurance and life insurance service network. AIG's member companies are the largest commercial insurance companies in the United States, and its subsidiary, AIG American General
, is one of the nation's top life insurance companies. Until the subprime mortgage crisis, AIG was a multi-faceted behemoth, encompassing insurance and finance.
Now, it relies on government bailouts and asset sales to survive.
In Barron's previous life, Prudential, the largest insurance company in Britain, nearly bought AIA from AIG...
but the deal ultimately fell through. After AIG sold some of its shares, AIA eventually listed on the Hong Kong Stock Exchange in 2010. AIG gradually reduced its holdings, ultimately delisting AIA from its US-owned subsidiary, transforming it into a Hong Kong-based company.
Of AIG's many insurance businesses, Barron was most interested in AIA.
First, AIA's primary business is in the Asia-Pacific region, and Barron knows that this region will be the fastest-growing insurance market globally. According to estimates, 40% of global life insurance premium growth over the next five years will occur in Asia.
AIA currently has over 20 million customers and over 200,000 insurance sales representatives in Asia.
In the Chinese market, after withdrawing from mainland China in 1949, AIA has re-entered the market as a wholly-owned subsidiary since 1992, becoming the first foreign company approved to conduct insurance business in China.
To date, AIA has become the largest foreign-owned life insurer in China, and in major cities like Beijing, Shanghai, and Guangzhou, AIA's market share even exceeds that of some established Chinese life insurers.
Barron's discussions with American International Group's management suggest that they are willing to sell AIA.
Edward Liddy, Chairman and CEO of American International Group, has also stated that American International Group will refocus on its property and casualty insurance business.
And AIG plans to retain its domestic property and liability insurance in the United States and its property insurance business abroad... Then it is obvious that between AIA, whose main business is in the Asia-Pacific region and is mainly life insurance, and AIG, which is mainly engaged in property insurance, the core business that AIG is ready to expose is AIG...
"I know that you have extensive connections in the upper echelons of America, Mr. Dimon, especially with the management and board of directors of AIG, so..."
Baron said to Jamie Dimon:
"We are friends, aren't we? You don't have an insurance business, and similarly, Standard Chartered Merrill Lynch has achieved sufficient development. Next is the time for us to support each other."
Even if AIG intends to sell AIA, but in terms of the asking price - they will definitely not let themselves get away with it.
However, after receiving a massive government bailout, American International Group's say on certain matters still needs to consider the government's opinions. JPMorgan Chase's relationship with the government is evident in their successful acquisitions of Bear Stearns and Washington Mutual, turning decay into magic.
So, is it truly willing to establish a "friendship" with him?
Under Baron's watchful eye, Jamie Dimon should provide the answer...
Of course, Baron doesn't expect to truly receive the "favored son" treatment JPMorgan Chase offers, but at the very least, he should be offered a fair price.