MICROCAPITAL STORY: ING Review of American International Group (AIG) and Its Partnerships with ACCION, FINCA, MicroCred, Pro Mujer, and Pak-Oman Microfinance Bank

The Dutch Bank ING published its updated 2008 study on commercial bank microfinance activity, called “A Billion to Gain? The Next Phase”. A MicroCapital review of the paper can be read here. MicroCapital is reviewing the microfinance activities of several of large international banks covered in the study, such as American International Group (AIG).

AIG is an international insurance provider and the 4^th largest global finance institution by market value in 2007. It operates in 130 countries and jurisdictions. In 2007, the company also has consolidated assets of USD 1.1 trillion and a USD 6.2 billion net income. Its stock is listed on the New York, London, Paris, Switzerland, and Tokyo exchanges.

In 1997 AIG Uganda partnered with microfinance institution (MFI) FINCA to offer a micro-loan with a low-cost credit insurance policy. This product paid back the loan in event of the client’s death, mitigating the family’s and lender’s risk. The success of this product also led to the expansion of AIG’s microfinance services in Africa, Brazil, India, and Central America.

In India, Tata AIG started offering a group livestock policy in December of 2005. This policy insured over 20,000 cattle for a rural group in Andhra Pradesh, with the majority of cattle owners being village women. Tata AIG also launched a microfinance insurance venture with over 50 non-governmental organizations in August 2006.

AIG’s other efforts in Asia include an 18 percent shareholding in MicroCred Nanchong, the first pilot MFI to target micro, small and medium-sized enterprises in the Sichuan Province. This MFI received an aggregate investment of CNY 55 million (or USD 7.4 million). Further details can be found in this MicroCapital Story. In Pakistan, American Life Insurance Company, a member company of AIG, signed a 2007 agreement with national bank, Pak Oman Microfinance Bank, to provide a credit protection facility to borrowers. For more on this deal, see the following MicroCapital coverage.

In 2006, AIG announced a 3-year partnership with multinational microfinance organization, ACCION International, for USD 5.25 million. Through this partnership, ACCION’s innovations will include remittances, savings products, microinsurance, and housing loans. AIG’s contribution includes support for ACCION’s financial literacy programs, assistance for ACCION’s exploratory program in China, and backing for the ACCION-run “AIG Fund for Microfinance Innovation”. MicroCapital’s coverage of this partnership can be found here.

Also in Latin America, AIG awarded Pro Mujer Argentina a three year grant of USD 1 million in 2007. Pro Mujer is a microfinance network in Latin America. It’s MFI in Argentina started in late 2005 and provides almost 6,000 clients with business loans, savings accounts, and pre-credit training sessions. The grant helps finance its loan portfolio as well as its financial and health services.

by Jennifer Lee

Additional Resources:

ING Microfinance: “A Billion to Gain? The Next Phase”, by Matthijs Boúúaert, March 2008.

AIG: Home, Microfinance, ACCION Partnership, Tata AIG, ALICO-AIG Life,

ACCION: Home

FINCA: Home

MicroCred Holding: Home, MicroCred Nanchong

Pro Mujer: Home, Pro Mujer Argentina

Pak-Oman Microfinance Bank: Home

MicroCapital Story: “American International Group (AIG) and ACCION International Announce $5.25 million, Three-year Partnership”, September 28, 2006.

MicroCapital Story: “Pak-Oman Microfinance Bank of Pakistan Signs Credit Protection Agreement with ALICO-AIG Life”, June 28, 2007.

MicroCapital Story: “MicroCred Holding Establishes Microfinance Institutions in China and Senegal, Backed by IFC, AIG and KfW Bankengruppe”, by Elizabeth Nelson, November 12, 2007.