I take this discussion from when I first started at AIG. I was a fresh graduate from my MBA/MIM schools and I was recruited to AIG’s Management Associate program in their life division.
Previous to getting my graduate degrees I had worked in non-profit with refugees, and the idea of working for ‘evil corporate America’ was somewhat in the back of my mind. I always thought of myself in the rebel alliance fighting against the Empire. However with a very first time pregnant wife I was just glad to have a job (this was right after 9/11 and there weren’t many companies hiring).
Wouldn’t you know it, my first job was to assess the situation in Latin America for a project that was somewhat outside of local legal regulations. The Argentine Peso had just devalued to 30% of its original value and the fear in the region of currency devaluation was strong. Therefore AIG wanted to set up an Offshore US Dollar based company that could sell high net worth dollar based policies into countries South of the boarder to HNW individuals.
I helped to set up a company that was going to try to get investments into our insurance products that were really just a wrapper. The product was mainly an investment product that was based in US dollars. Our customers were going to have to give us US dollars, but then their investments would not be at risk of devaluing in their local currencies. Technically this is not truly legal to sell in the countries and so we had to do so clandestinely. The customer was supposed to only buy this outside of their own country, but we suspected the brokers who were selling this did not hold too hard to that rule. It was a hard thing for me to get my head around.
However, after seeing how much wealth had been wiped out in Argentina, I realized that had some of this wealth been in US dollars, the people would have been able to bring those dollars back ‘on shore’ and back into a faltering economy.
You are tasked with three things (keeping in mind this is 2001):
1) Would you be OK doing this as your first job out of Grad school? Why or Why not?
2) Where do you base your company jurisdiction (this is where your insurance guarantees, or policy documents are located) from? There are a few countries that are OK with hosting off-shore companies. Find them and tell me which one you would chose and why. Keep in mind you physically don’t have to be there, you just have to register your company there. There are a couple of countries that specialize in off shoring. Look them up.
3) You need to set up a dollar friendly operation center somewhere in Latin America. Whatever country you chose to set this company up you may NOT sell to its citizens. Which country do you chose to set up in and why?
4) Chose 5 countries you would enter to try to find HNW brokers to sell your product in South and Central America and tell me why you chose those 5 countries.
5) Bonus: what things do you need to be worried about both for this project and personally for your career?
Looking forward to hearing you thoughts!
