Regulators around the world have been shaken by the downfall of American International Group, once seen as the pinnacle of well-managed international insurance groups.

The harshest aspect of AIG's difficulties is that its problems originated not within its far-flung collection of insurance operations, but in a securities trading wing. Like other groups that have run into trouble--Aegon, ING, Swiss Re--AIG's top-rate insurance subsidiaries were fine (or could have been fine) on their own. But problems within banking, trading and capital markets operations posed what, in the current fashionable parlance, amounted to enterprise-wide risk.

Read the full story here on the InsuranceNewsNet website.