Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG
By Ron Shelp with Al Ehrbar
Maurice “Hank” Greenberg and American International Group Inc. (AIG), the company he ran for 37 years, were little known by anyone outside the insurance industry or Wall Street until March 2005, when Greenberg was asked by his board to resign after running afoul of Eliot Spitzer, at the time New York’s crusading attorney general. The spat that followed and the litigation that continues to this day have shined a bright light on the unusual history of the giant insurer AIG and the practices of its legendarily tough boss. In Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG, former AIG executive Ron Shelp teams up with business journalist Al Ehrbar to tell the tale.
AIG began its life in Shanghai in the 1920s as the brainchild of a gregarious serial entrepreneur, Cornelius Vander (C.V.) Starr. At that time, the city had been carved up into several foreign concessions that were magnets for entrepreneurs of all stripes and nationalities. Within 10 years, Starr had a team of multinational managers running insurance offices across East Asia. He owned two newspapers and was a major land speculator. The rough-and-tumble of business in China was to lay the foundation for a maverick corporate culture. This culture encouraged the exploitation of new opportunities via political connections and was penurious about costs, using a hardball approach to handling claims. Powerful political connections have always been a feature of AIG, and during World War II several of its executives had close ties to the OSS, the precursor of the CIA. The company’s origins and international sprawl also fostered an exceedingly complex corporate structure, the opacity of which would come back to haunt both Hank Greenberg and AIG.
Hank Greenberg’s career is a story of a rise from humble origins in a working-class Jewish family; in 1942, underage, he enlisted and became an Army ranger, landing on Omaha Beach on D-Day. After his military service, he studied as a lawyer before becoming an expert on accident and health insurance. When C.V. Starr offered him a job in 1960, he jumped at the chance. He soon proved his business acumen, and he was appointed CEO on Starr’s death in 1968. Under Greenberg’s leadership, AIG became an insurance powerhouse, making its shareholders and executives extraordinarily wealthy. Shelp, who joined the company in 1973, marveled at the way AIG used its clout with governments, both U.S. and foreign, to its advantage. His treatment of Greenberg’s legendary temper and imperial working style is sympathetic, and he argues that the man’s business achievements totally overshadow any personal foibles. In the post-Enron regulatory environment, however, the business style and practices that had propelled AIG and Hank Greenberg to the summit proved to be vulnerabilities, allowing Eliot Spitzer to play David to Greenberg’s Goliathpermalink.