American International Group Inc. - The AIG Story: + Website

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Copyright 2013 by Maurice R. Greenberg and Lawrence A. Cunningham. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Greenberg, Maurice R.

The AIG story / Maurice R. Greenberg and Lawrence A. Cunningham.

p. cm.

Includes bibliographical references and index.

ISBN 978-1-118-34587-0 (cloth) ISBN 978-1-118-51958-5 (ebk) ISBN 978-1-118-51954-7 (ebk) ISBN 978-1-118-51957-8 (ebk)

1. American International Group, Inc. 2. Insurance companiesUnited States. 3. Insurance companies. I. Cunningham, Lawrence A., 1962- II. Title.

HG8540.A43G74 2013

368.006573dc23

2012039474

From Maurice R. Greenberg

My wife, Corinne (Corky), is and has been supportive throughout my career during good times and bad and has been wonderful to bounce ideas off of. She has been a loving and loyal partner on this journey .

My children grew up as part of AIG during their youth. Jeff and Evan had successful careers at AIG and moved on to fulfill their own ambitions and hence have brilliant careers. Cathy is an outstanding physician and Scott is focused on investments. All my children were influenced one way or another growing up as part of the AIG family .

Shak, my right hand on just about everything I did and do .

Mona, enormously competent and reliable, and together with Shak, the best team anyone has ever had as assistants .

Ed Matthews, a close associate who was an investment banker and then a member of the AIG senior management, and personal friend .

Howie Smith, maybe the insurance industrys best financial executive, also a long-time close colleague and friend .

Bertil Lundqvist, who joined the team from Skadden Arps and was enormously helpful in the ensuing legal battles. Bertil has been invaluable in writing this book. He read draft after draft and made numerous suggestions. Most, if not all, were right on target .

David Boies, whose firm spearheaded the legal strategies following my leaving AIG, became a personal friend. His brilliance and loyalty were critical to me when I left AIG .

John Whitehead, a courageous friend who didnt hesitate to speak out when others feared to do so .

There are many more names that deserve individual mention, but it would consume pages. My thanks to so many loyal friends and colleagues who helped AIG become the largest insurance company in history. This book is a testament to them and what they accomplishedthat will never change .

From Lawrence A. Cunningham

To Stephanie and Rebecca, the loves of my life .

Chairmans Note

In the late 1960s, a group of domestic and international insurance executives began to build American International Group, popularly known as AIG. We developed close relationships with some of the most interesting and successful business and world leaders of our time. We forged new trails throughout the world and helped pave the way for globalization. We assembled an innovative, loyal, and committed workforce without peer in the industry, which formed AIGs backbone. AIG became the largest insurance company in history with an unmatched record of growth and profit and a culture that attracted the best and the brightest.

Despite such achievements, in 2005 I became the target of an overzealous New York attorney general, Eliot Spitzer. He, along with a group of outside directors, lawyers, and accountants, coordinated to separate me from the company that we had built. Their aggression planted the seeds of AIGs near-destruction and loss of billions of dollars for shareholders, which included pension funds, and myriad other investors.

I was forced to fight heated battles with a company I led for almost 40 years. The battles cost more than $1 billion in legal fees and lasted five years. A new batch of managers, consultants, and advisers dismantled AIGs traditions, culture, and internal controls. The company decimated its risk management systems and exposed itself to a liquidity crisis that would have been unimaginable during my tenure at the company. I sought to warn the new management about the dangers of the changes they had implemented, but my overtures were rebuffed.

When the financial crisis of 2008 blew up, AIG was at the heart of it. The government took control of the company and used it as a funnel to move capital to a dozen other financial institutions in backdoor bailouts.

C.V. Starr & Co., a much older company that had founded AIG, had always remained independent of AIG. It became the vehicle for me and several of my colleagues, who were either forced out of or left AIG, to begin building a new global property/casualty insurance company, and we are making significant progress in that new endeavor.

My schedule is packed. I travel extensively to countries where we had been doing business for decades and, frankly, I spend almost every waking moment working on this new exciting business.

I want to be sure that the record is complete about the building and near-destruction of AIG so I asked Lawrence Cunningham to collaborate with me to produce the book you are reading. It is a story of the building of AIG, along with the unvarnished facts of what occurred at AIG in a brief period of time after I was forced to leave. The U.S. government nationalized AIG despite there being so many alternatives it could have taken. Those alternatives would have led to a soft landing rather than the turmoil that ensued.