(1925–)
Chairman and chief executive officer, American International Group
Nationality: American.
Born: May 4, 1925, in New York, New York.
Education: University of Miami, BA, 1948; New York Law School, LLB, 1950.
Family: Son of Jacob Greenberg and Ada Rheingold; married Corinne Phyllis Zuckerman; children: four.
Career: Continental Casualty Company, 1952–1960, employee, then vice president; American International Group, 1960–1962, founder of overseas health and accident business; 1962–1967, president of American Home Assurance Company; 1967–1989, CEO and president; 1989–, chairman and CEO.
Awards: Insurance Leader of the Year, College of Insurance, 1998, 1999; six honorary degrees.
Address: American International Group, 70 Pine Street, New York, New York 10270; http://www.aig.com.
Maurice R. Greenberg, well known as "Hank," reached legendary status in the business world as the long-time chairman and CEO of American International Group (AIG), a holding company engaged in a broad range of insurance and insurance-related activities and the largest underwriter of commercial and industrial insurance in the United States. Under Greenberg's innovative leadership AIG underwent exceptional growth and was transformed into a leading global insurance organization. Employing a risk-taking strategy combined with product innovation and expansion into such areas as financial services, Greenberg became a legend whose business moves were watched closely not only by others in the insurance business but by business leaders throughout the country and around the world. Industry analysts and colleagues noted that Greenberg was a dynamic, hard-driving, intimidating leader who was committed to improving the bottom line and instilling an entrepreneurial spirit throughout AIG.
From Farm Boy to Ceo
Greenberg was born in New York City but grew up on a New York dairy farm in the hamlet of Swan Lake. He lied about his age to join the U.S. Army during World War II, became an Army Ranger, and stormed the beach at Normandy. After the war he attended the University of Miami, where he majored in prelaw, and then New York Law School, where he earned his LLB in 1950. He was just embarking on a career in law when the Korean War broke out; he soon found himself back in the service stationed in South Korea, eventually rising to the rank of captain and receiving a Bronze Star, an award given for heroic or meritorious service.
Greenberg entered the insurance business three days after returning from Korea in 1952, when he knocked on the door of the Continental Casualty Company. Greenberg was initially rebuffed in his search for a job there but was hired after he reportedly criticized the boss of the man who had initially refused to employ him. He quickly rose through the ranks to become the youngest person to be appointed vice president at the company.
In 1960 Greenberg joined AIG; he was appointed president of its major subsidiary American Home Assurance Company in 1962. In that position Greenberg was credited with developing substantial reinsurance facilities, which allowed insurers who were forced to take unwanted assignments, or "bad risks," the opportunity to reinsure those risks. Losses incurred by the bad risks were thus absorbed by the facility. Greenberg's strategy enabled American Home to write large quantities of major-risks policies and thus control the pricing of those policies. Greenberg was lauded for his notable contribution to the advancement of the risk-management movement in the 1960s, when other insurers and brokers opposed its advancement. He also introduced personal-accident insurance through American Home. He established a bottom-line philosophy of insisting on underwriting only those companies that made profits, installing a management team that could accomplish that goal.
Greenberg's strategies for building American Home were successful, and the company's reputation for being aggressive and profitable grew. Greenberg soon moved to acquire other domestic companies, including New Hampshire Insurance Company and the National Union Fire Insurance Company. Greenberg established a strategy of identifying companies that were troubled or fighting off takeovers, buying controlling interests in the companies, and ultimately integrating them into the AIG corporate structure. When AIG's founder and CEO Cornelius van der Starr died, Green was named to head the company. Two years later AIG went public with Greenberg as the CEO.
Period of Exceptional Growth
In response to the changing needs of corporate America, Greenberg led AIG to be among the first companies to establish risk-management services for large companies. In 1979 and 1980 AIG became the first Western insurance organization to establish joint ventures with foreign countries, including Hungary, Poland, Romania, and China. Throughout the 1970s and 1980s Greenberg also organized or acquired various specialized entities focusing on such areas as aviation insurance, vocational and rehabilitation services, mortgage-guaranty insurance, and managed health care.
By the mid-1980s Greenberg had made AIG one of the most respected companies in the insurance business, largely by selling insurance for risks other insurers would not address. When devastating floods occurred in portions of Pennsylvania in the early 1980s, other insurers started canceling their flood insurance. Greenberg, however, directed AIG to write new policies at a profitable rate. Greenberg also continued his knack for innovation. When soaring premiums led corporations to create their own offshore captive insurance companies—which insured the risks of the parent corporations—Greenberg stepped in to establish AIG as a premier provider of services to those offshore captives; other insurers merely tried to block the trend. In 1984 Lynn Brenner, writing in American Banker, noted, "In the past 10 years, the company has consistently grown faster and more profitably than its industry" (August 24, 1984).
Greenberg's success continued, as AIG had 1985 revenues of $5.8 billion. He had led AIG to consistently outperform competitors through what many were viewing as the industry's dark years. Analysts noted that Greenberg's successes stemmed from his start as an insurance underwriter who conscientiously priced policies to be both profitable and salable. Greenberg's philosophy was that the entire insurance industry needed to "return to basics." As quoted by James Ring Adams in Forbes, Greenberg noted that succeeding in insurance "means proper pricing and recognizing that you're in a risk business, not selling potatoes" (December 29, 1986).
A New Business
In 1987 Greenberg decided to diversify AIG by expanding the company from commercial insurance into financial services, creating AIG Financial Products. Despite Greenberg's successful track record, proving that the business would work took time, and many shareholders booed Greenberg in a 1990 meeting at which the diversification gamble was discussed. Analysts as well questioned Greenberg's move, noting that most investors owned AIG stock purely for its renown in the insurance business and that the financial market typically went through violent earnings swings. In response to the many questions about AIG management's decisions, Greenberg, as quoted by Caren Chesler-Marsh in Euromoney, explained the strategy this way: "We've been very focused in what we want to do. We're not going into every area of financial services. We've chosen the areas where we think we can have the best leverage and the best results" (February 1991).
Although AIG's stock fell 7 percent in 1990, it began to rebound in 1991; Greenberg had once again proven himself to be on target. AIG Financial Products had an operating income of $127 million and became a major force in swaps and derivatives. The move turned out to be extremely profitable for the company and its shareholders. Financial industry analysts once again placed the kudos squarely on Greenberg's shoulders, noting that he had been the first to appreciate the value of a triple-A balance sheet in the swap market and that he had successfully forged joint ventures with some of the elite swap technicians.
By 1993 Greenberg's management approach had propelled AIG to the top of the business world; the company made a 13.1 percent return on equity, with profit growth from $17 million to $1.7 billion after he took over the company. Others in the insurance and financial markets tried to imitate Greenberg's approach, but none could match his performance. Although he was nearing 70, Greenberg had no plans to retire and was guiding AIG's advances into foreign markets. Once again he was having success in countries like Russia where other American companies were having difficulty competing. As reported in Chief Executive, Greenberg noted that the company's success was due to extensive forethought, stating, "It's taken us years to plan an entry into some countries. But many American companies don't take that approach. There's no quick fix in international business" (June 1993).
Into the 21st Century
Greenberg and AIG strode into the new millennium on an upbeat note, with the company's net income rising 11.5 percent to a record $5.64 billion in 2000. By the end of the year revenues had gained 13.1 percent, assets had risen 14.3 percent, and shareholders' equity had reached $39.62 billion, compared to the $33.3 billion of 1999. When the economy took a downturn, Greenberg acted quickly, waiving a year-end bonus of $5 million for himself and freezing pay for all employees in 2001. The terrorist attacks of September 11, 2001, created additional levels of uncertainty for the insurance group; furthermore, investors became cautious because of the collapse of giant corporations such as Enron and concerns about conflicts of interest, unsavory accounting practices, offshore registration of corporate vehicles, and high share valuations.
By early 2002 AIG's share price had fallen 30 percent. Nevertheless, analysts did not recommend AIG as a "sell." Industry watchers believed that part of the analysts' decisions was based on the extreme clout held by Greenberg, who had been known in the past to exert his power to the detriment of those who opposed him or his company. According to some, analysts feared that even the mildest criticism of AIG would prompt Greenberg to disparage the firm responsible and remove it from AIG's vast information network. When Shearson Lehman published a critical report on one of AIG's subsidiaries in 1990, Greenberg spoke out loudly against the report; Shearson Lehman eventually issued a subsequent report essentially summarizing Greenberg's views.
Greenberg and AIG were questioned about their practice of registering more than 50 AIG entities in Bermuda, which many saw as an attempt to avoid the ramifications of American securities-law disclosures and create an ownership structure that was, in many ways, immune to U.S. business laws and taxation. AIG's routine public filings were considered virtually impenetrable even to expert outsiders. As a result, few could determine with absolute certainty what businesses AIG retained and what it ceded. Some analysts saw AIG's fall in share price as stemming from these creatively inscrutable accounting and financial-engineering practices.
In spite of these concerns, many maintained a strong belief in the virtuousness of Greenberg's leadership of AIG, noting that he swiftly responded to rumors of his own demise when he fell ill for a brief period. Greenberg also promised to discuss profits and details about insurance operations via quarterly conference calls between himself, analysts, and investors; in fact, changes in the securities industry forced Greenberg to open his conference calls and presentations to all stockholders and industry analysts who wanted to listen. Some analysts felt that such openness eliminated much of the mystique that had surrounded Greenberg and AIG. Greenberg told Aaron Elstein of Crain's New York Business, "First I get criticized for not being accessible enough, and now I get criticized for being too available. It's like getting sued for infidelity and impotence at the same time" (September 8, 2003).
The outlook for AIG remained strong as Greenberg continued to apply his formidable knowledge and implement well-construed strategies with positive effects. He helped AIG overcome the massive losses that had resulted from the 2001 World Trade Center attacks. For the first nine months of 2002 AIG reported a 61 percent gain in net income, to $5.6 billion. Greenberg kept AIG on track the following year as well, with the company's profits rising a record 68 percent to $9.3 billion in 2003.
Although Greenberg was nearing 80, he maintained a strong interest in AIG and the insurance business in general. In 2003 he set out on a crusade to establish tort reforms. He wasn't getting any mellower either; according to Michael Ha in National Underwriter Property & Casualty/Risk & Benefits Management, Greenberg went as far as to call lawyers who opposed the reforms "terrorists" (March 8, 2004).
Management Style: Bold and Brilliant
Business analysts and colleagues alike noted that throughout his career Greenberg combined a disarming charm with a hard-driving and intimidating demeanor that often terrified colleagues, competitors, and even market analysts. Passionate in his approach to building AIG, he was known for a hands-on style that reached out to every area of the company. When AIG's new commodities unit was formed, Greenberg attended every meeting in which the deal to launch the operation was negotiated. When employees were recruited for the unit, Greenberg, in his usual thoroughness, personally ensured that each candidate was completely checked out. Robert Rubin, who became executive vice president and director of the unit in 1991, told Chesler-Marsh of Euromoney, "At AIG, we were cleaned and screened and pressed and pulled and tugged. They lifted up our teeth, called everyone I knew of any consequence, and asked for lists of references, and they called everyone on the list" (February 1991).
Although Greenberg garnered little praise for being a "good guy," early on he won respect for being one of the most accomplished business thinkers in the world. Many noted that he had a "heavy-hitter" approach to fighting off threats to his business empire. In the early 1990s the consumer-advocacy group Public Citizen issued a negative report saying that AIG was vulnerable to a downturn in the economy; Greenberg threatened to take legal action unless the group retracted its statement. Yet Greenberg conducted business within AIG on a relatively informal basis—an anomalous approach in the highly bureaucratic insurance business. Brenner of American Banker quoted him as saying that the trick was to maintain "a nonchaotic environment without becoming too bureaucratic as you get bigger" (August 24, 1984).
Greenberg was known to support spontaneity in his management team, the members of which always felt that they could get the boss's attention with a good idea. As reported on BusinessWeek Online, Greenberg once commented, "When new ideas come in, they don't find a deaf ear" (January 14, 2002). Nevertheless, Greenberg's dominant personality was at times overbearing and for some employees made AIG a nerve-wracking place in which to work. Greenberg often publicly criticized the company's senior management team; his abrasive personality was legendary within insurance circles and beyond.
Observers noted that AIG's entire corporate style reflected Greenberg's approach to business. He was nicknamed "Hammerin' Hank," after the one-time Detroit Tigers baseball star Hank Greenberg. His aggressive spirit so pervaded the company that workers once pasted his and other senior staff members' pictures over the faces in a cartoon ad for AIG featuring the comic-book tough guy Sergeant Fury and other hardened Marines storming a beach with machine guns firing.
In terms of his overall management philosophy, Greenberg aimed to wring out the company's cost inefficiencies while gauging risks with pinpoint precision. On the insurance side, he unswervingly refused to underwrite any business that he didn't think would turn a profit. To some observers Greenberg's personality and business approach were summed up perfectly by Greenberg himself when he told Chesler-Marsh in Euromoney, "The strategy of AIG is not developed on a consensus basis" (February 1991).
Impact Beyond Industry
As Greenberg reached his late 70s, rumors grew about his potential health problems and efforts to ultimately choose a successor. Greenberg, who would grow annoyed when asked about retirement plans, often joked that the company was developing a clone to succeed him. Most analysts and company stockholders dreaded the day that Greenberg would step down. One contributor to National Underwriter Property & Casualty/Risk & Benefits Management noted that for more than three decades Greenberg had delivered solid returns for shareholders, "who see him as their security blanket" (March 4, 2002).
Greenberg had a wide-ranging influence that also reached into the world of government and politics. As noted by William F. Jasper in New American, few corporate leaders could "match Greenberg's political clout and connections" (October 8, 2001). Greenberg was a longtime influence on the Business Roundtable and the President's Advisory Committee for Trade Policy and Negotiations. He was a member of the board of directors of the New York Stock Exchange and the Trilateral Commission and a director of the United Nations Association. He served as the chairman, deputy chairman, and director of the Federal Reserve Bank of New York; on President Bill Clinton's Advisory Committee for the President's Commission on Critical Infrastructure Protection; and as vice chairman of the Council on Foreign Relations. Greenberg was chairman of the U.S.-China Business Council, the U.S.-ASEAN Council on Business and Technology, and the Starr Foundation. He was the founding chairman of the U.S.-Philippine Business Committee, trustee and chairman emeritus of the Asia Society, and a member of the Board of Governors of the Society of the New York Hospital. He was also involved in several other charitable and civic organizations.
Sources for Further Information
Adams, James Ring, "Insurance Follies," Forbes, December 29, 1986, p. 107.
Brenner, Lynn, "Stirring Staff to Grab a Risk," American Banker, August 24, 1984, p. 16.
Chesler-Marsh, Caren, "The Greenberg Enigma," Euromoney, February 1991, p. 26.
"Does AIG Need to Reveal a CEO Succession Plan?" National Underwriter Property & Casualty/Risk & Benefits Management, March 4, 2002, p. 32.
Elstein, Aaron, "World's Largest Insurer a Low-Risk Investment," Crain's New York Business, September 8, 2003, p. 47.
Ha, Michael, "Trial Lawyers Deplore Greenberg's 'Terrorist' Label," National Underwriter Property & Casualty/Risk & Benefits Management, March 8, 2004, p. 10.
Jasper, William F., "China's Man in America," New American, October 8, 2001, p. 29.
"Risky Business," Chief Executive, June 1993, p. 34.
"The Top 25 Managers of the Year: Maurice R. Greenberg," BusinessWeek Online, January 14, 2002, http://www.businessweek.com/magazine/content/02_02/b3765033.htm.
—David Petechuk
- Hank Greenberg 
