Banking Exchange Magazine Logo

AIG Story: Fall of an insurance giant

Book Review: "Hank" Greenberg's side of the mega-insurer's story

The AIG Story. By Maurice R. Greenberg and Lawrence A. Cunningham. Wiley, 328 pp. The AIG Story. By Maurice R. Greenberg and Lawrence A. Cunningham. Wiley, 328 pp.

During the financial crisis, which gained maximum attention in 2008, American International Group was one of the companies gaining extreme media and government attention.

Maurice R. (Hank) Greenberg had served as CEO of the international insurance conglomerate for 40 years, until resigning under pressure. The AIG Story, co-written by Lawrence A. Cunningham, a corporate governance expert, tells how the company was founded, grew, and then almost disappeared during the crisis.

The book features Greenberg's personal introduction ("The Chairman's Note") and a preface to set the scene for the reader of the story of the birth, life, battles, defeat and near-destruction, and nationalization of what had been the largest private insurance company in history-and the separation of Greenberg from his corporate child and his efforts to keep it private and alive from the outside. A brief epilogue covers Greenberg's own resurgence through an insurance entity that had always been kept corporately independent from AIG.

The book is divided into two main parts, and the tone of the two could not be more different. The first section provides a detailed history of the growth and numerous successes under Greenberg's leadership. The second summarizes the swarming forces bent on the company's destruction.

Title chapters in part one include "Innovation", "The Internationalist", "Reopening China", and "The Life Business." In section two, the picture painted becomes dark and dramatic in chapters including "Hostile Change", "Civil War", and "Chaos."

In many respects these sections could be two completely separate books.

Building AIG, or "The Hank Greenberg Story"

Section one is all about "Hank" Greenberg. The story of his attaining his first job after serving in the Korean War is the beginning of a portrayal which does not engage in modesty in any form. Greenberg's candidly tells the story of an early success--how he did an end run around a personnel officer who rejected Greenberg's job inquiries.

"The personnel manager acted as if he had no time for the inquiry, giving Greenberg, barely out of uniform, the cold shoulder. Stoking his anger about how Americans largely ignored the Korean War, Greenberg stormed into the office of the branch vice president, Bob Vollreide, and told him he thought his personnel manager was a jerk."

Greenberg showed his stuff and got the job that launched his insurance career, initially with Continental Casualty Co.

Want more banking news and analysis?

Get banking news, insights and solutions delivered to your inbox each week.

Greenberg was quickly seen as someone with business sense and intelligence. He worked hard and was focused on developing relationships with people he saw as beneficial to grow his stature within the company and to help the company grow.

Section one of the book carefully constructs the process of how AIG was built with buyouts; building of key relationship building; a clear sense of business discipline; and hard work. Companies were blended into one main conglomerate and other entities were aligned as minority interest holders in an amazing example of international corporate growth.

While many of these opportunities will probably not present themselves to me in my world while working as a community banker, the drive, sense of discipline, and focus on relationship building is a definite take-home from the book. It is fascinating reading how AIG came together.

Another point that made a positive impression is a description of the AIG culture. The company wanted to be "first to develop and launch products, first to open and grow markets, first in performance from earnings to growth to assets. The culture spawned a commitment to innovation unlike the culture at any other insurance company." 

This kind of culture is inspiring and is needed in today's world of business in general and banking in particular, which increasingly is running into many challenges.

Too many celebrity mentions

The book suffers somewhat from an overabundance of notable names. As section one continued, I began to wonder if mentioning  the multitude of business, political, and international contacts that Greenberg came to know really was necessary to defend what appears to be reason for writing the book,

Clearly that motive involves the fact that Greenberg "became the target of an overzealous New York attorney general, Eliot Spitzer (later the state's governor). He, along with a group of outside directors, lawyers, and accountants, coordinated to separate me from the company we had built. Their aggression planted the seeds of AIG's near destruction and loss of billions of dollars for shareholders, which included pension funds, and myriad of other investors."

At times the relationships recounted are important to know of, for a full understanding of the particular area of growth or success. But at other times, the chronicle hinged on mere name dropping, perhaps to prove importance. In this vein, an eight-page photo spread of international leaders, U.S. Presidents, and other movers and shakers of the 1960s through the early 2000s seems somewhat self-serving.

Before plunging into section two, the book offers an interlude to apparently prepare the reader for the upcoming doom and gloom in which Greenberg, the story's hero, finds himself cast down. AIG will be change from a company "with nearly $1 trillion in assets and worth $180 billion, to the verge of destruction."

Ultimately, in 2005 AIG's directors ask him to resign in 2005, "just two months before he planned to step down and after four decades of service."

SOX and shocks

Section two begins with the passage of the Sarbanes-Oxley Act, which provides Eliot Spitzer the mechanism to begin intervening into AIG.

As the book recounts: "In July 2002, President George W. Bush gushed that the Sarbanes-Oxley Act made the ‘most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.' Adding to the hype, critics lambasted public prosecutors ... for allowing such abuses to fester into billion-dollar calamities. These prosecutors got the message."

The lack of valid evidence becomes apparent, but Spitzer's political ambitions continue to drive him forward with alarming consequences. As the pressure continued, the attitude of the outside board members and legal counsel, and the company's auditors, turned on company management in general and Greenberg in particular.

Coupled with the political pressure, failing economic conditions began pressuring the core of AIG's financial stability, especially liquidity. AIG asked for government assistance through access to the Federal Reserve's discount window. This aid was denied.

It became apparent that the government had specific plans for the company which would not be in the best interest of AIG but was labeled for the benefit of the country.

"[The] government made AIG the ‘poster child' for the unpopularity of bailouts while also imposing the most punishing terms imaginable unlike those imposed on any other financial institution," the book states.

This comes in a chapter called, simply, "Nationalization," an ugly word floated in relation to the banking system in some of the darkest days of the crisis period.

Is there a story yet to be told?

The AIG Story is well documented, telling of how the company virtually collapsed and Greenberg was pushed out of leadership. The book has much information to share with financial leaders to help grow a business and to protect the identity of a company during periods of economic downturns. The narrative is written in a style that is understandable.

All this said, I wondered as I was reading if Greenberg was as blameless as the book projects him. Unfortunately there is no answer provided in The AIG Story, to that concern, so, along with the solid business advice comes doubt. There is, however, a greater benefit in reading the book than in dismissing it as merely sour grapes from a rejected CEO.

If you'd like to review books for our online book column, or have recently read a book that you found helpful that we haven't already reviewed, please e-mail [email protected]

Tagged under Books for Bankers,

Will Taylor

William Taylor is senior vice-president and senior trust officer at Soy Capital Bank & Trust Company, Decatur, Ill. He is a frequent book reviewer for

back to top


About Us

Connect With Us