Maurice R. “Hank”
Greenberg has been transforming insurance companies for nearly seven decades.
Along the way, he also has transformed the global insurance industry.
KATE
SMITH MARCH 2020
Hank Greenberg landed at New Jersey's
Teterboro Airport and headed straight to the Marriott Marquis in Times Square.
It was the night of the St. John's University Insurance Leader of the Year
Award Dinner—and part two of a marathon day that started at 4 a.m. for
Greenberg.
It began with a trip to Washington, D.C., for
the signing of the U.S.-China trade agreement. Nearly 15 hours later, the
chairman and CEO of C.V. Starr was whisked to the seventh floor of the Marriott
for a VIP reception in his honor.
Flashing cameras illuminated the corridor as
Greenberg approached, a red carpet greeting for the man about to receive a
Lifetime Leadership Award from St. John's University. The honor was bestowed
just hours after President Donald Trump recognized Greenberg during the signing
of the trade deal.
It is perhaps fitting that the two events
coincided. Greenberg's insurance achievements, after all, are intertwined with
the global relationships he has forged and international clout he has gained.
“When you think about Hank's leadership
record, it's not just what he's done in business at AIG and C.V. Starr, which
is distinctive and something we all aspire to,” Greg Case, CEO of Aon, said.
“It's what he's done in the community with the Starr Foundation, what he's done
in government, opening up China and Eastern Europe, what he's done in service
to the country.
“Hank has not been singularly excellent in
what he's done; he's been truly collectively great.”
Over the course of nearly seven decades,
Greenberg has become a business icon. He has opened new markets, pioneered new
lines of insurance and built AIG into what was once the world's largest
insurance company ... a feat he's striving to match at Starr.
He has transformed the companies he has led,
and in the process he has also transformed the insurance industry.
“To me he would be in the pantheon of the
greatest executives of all time,” Dan Glaser, chief executive officer of Marsh
& McLennan, said.
Greenberg didn't get there by shying away from
change. Yes, his success has always been predicated on strong underwriting.
Yes, he consistently surrounds himself with world-class executives, at least a
dozen of whom have gone on to become prominent CEOs. But he has built cultures
that strive to be first, thrive on creativity and embrace transformation.
“Change is inevitable,” he said.
And Greenberg's genius lies in finding ways to
make money in the margins of it.
Hank was really instrumental in opening up new markets for the
entire industry—places like the Soviet Union, Eastern Europe, China. Dan
Glaser Marsh & McLennan
Constant Evolution
Four weeks before the St. John's dinner,
Greenberg is sitting in his 17th floor office overlooking Manhattan's Park
Avenue. He's talking about the need to continuously evolve.
“Look,” he said, “not just the insurance
industry but virtually every industry is undergoing change, all over the world.
There's a new generation of people who recognize the necessity for change.
“Look at a company like Amazon, for example,
which offers online buying of almost every product you could think of. In many
countries, China for example, you don't need cash anymore. That wasn't true a
few years ago. The entire world of business and the way people buy are
changing.”
Greenberg is invigorated by the prospect. He
always has been. Adapting to change—not to mention capitalizing on it—has been
a hallmark of his career.
“When I was running a different company, we
lived on change,” he said, referring to AIG. “We're doing that here, too.”
C.V. Starr's history is complex. It is 101
years old, but has radically transformed in the last 15 years. Greenberg is
wholly responsible for that.
After being forced to accelerate his
retirement from AIG in 2005 amid allegations of accounting fraud at the company
brought by former New York Attorney General Eliot Spitzer—a case that
ultimately ended with a defamation lawsuit against Spitzer and no admission of
wrongdoing by Greenberg—Greenberg promptly decoupled C.V. Starr from AIG and
began building his second empire. Since then, he has transformed C.V. Starr
from a company that operated managing general agencies to a global insurance
carrier operating on five continents. Starr's total gross written premiums have
grown every year since 2009. And not just by a little.
Between 2009 and 2019, Starr's GWP jumped from
$737.2 million to $5.4 billion, according to the company. And there is no
resting on those laurels.
“We're trying to find ways to write new
coverages by recognizing that what was true 10 years ago is not true today,”
Greenberg said. “You have to adapt.”
He offers no hint of what new coverages are in
the works. “It's hard to say anything without alerting our competitors,” he
added.
It's easy, however, to find examples of
innovation throughout Greenberg's career.
On his watch, AIG pioneered insurance coverage
for armies, kidnapping, oil pipelines and rigs, satellites, and airline
passengers. As the airline industry took off in the early 1970s, insurance
companies focused on aviation coverage for planes. AIG, however, developed
coverage for passengers as well.
Asked how he spots such opportunities,
Greenberg shrugs as though there's no secret to innovation.
“If you understand your business, it comes
naturally because you're looking for ways to expand opportunities,” he said.
“But many times, the people running a business don't see the forest for the
trees.”
In terms of innovative products, Greenberg is
perhaps best known for launching directors and officers insurance in the U.S.
He didn't create the first coverage for corporate directors—that was done by
Lloyd's in the 1930s—but he scaled it.
The Lloyd's coverage never took off. By the
time Greenberg flew to London in 1968 to learn about it, the product was
offered by just one syndicate.
Greenberg spent a week studying the coverage
and building a strategy to bring it to the United States.
“I went to London, and I lined up not only
reinsurers but underwriters,” he said. “I spent about a week and came away with
what I needed.”
Today, the global D&O insurance market
collects an estimated $15 billion in premiums each year.
Greenberg also was instrumental in globalizing
the insurance industry. He took AIG behind the Iron Curtain when no other U.S.
insurers were allowed there. He operated in Mao's China three years before the
formal reopening of diplomatic relations between the United States and China in
1978.
In 1975, Greenberg flew to Beijing and
proposed a reinsurance deal with the state-owned People's Insurance Company of
China. It was a foot in the door of the world's most populous country.
Seventeen years later, in 1992, AIG became the first wholly foreign-owned
insurance company to be licensed in China.
During the Cold War, Greenberg cultivated
relationships with Eastern European government leaders, forming reinsurance
partnerships in Romania, Poland and Hungary. Before the U.S. decided to boycott
the 1980 Summer Olympics in Moscow, AIG had made a deal to jointly underwrite
the event. When the Iron Curtain fell, AIG received a license to operate a
full-scale insurance company in Russia.
It wasn't only AIG that benefited from those
events. It was the industry as a whole.
“Look at the juggernaut that was created within
AIG,” Glaser, who worked at AIG under Greenberg, said. “AIG had a culture of
innovation in the insurance industry unlike anything the industry has ever
seen. Hank was really instrumental in opening up new markets for the entire
industry—places like the Soviet Union, Eastern Europe, China.”
Portrait of a Leader
Greenberg's interest in foreign affairs stems
from his days in the military. As does his leadership style.
“It had a major impact on my life,” he said.
Greenberg's assistant enters his office with a
stack of photo albums and lays them on a coffee table. They are meticulously
composed.
Black and white images of a fresh-faced
soldier in Army fatigues stare up from the pages. It's a teenage Hank
Greenberg, not even out of high school and yet already serving his country.
Greenberg lied about his age and forged his
mother's signature to enlist in the Army at age 17. “The country was at war. I
didn't want to stay home,” he said by way of explanation.
He was still a kid when he landed in Normandy
during World War II. He was just 18 when he helped liberate Dachau
concentration camp.
Flipping through images, some of which look
straight out of the television show M*A*S*H, Greenberg shares
snippets of memories. After World War II, he completed college and reenlisted
for the Korean War, where he commanded a company. He remembers the cold. It was
brutal, and his men didn't have winter uniforms. They stuck newspaper in their
boots for warmth. He talks about flying missions. He'd accompany the pilots
from his unit when they flew into enemy territory.
“I wouldn't ask anyone to do anything I
wouldn't do myself,” he said, echoing what has become his mantra as a leader.
Closing the photo albums, Greenberg continues
to speak of carrying out orders. Only now, he's talking about corporate culture
rather than global warfare.
“They have to believe in the strategy and they
have to carry it out,” Greenberg said when asked who fits into his company's
culture.
“I don't think it's a tough environment,” he
added. “It's an environment that doesn't suit everybody. Period.”
He makes no apologies for that. Greenberg's
style is not for everybody. He is tough. He is demanding. His temper can be
fiery and his wrath is well known. In his own book, The AIG Story, he talks
about “chewing out” employees in front of their peers. He's never been known to
back down from a confrontation (just ask Spitzer). His insurance career even
began with one.
Fresh out of Korea, he stopped by the
Continental Casualty Company to inquire about job openings. When the personnel
manager treated him rudely, he stormed into a vice president's office to
complain.
“I said, 'You've got a jerk for an HR guy,'”
Greenberg recalled. “He told me to please sit down. We started talking. About
an hour later, I had a job.
“I was about two or three days out of Korea
when I came back to New York. I was not very tame by then.”
Asked if he'd react the same way today,
Greenberg doesn't hesitate. “Absolutely,” he said with a sly smile.
Greenberg is an enigma. He is known as much
for his feistiness as his generosity, as much for his sharp tongue as his
diplomacy. Above all, he is known for being one of the most innovative and
successful executives of all time.
“He is the greatest leader the industry has
ever had,” former Ironshore CEO Kevin Kelley said.
Kelley trained under Greenberg before going on
to become CEO of Ironshore and vice chairman of Liberty Mutual. He is among the
long list of AIG alumni who have gone on to become prominent CEOs.
On an unseasonably warm January evening,
several of those protégés, Kelley included, made their way to the Marriott
Marquis to honor Greenberg for his impact on the insurance industry.
Greenberg, for his part, is not done yet. As
the world rapidly transforms, Greenberg is right in his sweet spot, looking to
find growth in the margins of change.
“We're still growing and we're still
building,” he said. “We have a long ways to go.”
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