Just as Steve predicted back in April, today’s New York Times reports Ex-A.I.G. Chief Is Back, Luring Talent From Rescued Firm:
Even as he has been lambasting the government for its handling of A.I.G. after its near collapse, Mr. Greenberg has been quietly building up a family of insurance companies that could compete with A.I.G. To fill the ranks of his venture, C.V. Starr & Company, he has been hiring some people he once employed.
You have to give Steve and his crystal ball credit:
Greenberg landed at the helm of C.V. Starr (insurance) which he is now reforming into a mini-me AIG. Greenberg will not be satisfied with running a mini-AIG and has recently acquired several key employees from AIG which may ensure the eventual expansion of C.V.Starr (insurance).
Greenberg’s dream of creating as his legacy the world’s greatest financial dynasty did not die with his departure from the helm of AIG. It is his life’s work.
Sop’s post on the history of the company – AIG and CV Starr: The Spies Who Shagged Us –is also a must-read in light of today’s news.
The NYT continues with Andrew J. Barile, an insurance consultant in Rancho Santa Fe, Calif. , saying,“To me, it’s just going to be a matter of time before the valuation of what he’s building is greater than the valuation of A.I.G“.
A.I.G., meanwhile, is struggling to regain its footing. The recipient of the biggest taxpayer bailout in history, it has been ordered by the government to restructure, unwind its complex derivatives and pay back the taxpayers.
At 84, Mr. Greenberg remains larger than life. He spent nearly four decades forging A.I.G. out of private companies, devising its Rubik’s Cube structure and building it into the world’s largest insurance group, with a $1 trillion balance sheet. He lost most of his fortune when the company nearly collapsed last year.
And now, he appears to be starting over…
Unlike A.I.G., C. V. Starr is privately held, so there is no stock to entice investors, and no disclosure of financial information. Little is known about its business plan, although it has been announcing ventures to insure things as diverse as wayward corporate directors and construction accidents on the bridges and roads being built under the Obama administration’s fiscal stimulus program.
The firm seems to be focusing on the specialized lines of business insurance that once made A.I.G. stand out. The government had hoped to leave those businesses at A.I.G. intact after selling off most of its other operations, like life insurance and household finance.
C. V. Starr is also taking on the same form as A.I.G. — an intricate group of companies, each with its own line of business.
For now, most of those companies do not sell their own insurance, but operate as general agencies, representing insurers from rival groups on products that C. V. Starr does not yet sell.
That way, if C. V. Starr does not yet profit from the underwriting of a line of insurance, it can still receive commission income by selling it. “That’s the beauty of how he structures the company,” Mr. Barile said. “Everything is in such silos that every time you make a transaction, the outside world thinks you’re competing, but you aren’t.”
In March, the Starr Indemnity & Liability Company named Charles H. Dangelo its president and chief executive, after bringing him from A.I.G. Global Risk Management.
A few months later, Starr Indemnity hired another executive from A.I.G., Jim Vendetti, making him its senior vice president and chief underwriting officer. The company also hired a former A.I.G. crisis manager, Alex Pittignano, to build up its businesses of insuring against specialized risks like environmental disasters.
Mr. Greenberg has found ways to exploit A.I.G. without directly hiring former employees. Starr has formed a joint venture with Ironshore, led by the former chief executive of an A.I.G. company called Lexington Insurance. Each of Ironshore’s five new businesses is headed by still more A.I.G. alumni. The joint venture, called Iron-Starr Excess Agency Ltd., is headed by Geoff Smith, an executive hired away from A.I.G. in December. It provides insurance to businesses after they have exhausted their primary insurance.
While I’m recommending reading SLABBED posts from the past, I’ll add to the list Russell’s insightful Where Insurance finally meets the big bailout. AIG a massive ponzi scheme? and a reminder to click on the link and read the full NYT story.