The New York Times ran a great story on Tuesday about former AIG chief Maurice Greenberg‘s latest venture, the C.V. Starr empire. Reporter Mary Williams Walsh links Greenberg’s new success to the Treasury Department capping executive pay at AIG last week: “That may hasten the exodus of A.I.G.’s talent, sending more refugees into Mr. Greenberg’s arms, since C. V. Starr is free to pay whatever it wants.”
Cornelius Vander Starr, a California-born entrepreneur, was the first American businessperson to sell insurance to the Chinese. The blanket company C.V. Starr International was established in 1919 in Shanghai and AIG would eventually grow out of it. Starr would eventually give Maurice Greenberg his first job in the insurance industry at AIG in 1962. Starr became Greenberg’s mentor and was handed the company after Starr died in 1968. After President Nixon opened up relations with China, Greenberg visited China for the first time in 1975. He would run AIG until 2005, when he resigned amid fraud allegations. Good thing he had the Starr empire to fall back on.
Who knows how this 1935 article in Fortune magazine about Starr made its way on to the interweb, but it’s a fascinating piece and very telling of Starr’s imperialistic intentions for setting up shop in China. Here’s an excerpt:
But Mr. Starr’s income is fat-perhaps as big today as any U.S. insurance income. This money is earned upon a sociological premise, that the standards of living and hygiene of the Chinese middle classes are improving, with a consequent decline in the death rate. Indeed, since Chinese statistics are all but nonexistent, the success of Mr. Starr’s American Asiatic Underwriters, and of its various subsidiaries, is perhaps the best available proof that the death-rate decline in China is a reality.
C. V. Starr has never bothered to become proficient in Chinese. But his knowledge of China is encyclopedic, and he is famed in the foreign community for his uncanny ability to work with and through the natives. Yet here too his success is basically sociological, Before his gusty arrival in Shanghai, Western insurance men had feared Chinese fraud. Mr. Starr clearheadedly laid it down as an axiom that Chinese fraud was no more to be feared than Western fraud, and proceeded to build up a big native business on minor variations of the practice he had learned in California.
When C.V. Starr died in 1968, his estate went to the Starr Foundation. The foundation boasts assets of $1.25 billion, a big slice of which goes into the C.V. Starr Center for the Study of the American Experience at Washington College. (Phew, what a name.) This relationship was questioned in 2005 when then-New York Governor Eliot Spitzer charged Greenberg with selling off Starr’s assets “to companies controlled by Mr. Greenberg and then flipped those assets ‘at far higher prices.’ ” Greenberg was exonerated of the charges in 2007 by “an independent commission of retired judges.”
But Starr’s assets are most alive and well in his companies. And so is his legacy, thanks to Greenberg. Greenberg has, slowly but surely, been filling the ranks of the Starr empire with ex-AIG employees.
At Starr Indemnity, Greenberg has handpicked execs Charles Dangelo, Jim Vendetti and Alex Pittignano from AIG. Dangelo, in particular, culled his experience as AIG’s chief reinsurance officer from 1995 until he left this year to become Starr Indemnity’s CEO.
At the Starr Foundation, Greenberg placed loyal AIG employees in director positions:
- Ted Matthews was AIG’s vice president of finance for 29 years and has also been a director at C.V. Starr & Co. since he started at AIG in 1973.
- Howard Smith, former CFO of AIG, is also a director at C.V. Starr & Co.
- John J. Roberts was at AIG for 55 years, retiring as vice chairman of external affairs in 1997.
- Florence Davis served as general counsel at AIG for four years and previously was director of worldwide regulatory affairs at Morgan Stanley.
Greenberg is still worth a fortune. He is AIG’s second-largest shareholder — next to the U.S. government, of course — and he was victorious in regaining $4.3 billion in AIG assets this summer, which he is now free to use to finance C.V. Starr & Co. Who knows what Greenberg’s intentions with the Starr companies are, but he certainly has plenty of building blocks at his disposal. At 84, he shows no signs of slowing down.