The Greenberg Brothers: A Response from AIG

[Joanne98]

Your article on the Greenberg family ''Like father, like sons'' (People, Mar. 1) is filled with inaccuracies that demonstrate lack of understanding of the insurance industry. The unfair characterization of both Evan and Jeffrey is offensive. In particular, the mean-spirited and personal nature of the comments about Evan Greenberg are a far cry from the responsible reporting one expects from BUSINESS WEEK. Nowhere is there a single quotation from an individual who had something positive to say about Evan Greenberg, AIG's president and chief operating officer.

The subhead, ''The Greenbergs rule insurance,'' is not merely hyperbole but absurd. The U.S. insurance industry consists of thousands of companies. No single company has more than a relatively small share of premiums written. Why, for example, when discussing Marsh & McLennan's relationships with insurers including AIG, does the article not mention that there are other large brokers? The article gives the impression that AIG and Marsh & McLennan have some kind of holy alliance and that they completely dominate the industry. Anyone with any scant knowledge of the insurance industry knows this is simply not the case.

The article had a number of other factual errors and omissions. They include an inaccurate description of the business of AIG's Domestic Brokerage Group, overseen at one time by Jeffrey Greenberg (neither of the products mentioned existed in the Group during his tenure), the attribution to AIG of ownership of a Marsh & McLennan unit, the implication that Evan and Jeffrey Greenberg are CEOs of their respective companies when they are not (''the two brothers are sitting at the helm of two industry giants''), and the description of Evan Greenberg's education background which omitted reference to his attendance at New York University and the College of Insurance. Finally, it is almost idiotic to claim that the Greenberg family ''controls'' AIG, a public company with over 1 billion shares outstanding.

Florence A. Davis
Vice-President and General Counsel
American International Group Inc. New York


Editor's note: Here is BUSINESS WEEK's reply to the factual errors cited:

-- The story incorrectly identified Trident Partnership: It is a unit of Marsh & McLennan Cos., not AIG.

-- According to several sources, when Jeffrey Greenberg was head of AIG's Domestic Brokerage Group, he was active in developing products geared to reducing financial risk. But those products targeted to the specific risks cited were launched after he left.

-- The biography of Evan Greenberg provided by the company did not mention that he attended New York University or the College of Insurance. The company didn't respond to inquiries about his educational background.

-- The story clearly indicated that Evan is president and chief operating officer of AIG, while Jeff is president of Marsh & McLennan.

-- The story didn't say that the Greenberg family ''controls'' AIG. The story states: ''Hank himself owns 2.45% of AIG's shares outright--and the Greenberg clan indirectly controls much more through holdings in three private entities that hold a combined 22% of AIG.''

In addition, a quote by Nikki Finke, former wife of Jeff Greenberg, was inadvertently cut in the editing process. It should have read: ''Evan, when he was younger, was the rebel of the family. Early on, the Greenbergs despaired that Evan would ever amount to anything. But, of course, he straightened out beautifully. By contrast, Jeff was always the dutiful son.''

http://www.businessweek.com/1999/99_10/b3619027.htm

Hank Greenberg Settles AIG Suit in Delaware, Deposed in New York

Resolution of one of the biggest corporate feuds in the last decade moved forward yesterday on two fronts: Former AIG Chief Hank Greenberg and three other AIG executives settled for $115 million a 2002 lawsuit filed against him and others in Delaware. Back in New York, Greenberg gave a deposition to the office of NY AG Andrew Cuomo — a sign, writes the WSJ’s Amir Efrati, that settlement talks have stalled in a civil fraud case.

The Delaware case involved the relationship AIG had with an insurance firm that Greenberg heads, C.V. Starr & Co., which underwrote some of AIG’s business. The suit was filed as a shareholder action on behalf of AIG and was scheduled to go to trial on Monday. It accused the four men of improperly diverting more than $1 billion from AIG to C.V. Starr, where they also served as officers and received compensation.

Lee Wolosky, a lawyer for Mr. Greenberg, said the former CEO won’t make any settlement payments from his own pocket, meaning the settlement will be paid out by a D&O insurance policy. The “arrangements Mr. Greenberg presided over while at AIG were not only proper, but contributed to AIG’s growth into the largest and most successful insurance company in the world,” Wolosky said.

Stuart Grant, a lawyer for the plaintiffs, said in a statement: “This is a hugely important settlement for shareholders, one that not only returns some of C.V. Starr’s ill-gotten profits to AIG shareholders, but also advances critical corporate governance goals.” (AIG approved the settlement, notes the WSJ, but it doesn’t resolve other outstanding disputes between the company and Greenberg.)

In the New York case, which was brought by former AG Eliot Spitzer and stems from an accounting probe of AIG that led to Greenberg’s departure in 2005, state lawyers will ask Greenberg about his role at the head of AIG and his involvement in specific deals that led to the company’s earnings restatement in 2005, as well as adjustments AIG made to the financials of its subsidiaries.

http://blogs.wsj.com/law/2008/09/12/hank-greenberg-settles-aig-suit-in-delaware-deposed-in-new-york/

[geckosfeet]

1. AIG - struggling to maintain some self respect and relevance. They are toast.

They should liquidated asap as they are doing nothing but burning taxpayer dollars on covering their idiotic underwriting polices. AKA - handing out our money to their business partners.

[acmavm]

2. We don't need to keep pumping money into that crooked corp.

We need to let it die.