‘Change Is Inevitable’
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
Photo by Frank Vowinkel
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.
Marsh & McLennan
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.”
Starr International Group (A.M. Best # 018756)
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