In Fallen Giant, author Ron Shelp—who worked within the AIG organization for more than a decade—sheds light on AIG, the company, and Hank Greenberg, the man. Through in-depth research, candid interviews, and firsthand experiences, Shelp provides a detailed look at how AIG was originally created and reveals how Greenberg’s unrelenting drive to be the best may have led to his untimely departure from AIG.
Fallen Giant
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Editorial Reviews
Review
"All Hank Greenberg ever wanted was "an unfair advantage." That is the phrase that Ron Shelp chooses to sum up Maurice R. Greenberg, the deposed chairman of the American International Group and the subject of his “Fallen Giant: The Amazing Story of Hank Greenberg and the History of A.I.G.,” and it would be hard to improve on.
Insurance, Mr. Greenberg realized early, is the game of playing only when the odds are in one’s favor. For instance, if a far-flung customer wants insurance against a kidnapping — a risk that few others will touch — chances are that you can charge a lot for the policy. As Mr. Greenberg did not fail to notice, plenty of overseas executives are kidnapped, but many more are not — and they pay premiums, too.
Throw in a few other “unfair” advantages, like lobbying, cajoling or otherwise persuading governments to do one’s bidding as well as, quite possibly, obscuring some of the truth about one’s operations, and you have the secret of a great insurance fortune.
Accusations of cooking the books more or less forced Mr. Greenberg to resign last year. Mr. Shelp, a former Greenberg lieutenant and troubleshooter at A.I.G., wrote the book ostensibly to explain his old boss’s fall from grace.
He asks some very good questions. One is why Mr. Greenberg would risk his $3 billion fortune on some “fairly modest fiddling.” Another is this: What did Eliot Spitzer, New York’s attorney general and now its governor-elect, have against Mr. Greenberg, whom he all but accused of criminality on Sunday morning television? Then, after the A.I.G. board forced Mr. Greenberg to resign, Mr. Spitzer neglected to charge him after all. Well, never mind. (Mr. Spitzer did file civil charges, which Mr. Greenberg is contesting.)
Mr. Shelp leaves no doubt that A.I.G. was a master at shaping and, at times, bending the rules, but he argues that the offenses that got Mr. Greenberg canned were pretty modest, and notes that reversing the deals in question resulted in a write-down of only 3 percent of A.I.G.’s equity.
The author does not probe deeply enough to resolve the legal issues, nor does he have much fresh news, but that is not his point. Mr. Shelp is more interested in another question: How did A.I.G.’s “unique corporate culture” contribute to its autocratic chairman’s success and — after 37 years at the helm — his undoing?
This gives Mr. Shelp license for telling one of the great unsung stories in American business, namely the origins of A.I.G. The company was founded by Cornelius Vander Starr, a gadabout soda-fountain operator in Fort Bragg, Calif., who switched to real estate, then insurance. For no particular reason, he hopped a boat to the Far East and in 1919 began to sell policies in Shanghai. Somehow, he talked American insurance companies into giving him their “pen” — that is, letting him act as their agent.
Starr had a wonderful idea, which was that the Chinese were not such a bad risk. (Other Western insurance companies in China preferred to sell policies only to Occidentals.) As you can imagine, this broadened his client base considerably. Mr. Shelp says Starr proved his affection for the natives by selling to them, but this is patronizing. What he proved was his good business sense.
Starr branched into other countries, bought newspapers in China, became friendly with American intelligence operatives. The author, who aims to be fair but does not pretend to be neutral, relates quite a few tales from those swashbuckling days, some of which are relevant to his narrative and many of which are interesting.
His style is conversational, as if he were telling the story from an adjacent barstool. When Starr marries, the author says his wife “would have been in her 20s” — as if the author were only dimly recalling an unverifiable detail.
We will allow Mr. Shelp his penchant for certain colonial mannerisms — for instance, referring to this or that character as a “Dutchman” or a “Chinese gentleman.” But a few of his sentences ought not to have slipped past his editor, nor his co-writer, Al Ehrbar. Here is one: “I persuaded friends at A.I.G. that an outsider writer but former employee who is basically friendly to A.I.G. would be read more widely than a corporate book, which might be read by some of those they give it to.” Here is another: “Apparently, they did well, for none withdrew because they were losing money.” This is perfectly good writing if you have just swallowed your fifth highball.
The pity is that Mr. Shelp, in his quirky fashion, arrives at a truth about A.I.G. that writers who focused on the insurance deals missed. A.I.G. was created, as it were, from the outside in: first in foreign outposts and only later in New York. It grew up beholden to a single executive, and accustomed to having its way more than conventional companies stacked with M.B.A.’s.
It was Starr who started the “revolution” in the way Bermuda regulated insurance companies, meaning that he arranged for the island to write rules that insurers found convenient. A brilliant protégé, perhaps less lonely than his mentor, Mr. Greenberg arrived at A.I.G. just as Starr was sadly unwinding and relinquishing the reins. Grabbing the opportunity, Mr. Greenberg tartly informed his only remaining rival: “Sit down, Gordon, and shut up. I’m in charge now.” That was in 1968. For the next 37 years, no one contended otherwise.
TRUE to the company heritage, Mr. Greenberg combined diplomatic cunning, business hardball and a sense that he was entitled to make his own rules. He lobbied for China’s admission into the World Trade Organization in 2001 — then maneuvered for a delay, at the last moment, until the Chinese agreed to let A.I.G. operate freely on Chinese soil.
Measured in terms of stock price appreciation, Mr. Greenberg’s success was stunning.
Alas, even modest fiddling, such as the “earnings management” he was accused of, is no longer tolerated in American business. Mr. Greenberg seems not to have noticed. But even if A.I.G. hadn’t changed, the world had. (New York Times, December 17, 2006)
Insurance, Mr. Greenberg realized early, is the game of playing only when the odds are in one’s favor. For instance, if a far-flung customer wants insurance against a kidnapping — a risk that few others will touch — chances are that you can charge a lot for the policy. As Mr. Greenberg did not fail to notice, plenty of overseas executives are kidnapped, but many more are not — and they pay premiums, too.
Throw in a few other “unfair” advantages, like lobbying, cajoling or otherwise persuading governments to do one’s bidding as well as, quite possibly, obscuring some of the truth about one’s operations, and you have the secret of a great insurance fortune.
Accusations of cooking the books more or less forced Mr. Greenberg to resign last year. Mr. Shelp, a former Greenberg lieutenant and troubleshooter at A.I.G., wrote the book ostensibly to explain his old boss’s fall from grace.
He asks some very good questions. One is why Mr. Greenberg would risk his $3 billion fortune on some “fairly modest fiddling.” Another is this: What did Eliot Spitzer, New York’s attorney general and now its governor-elect, have against Mr. Greenberg, whom he all but accused of criminality on Sunday morning television? Then, after the A.I.G. board forced Mr. Greenberg to resign, Mr. Spitzer neglected to charge him after all. Well, never mind. (Mr. Spitzer did file civil charges, which Mr. Greenberg is contesting.)
Mr. Shelp leaves no doubt that A.I.G. was a master at shaping and, at times, bending the rules, but he argues that the offenses that got Mr. Greenberg canned were pretty modest, and notes that reversing the deals in question resulted in a write-down of only 3 percent of A.I.G.’s equity.
The author does not probe deeply enough to resolve the legal issues, nor does he have much fresh news, but that is not his point. Mr. Shelp is more interested in another question: How did A.I.G.’s “unique corporate culture” contribute to its autocratic chairman’s success and — after 37 years at the helm — his undoing?
This gives Mr. Shelp license for telling one of the great unsung stories in American business, namely the origins of A.I.G. The company was founded by Cornelius Vander Starr, a gadabout soda-fountain operator in Fort Bragg, Calif., who switched to real estate, then insurance. For no particular reason, he hopped a boat to the Far East and in 1919 began to sell policies in Shanghai. Somehow, he talked American insurance companies into giving him their “pen” — that is, letting him act as their agent.
Starr had a wonderful idea, which was that the Chinese were not such a bad risk. (Other Western insurance companies in China preferred to sell policies only to Occidentals.) As you can imagine, this broadened his client base considerably. Mr. Shelp says Starr proved his affection for the natives by selling to them, but this is patronizing. What he proved was his good business sense.
Starr branched into other countries, bought newspapers in China, became friendly with American intelligence operatives. The author, who aims to be fair but does not pretend to be neutral, relates quite a few tales from those swashbuckling days, some of which are relevant to his narrative and many of which are interesting.
His style is conversational, as if he were telling the story from an adjacent barstool. When Starr marries, the author says his wife “would have been in her 20s” — as if the author were only dimly recalling an unverifiable detail.
We will allow Mr. Shelp his penchant for certain colonial mannerisms — for instance, referring to this or that character as a “Dutchman” or a “Chinese gentleman.” But a few of his sentences ought not to have slipped past his editor, nor his co-writer, Al Ehrbar. Here is one: “I persuaded friends at A.I.G. that an outsider writer but former employee who is basically friendly to A.I.G. would be read more widely than a corporate book, which might be read by some of those they give it to.” Here is another: “Apparently, they did well, for none withdrew because they were losing money.” This is perfectly good writing if you have just swallowed your fifth highball.
The pity is that Mr. Shelp, in his quirky fashion, arrives at a truth about A.I.G. that writers who focused on the insurance deals missed. A.I.G. was created, as it were, from the outside in: first in foreign outposts and only later in New York. It grew up beholden to a single executive, and accustomed to having its way more than conventional companies stacked with M.B.A.’s.
It was Starr who started the “revolution” in the way Bermuda regulated insurance companies, meaning that he arranged for the island to write rules that insurers found convenient. A brilliant protégé, perhaps less lonely than his mentor, Mr. Greenberg arrived at A.I.G. just as Starr was sadly unwinding and relinquishing the reins. Grabbing the opportunity, Mr. Greenberg tartly informed his only remaining rival: “Sit down, Gordon, and shut up. I’m in charge now.” That was in 1968. For the next 37 years, no one contended otherwise.
TRUE to the company heritage, Mr. Greenberg combined diplomatic cunning, business hardball and a sense that he was entitled to make his own rules. He lobbied for China’s admission into the World Trade Organization in 2001 — then maneuvered for a delay, at the last moment, until the Chinese agreed to let A.I.G. operate freely on Chinese soil.
Measured in terms of stock price appreciation, Mr. Greenberg’s success was stunning.
Alas, even modest fiddling, such as the “earnings management” he was accused of, is no longer tolerated in American business. Mr. Greenberg seems not to have noticed. But even if A.I.G. hadn’t changed, the world had. (New York Times, December 17, 2006)
"a rather interesting (and, on the whole, balanced) account of the Shakespearean turn of events that toppled the industry’s most powerful figure—at least temporarily."--National Underwriter Review
From the Inside Flap
Over its eighty-nine-year history, American International Group, better known as AIG, has achieved unparalleled success by adjusting to changing economic trends, regulatory rules, and political situations. While founder Cornelius Vander Starr—who led this Shanghai start-up for fifty years—built an extraordinary insurance franchise, it was his hand-picked successor, Maurice "Hank" Greenberg, who would turn that franchise into one of the world's most profitable and powerful financial services companies.
Now, in Fallen Giant, author Ron Shelp—who worked alongside Greenberg and within the AIG organization for more than a decade—sheds light on AIG, the company, and Hank Greenberg, the man. Through in-depth research, candid interviews, and firsthand experiences, Shelp provides a detailed look at how AIG was originally created and reveals the trouble that Greenberg and company eventually ran into when New York State Attorney General Eliot Spitzer turned his sights on them.
Entertaining and informative, Fallen Giant follows AIG from its humble beginnings in Shanghai to its modern-day offices in New York City—where Chinese involvement can still be found. Along the way, you'll meet a unique group of individuals—from Russia and China to the United States—who helped shape the company's culture, and discover the unpredictable events that changed the course of the company.
Filled with international intrigue and expert business acumen, Fallen Giant carefully details how founder Cornelius Vander Starr built his empire—from American Asiatic Underwriters to AIG—and why he ultimately handed it off to the dynamic, driven, and tough-minded Hank Greenberg. With Greenberg at the helm, you'll learn how this calculated risk-taker transformed AIG into a public entity, expanded its operations to new countries, and acquired huge businesses. You'll also see how Greenberg's numerous
connections with both politicians and business professionals allowed him to become a highly visible spokesman for the industry, a leader in the nonprofit and philanthropic worlds, and an important figure in foreign policy circles.
Through a unique insider's view, Fallen Giant paints a compelling portrait of how the world's largest provider of property and casualty insurance came to be and reveals how Greenberg's unrelenting drive to be the best may have led to his untimely departure from AIG.
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10 of 11 people found the following review helpful:
5.0 out of 5 stars
A Fascinating and Insightful Story,
By
This review is from: Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG (Hardcover)
Reading about some CEO in the insurance industry, even a colorful one like Hank Greenberg, would not normally be my first choice for spending a leisurely afternoon by the fire. But I am certainly glad I chose to pick up this book.Ron Shelp's tale of Hank Greenberg and AIG is utterly fascinating. The rise and fall of Greenberg, an extraordinary man who despite his present troubles is obviously greatly admired by the author (a former senior officer of AIG who reported directly to Greenberg for 12 years), has elements of Greek tragedy. At age 80, Greenberg had everything one could possibly want in the world, and he had earned it all. One would think his highest priority should have been to protect his legacy and his well-deserved reputation as one of the world's great businessmen. But he was tripped up by inattentiveness to his own vulnerability and that of his company in a post-Enron world. The free-wheeling ways of the international insurance industry, and the dubious financial engineering methods and questionable accounting practices that must have been growing like a cancer inside AIG over a number of years, never seemed to have sounded any warning bells in his mind. It was business as usual. But after Enron, the world had changed, and Greenberg had the bad luck to have as an adversary an energetic, determined and effective crusader against corporate malfeasance -- the Attorney General of New York (and now Governor-elect) Eliot Spitzer. The rest is history. Ongoing litigation will determine the final chapter of this story. Greenberg's alleged misdeeds, even if they are proved in court, are trivial in comparison to the crimes committed at Enron and by many of the more egregious corporate bad guys of our era. Punishment, if the prosecutors prevail, will likely be a lot less severe than in some other high profile cases. But those alleged misdeeds have already been enough to destroy a great man's reputation, and that must be a stunning personal tragedy for the leading character of this excellent book.
5 of 5 people found the following review helpful:
3.0 out of 5 stars
As much an insight into Chinese history as the insurance business,
By Elizabeth, the Traveler (Atlanta, Georgia) (Atlanta, GA United States) - See all my reviews
This review is from: Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG (Hardcover)
Had it not been for the current "bailout" which in January 2009 is still playing out I would never have thought of buying this book. It was published in 2006, in -as other reviewers here have pointed out - was a real hurryup year long task just to get it on the shelves. The author is an insider for whom Starr and Greenberg are real heroes and his personal insight is invaluable. If only he could now team up for another edition with a first class institutional historian and a great Wiley editor there could be a terrific bestseller coming up.What I found most interesting was the way Starr could, as a young America , who did not speak Chinese, go to China, not only found an insurance business, but found newspapers, then move literally all over he world - Latin America, Europe, the Phillipines - and expand the country. With insurance basically a "piece of paper" the company worked in many languages. Starr also helped out the CIA and interfaced with the arts and philanthropy as did Greenberg. The insurance business seemed to some how go on and recover through WWII and revolutions all over the world. In spite of the less than perfect writing this is a facinating story and I end up admiring the author who himself so admired the company and the business.
7 of 8 people found the following review helpful:
5.0 out of 5 stars
Swashbuckling Insurers and Other Oxymorons,
By
This review is from: Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG (Hardcover)
What is the first word you think of when you hear the word "insurance"? "Boring", right? Well, who knew the history of an insurance company could be filled with tales of passion and intrigue? Oh yes, and multimillion-dollar deals. AIG, the huge global insurance company, has always been a bit of a mystery to the outsider. A reverse multi-national, born in China, AIG has a culture and mores somewhat different from those of its blue-blooded brethern from New York and London. Ron Shelp does a fine job of condensing the massive 80+ year history, power struggles, and new business exploits into a story filled with intrigue and adventure. It is an essential "AIG 101" for anyone who wants to understand how an organization that managed its affairs with such finesse, for so long, could have stumbled at the top of its game.
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Key Phrases - Statistically Improbable Phrases (SIPs):
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foreign insurers, largest insurance company Key Phrases - Capitalized Phrases (CAPs): (learn more)
New York, Hank Greenberg, Starr Foundation, United States, Hong Kong, American International, American Home, Buck Freeman, Starr International, Gordon Tweedy, Asia Life, Far East, Neil Starr, World War, Martin Sullivan, National Union, Foreign Relations, Frank Zarb, John Roberts, Mansfield Freeman, Ernie Stempel, Middle East, Supreme Court, Bill Youngman, David Boies New!
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Front Cover | Front Flap | Table of Contents | First Pages | Index | Back Flap | Back Cover | Surprise Me!
foreign insurers, largest insurance company Key Phrases - Capitalized Phrases (CAPs): (learn more)
New York, Hank Greenberg, Starr Foundation, United States, Hong Kong, American International, American Home, Buck Freeman, Starr International, Gordon Tweedy, Asia Life, Far East, Neil Starr, World War, Martin Sullivan, National Union, Foreign Relations, Frank Zarb, John Roberts, Mansfield Freeman, Ernie Stempel, Middle East, Supreme Court, Bill Youngman, David Boies New!
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Front Cover | Front Flap | Table of Contents | First Pages | Index | Back Flap | Back Cover | Surprise Me!
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This book cites 4
books:
- The World Is Flat [Updated and Expanded]: A Brief History of the Twenty-first Century by Thomas L. Friedman on page 35, and Back Matter
- Next President by David Frost on page 141
- Madama Butterfly in Full Score by Giacomo Puccini on page 72
- Van Gogh (Essential Art) by James Smith on page 4
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