Remember the days when American International Group (AIG) was the largest, most powerful insurance company on the planet? The AAA-rated giant that took on risks and markets that rivals seemed too nervous to touch? No? Well, Hank Greenberg does. The man who built AIG from a bit player into a powerhouse has fought to preserve that legacy since former Attorney General Eliot Spitzer essentially had him ousted in 2005. Today, he’s in the U.S. Court of Federal Claims to challenge the government’s 2008 bailout of his former company.
Technically, the case of Starr International Co. Inc. v. United States is about the legality of Washington’s move to stave off AIG’s bankruptcy in exchange for about 80 percent of common stock. Through Starr, Greenberg still owned about 11 percent of AIG’s shares, making him its largest individual shareholder. That also made him arguably the largest casualty of the deal, which saw taxpayers ultimately gain $22.7 billion in profit from $182 billion in loans. AIG’s existing shareholders, in contrast, got about $500,000 for the $35 billion in shares that went under public control. (The government’s stance is that AIG’s imminent bankruptcy would have left those shareholders with nothing.)
While Greenberg no doubt cares about the tens of billions at stake in the trial–David Boies is representing Starr—he seems even more concerned about the legacy he built at AIG. He’s spent untold millions in legal battles against Spitzer and his old employer and continues to face challenges related to transactions at AIG. At 89, he continues to be a major force in the insurance business through the Starr companies; he’s written a book and gives speeches; he opines on issues from China’s growth to the global risk environment. And while he may have been in charge when AIG got into the risky credit-default swaps that almost killed the firm, he condemns his successors for abandoning risk controls and taking on too much.
Many legal experts believe the government will prevail in its case that the crisis justified the conditions of AIG’s bailout. Whether or not Greenberg wins, the trial will give him another chance to remind people what AIG was under his leadership. For a man whose reputation remains complicated, that’s an opportunity worth fighting for.
