Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG

Almost daily, we read about the steady descent of Maurice "Hank" Greenberg and AIG. Because I was recently preparing for a speech about the people side of the financial and banking industry, I decided to reread Ron Shelp's 2007 book, Fallen Giant. Shelp provides three penetrating insights: 1. When dominoes start tumbling in the insurance industry Kingdoms crumble world-wide. AIG was one of the first much needed flushing's in the world financial system. 2. Insurance and the assumption of Risk. In order to be effective in returning profits on investments, rewarding productivity, business leaders must not only assume but must seek risk. In order to do this they have to calibrate risk very carefully and understand the amount of exposure that they have on any transaction. The insurance business present their calculations and the business leaders decide on the best options. The people who insure these risks disperse them among other insurers like AIG. When these insurance executives behave fraudulently or are insufficiently cautious, the ripple effect turns into a tsunami. Tsunami's affect people and institutions around the world sometimes permanently. 3. Real people start business dynasties and only real people can bring them down. People such as CV Starr, Bill Donovan, and Hank Greenberg, described in detail in the book are very human in terms of their strengths and peccadillo's. It is easy to see how the melding of their strengths and the avoidance of their weaknesses resulted in the building of institutions and, eventually, an empire called AIG. Shelp does not portray Greenberg nor his predecessors or his successors as villains or saints. They just enabled business leaders around the world to manage risk-both natural and manmade. These players happened to be the targets when Elliott Spitzer pushed the lever down. There were many others engaged in other spheres of activity and also experienced Mr. Spritzer's spirited assault. Many wealthy and moderate investors around the world were hung out to dry. Mr. Shelp had a unique "once in a life time" window. He took a great photograph. Millions will be grateful for his capturing the snapshot for us. Further, he helps us understand how it occurred.

As a lay reader, I had no idea whether or not I would enjoy reading a book about an insurance tycoon and his downfall, so, what a surprise for me to discover that Fallen Giant is a highly entertaining as well as informative book. It reads more like a historical/psychological novel than non-fiction. The story of the man who turned AIG into an international giant begins in Asia after the turn of the century, where the roots of this multi-national insurance giant first took hold. The book hops the globe, from golf course to meeting room to dining room, where the ultimate power politics of big business play out. It's fascinating to learn how Hank Greenberg worked his way to the top, and what it was like to work for him -- a story enriched by Ron Shelp's reporting of his personal experience at AIG. Shelp shows that Greenberg was not an easy man to work for by any means, but the stakes were high and the rewards were many for those who survived. Fallen Giant describes, in an easily comprehensible way, the complexity of how AIG evolved into the multi-national that it is today, how Hank Greenberg played by his own rules, and how he was ultimately disgraced and overthrown. This fascinating story proves once again the old adage that "truth is stranger than fiction".

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.

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.

This is a great story, well told by Shelp. The complexities of business and the dynamic personalities who drive great enterprises deserve careful treatment. We ought to gain insights that go well beyond glib generalizations, street gossip, or news that readers could pick up from the many journals delving with shallowness beyond the headlines. AIG, the Star empire, and Greenberg's impressive and colorful journey is one of those stories now with a telling it merits. Shelp reveals an insider's perspective, gathers plenty of rich accounts from others, and gifts us with his research and reach into the depth of AIG's remarkable history and the stunning revelations about Greenberg, its most recent giant. Shelp shows an appreciation for the financial services industry that adds value to our understanding. Well worth getting ahold of this fascinating book.