Jones Lang LaSalle
A.I.G. Finds a Major Foe in Ex-Chief
By JENNY ANDERSON
Few people who know Maurice R. Greenberg, the former chairman and chief executive of the American International Group, thought he would go quietly. Now it is clear he is not going anywhere.
A recent spate of lawsuits between A.I.G. and C. V. Starr, one of two highly capitalized private companies that Mr. Greenberg controls, shows that Mr. Greenberg, who is 80, will do more than just use Starr's $22 billion worth of A.I.G. stock to build a private equity giant. He will also compete head-on with A.I.G.
This is a change from what appeared to be his previous stance. Six months ago, Mr. Greenberg told associates that he planned to sell the insurance agencies controlled by C. V. Starr, a private company he controls, to A.I.G. The four Starr agencies sell about $2 billion in premiums a year, all of which A.I.G. underwrote, some of which was in turn ceded to reinsurers.
After selling the agencies, it was expected that Mr. Greenberg would focus on the almost $20 billion worth of A.I.G. stock he controls through Starr International, another private entity he controls, and the $2 billion in A.I.G. stock controlled by C. V. Starr to create a formidable private equity venture with an eye toward investments in Asia.
But divorce is often messy and this one is turning out to be no exception.
For starters, A.I.G. and C. V. Starr could not settle on a price: A.I.G. offered $600 million less than C. V. Starr wanted, according to a lawsuit filed by C. V. Starr. So Mr. Greenberg decided to hold onto the business. He offered to continue doing business with A.I.G., but they did not respond, his suit says. So he went out and found other insurance and reinsurance policies to sell, including National Indemnity Company, a unit of Berkshire Hathaway.
That did not go over well back at A.I.G. The company responded by seeking a temporary restraining order to force C. V. Starr to hand over its new business agreement with National Indemnity, and prohibit C. V. Starr from entering into that agreement.
Justice Herman J. Cahn of the New York State Supreme Court in Manhattan yesterday approved a narrower version of that order. He required that C. V. Starr turn over the agreement. He said the agreement could remain in place as long as C. V. Starr did not interfere in any way with A.I.G.'s existing business, thus allowing C. V. Starr to use Berkshire to write new, direct insurance or reinsurance.
At the same time, the judge extended a restraining order initiated by C. V. Starr against A.I.G., which he originally issued Sunday, forcing A.I.G. to allow C. V. Starr employees into their offices and access to their documents. The victories, while debated endlessly yesterday, are ephemeral. The parties return to court on Thursday to argue the big question: whether C. V. Starr must offer only A.I.G. insurance.
C. V. Starr says its contract says it is not limited: A.I.G. says the two are stuck together.
Mr. Greenberg declined to comment yesterday.
The fighting, which is likely to escalate, overshadows the larger point, which is that Mr. Greenberg, who has been fighting back against his detractors — particularly Eliot Spitzer, the New York attorney general — will not hesitate to take on even the company he built over four decades.
"We didn't want another fight," said David Boies, one of Mr. Greenberg's lawyers.
Whether that is true or not — Mr. Greenberg is notoriously intransigent — it is clear the two have yet another nasty fight on their hands.
A.I.G. and Starr International are suing each other for control of more than $20 billion in A.I.G. stock. Mr. Greenberg argues that the company is his, while A.I.G. contends that the money was intended to compensate A.I.G. employees and so belongs to them.
The Starr skirmishes are, of course, small fry compared with the epic battle between A.I.G. and the man who built it. The attorney general has sued both, accusing them of manipulating financial statements and misleading regulators and investors. A.I.G. has already acknowledged much wrongdoing in public filings and is expected to settle with state and federal regulators.
But Mr. Greenberg will fight. He has two companies, which have $22 billion in the bank, in his corner. He also has an insurance brokerage business with over half a century of experience.
And perhaps he will use the brokerage business to buy an underwriter and build a business, repeating his early history at A.I.G.
A.I.G. Finds a Major Foe in Ex-Chief
By JENNY ANDERSON
Few people who know Maurice R. Greenberg, the former chairman and chief executive of the American International Group, thought he would go quietly. Now it is clear he is not going anywhere.
A recent spate of lawsuits between A.I.G. and C. V. Starr, one of two highly capitalized private companies that Mr. Greenberg controls, shows that Mr. Greenberg, who is 80, will do more than just use Starr's $22 billion worth of A.I.G. stock to build a private equity giant. He will also compete head-on with A.I.G.
This is a change from what appeared to be his previous stance. Six months ago, Mr. Greenberg told associates that he planned to sell the insurance agencies controlled by C. V. Starr, a private company he controls, to A.I.G. The four Starr agencies sell about $2 billion in premiums a year, all of which A.I.G. underwrote, some of which was in turn ceded to reinsurers.
After selling the agencies, it was expected that Mr. Greenberg would focus on the almost $20 billion worth of A.I.G. stock he controls through Starr International, another private entity he controls, and the $2 billion in A.I.G. stock controlled by C. V. Starr to create a formidable private equity venture with an eye toward investments in Asia.
But divorce is often messy and this one is turning out to be no exception.
For starters, A.I.G. and C. V. Starr could not settle on a price: A.I.G. offered $600 million less than C. V. Starr wanted, according to a lawsuit filed by C. V. Starr. So Mr. Greenberg decided to hold onto the business. He offered to continue doing business with A.I.G., but they did not respond, his suit says. So he went out and found other insurance and reinsurance policies to sell, including National Indemnity Company, a unit of Berkshire Hathaway.
That did not go over well back at A.I.G. The company responded by seeking a temporary restraining order to force C. V. Starr to hand over its new business agreement with National Indemnity, and prohibit C. V. Starr from entering into that agreement.
Justice Herman J. Cahn of the New York State Supreme Court in Manhattan yesterday approved a narrower version of that order. He required that C. V. Starr turn over the agreement. He said the agreement could remain in place as long as C. V. Starr did not interfere in any way with A.I.G.'s existing business, thus allowing C. V. Starr to use Berkshire to write new, direct insurance or reinsurance.
At the same time, the judge extended a restraining order initiated by C. V. Starr against A.I.G., which he originally issued Sunday, forcing A.I.G. to allow C. V. Starr employees into their offices and access to their documents. The victories, while debated endlessly yesterday, are ephemeral. The parties return to court on Thursday to argue the big question: whether C. V. Starr must offer only A.I.G. insurance.
C. V. Starr says its contract says it is not limited: A.I.G. says the two are stuck together.
Mr. Greenberg declined to comment yesterday.
The fighting, which is likely to escalate, overshadows the larger point, which is that Mr. Greenberg, who has been fighting back against his detractors — particularly Eliot Spitzer, the New York attorney general — will not hesitate to take on even the company he built over four decades.
"We didn't want another fight," said David Boies, one of Mr. Greenberg's lawyers.
Whether that is true or not — Mr. Greenberg is notoriously intransigent — it is clear the two have yet another nasty fight on their hands.
A.I.G. and Starr International are suing each other for control of more than $20 billion in A.I.G. stock. Mr. Greenberg argues that the company is his, while A.I.G. contends that the money was intended to compensate A.I.G. employees and so belongs to them.
The Starr skirmishes are, of course, small fry compared with the epic battle between A.I.G. and the man who built it. The attorney general has sued both, accusing them of manipulating financial statements and misleading regulators and investors. A.I.G. has already acknowledged much wrongdoing in public filings and is expected to settle with state and federal regulators.
But Mr. Greenberg will fight. He has two companies, which have $22 billion in the bank, in his corner. He also has an insurance brokerage business with over half a century of experience.
And perhaps he will use the brokerage business to buy an underwriter and build a business, repeating his early history at A.I.G.
posted by Jones Lang LaSalle NJ News Blog at 11:49 AM
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