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Greenberg's task-trying to save AIG.

When the final chapter is written on how the world's largest and most powerful, insurance company fell from glory, Maurice "Hank" Greenberg, who led American International Group Inc. for more than 35 years, will be featured prominently--a deposed leader trying to rally to save the company he built.

In its heyday, AIG had a market value of $180 billion, and was slated to become one of 10 major global financial supermarkets in the world by the end of the decade. Today, the company has lost 90% of its value, and has borrowed $150 billion.

Greenberg, whose legacy has unraveled at breathtaking speed in the past year, is on a mission. "If I were in control this wouldn't have happened," he said in an exclusive interview with BestWeek.

He left AIG amid probes of accounting irregularities, but Greenbeeg said the board and management that took over were just "collecting pay checks and attending meetings." AIG recently froze more than $19 million in compensation for Greenberg's successor, Martin Sullivan--a move Greenberg applauds.

"I think [Sullivan's] compensation ought to be totally recovered," be said." I do not believe you're entitled to a golden parachute for aiding and abetting the destruction of a company."

AIG, he said, has been mismanaged. "The expense ratio used to be, when I left the company, 19 1/2%. It was 31%, in the third quarter--a vast difference," the still energetic 83-year-old said. "They've had to add 20,000 people since I left the company. That's the equivalent of roughly two army divisions. You wonder what they're all doing."

Greenberg also took aim at AIG's security-lending program, which he called "totally distorted and off base." In these programs, companies lend their securities to a third party in exchange for cash collateral or government securities. "It's not intended to take that cash and speculate with it. That's kind of dumb. Well, they were dumb. They did that and lost billions and billions of dollars. Whatever could be done wrong, they invented; they found it."


In recent months, Greenberg has launched his own proxy campaign to get AIG, the government, fellow investors-anybody who would listen--to take his advice on how to get AIG out of its financial mess. The second bailout plan took into consideration some of his recommendations.

AIG must sell its assets within five years to pay off its loans, including a $40 billion loan in preferred stock at 10% interest.
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Title Annotation:Briefing; American International Group Inc.; Maurice Greenberg
Author:Dankwa, David
Publication:Best's Review
Date:Dec 1, 2008
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