thing, and as an interim CEO, it will be exactly the same job as the permanent CEO. If I were the board, I wouldn’t allow it, and if it were me, I wouldn’t do it. It’s like cutting your own balls off.”
“Zarb thinks it’s all or nothing, too,” Willumstad said, referring to Frank Zarb, AIG’s former chairman. “He doesn’t want to have three CEOs in three years with a fourth one coming in.”
“You know, if you do things well, it’s still going to take you two years at a minimum,” Dimon said about the prospects of turning things around, leaning forward and punching the air to underscore his points. “The question is, do you want to get back in the saddle or not? If you are going back in the saddle, remember how hard the saddle is.”
Willumstad nodded in agreement. But he had one other concern. “I don’t like both the public appearance of it and that it looks like I’m going to throw Martin out and put myself in,” he said, but Dimon assured him that that was not a serious issue.
The board wanted Willumstad to take the job; his wife, Carol, thought he should—she had always believed that he had been robbed of the CEO job at Citi—and now Dimon was adding his vote.
The next day Willumstad took a black Town Car to AIG’s offices at 70 Pine Street. Upon taking a seat in Martin Sullivan’s office, he delivered his message without any equivocation: “Listen, Martin, the board is going to meet on Sunday, and whether or not you continue in this job is the topic of discussion.”
Sullivan merely sighed and said, “The board doesn’t fully appreciate how difficult this market is. When I took over, I had to clean up the mess with our regulators, and I can lead us out of these troubles.”
“Yes, Martin,” Willumstad acknowledged, “but you have to look at what has happened over the last few months. The feeling among directors is that someone has to be accountable… . Look, there are three possible outcomes of the board meeting. I could be coming back to you and saying that the board fully supports you, or the board thinks you should go. The other possibility is that the board says, ‘You have to do the following things in an X period of time or else you’re out.’”
Sullivan looked down at the floor. “And what do you think the likely outcome will be?”
“There’s a strong sentiment to make a change, but who knows?” Willumstad replied with a shrug. “You put twelve people in a room, and anything could happen.”
On Sunday, June 15, the board of AIG met in the office of Richard Beattie, the chairman of the board’s outside law firm, Simpson Thacher & Bartlett. Sullivan was on the agenda, but he had chosen not to attend. After a brief discussion, the board decided to remove Sullivan and install Willumstad in his place.
The company over which Willumstad had now been assigned stewardship was one of the most peculiar success stories in American business. American International Group began as American Asiatic Underwriters in a small office in Shanghai in 1919. Nearly half a century later, it had operations throughout Asia, Europe, the Middle East, and the Americas, but with its modest market value of $300 million and about $1 billion worth of insurance policies, the privately owned firm was hardly a juggernaut.
By 2008, however, the word “modest” was seldom used in connection with AIG. In only a few decades it had grown into one of the world’s largest financial companies, with a market value of just under $80 billion (even after a steep slide in its share price earlier that year) and more than $1 trillion worth of assets on its books. That phenomenal expansion was primarily the result of the cunning and drive of one man: Maurice Raymond Greenberg, known to friends as “Hank,” after the Detroit Tigers slugger Hank Greenberg, and referred to within the company simply as “MRG.”
Greenberg had had a hardscrabble upbringing worthy of a Dickens hero. His father, Jacob Greenberg, who drove a cab and owned a candy store on the Lower East Side of Manhattan, died during the Great Depression when Hank was only seven years old. After his mother married her second husband, a dairy farmer, the family moved to upstate New York, where Hank would wake before dawn most mornings to help milk the cows. When he was seventeen, he faked his birth date to join the army. Two years later, Greenberg was among the troops who landed on Omaha Beach on D-day. He was in the unit that liberated the Dachau concentration camp and, after returning to the United States for law school, he returned to the military to fight in the Korean War, in which he was awarded the Bronze Star.
Returning to New York after Korea, Greenberg talked his way into a job as a $75-a-week insurance underwriting trainee with Continental Casualty, where he quickly rose to become the firm’s assistant vice president in charge of accident and health insurance. In 1960, Cornelius Vander Starr, the founder of what would become AIG, recruited Greenberg to join his company.
A onetime soda-fountain operator in Fort Bragg, California, C. V. Starr was one of the prototypical restless Americans of the early twentieth century, the kind who made their names as wildcatters, inventors, and entrepreneurs. After trying his hand at real estate, he entered the insurance business and at the age of twenty- seven sailed to Shanghai to sell policies. There he discovered a market that was dominated by British insurance companies, but they sold only to Western firms and expatriates; Starr built his business selling policies to the Chinese themselves. Forced out of China after the communist takeover in 1948, Starr expanded elsewhere in Asia. With the help of a friend in the military by the name of General Douglas MacArthur, commander of the occupying force in Japan after the war, Starr secured a deal to provide insurance to the American military for several years. Before the country opened up its insurance market to foreign underwriters, AIG Japan would become the company’s largest overseas property-casualty business.
By 1968, Starr was seventy-six and ailing, and with an oxygen tank and vials of pills never far from his side, he turned to Greenberg to crack the American market, naming him president and Gordon B. Tweedy chairman. Greenberg wasted no time in making it clear who was going to be taking the lead. At a meeting soon after his appointment, he and Tweedy were on opposite sides of an argument when Tweedy stood up and began loudly pressing his point. “Sit down, Gordon, and shut up,” Greenberg told him. “I’m in charge now.” Starr, whose bronze bust still greets visitors to AIG’s art deco headquarters, died that December. The following year, AIG went public, and Greenberg became CEO. (Tweedy left soon afterward.)
Under Greenberg, AIG grew rapidly and became increasingly profitable through expansion and acquisitions, doing business in 130 countries and diversifying into aircraft leasing and life insurance. Greenberg himself became the very model of an imperial CEO—adored by shareholders, feared by employees, and a cipher to everyone outside the company. Despite his slight build, he had an intimidating presence. He drove himself relentlessly, eating nothing but fish and steamed vegetables every day for lunch, and regularly working out on a StairMaster or playing tennis. He showed little affection for anyone, with the exception of his wife, Corinne, and his Maltese, Snowball. Within AIG he was famous for his short fuse and his ceaseless drive to know everything that was happening inside the company—
To the outside world the biggest AIG drama was Greenberg’s attempt to secure a dynasty; what he created,
