For more than a decade, Ron Shelp worked alongside the biggest name in insurance and witnessed the emergence of the AIG empire as a trusted insider. Today, Hank Greenberg is no longer known solely as the industry legend “who walked and talked with kings, presidents and premiers,” but the AIG story nevertheless remains among the most fabled in insurance.
Recently, RM sat down with Shelp to discuss his book Fallen Giant, an historical account of both the company and its former chief.
RM: Why did you want to write this book?
Ron Shelp: The theme of the book is the story of an extraordinary company—America’s first reverse multinational.
It starts with C.V. Starr, a remarkable man, whom I regrettably never knew. He goes to China in 1919, and two or three weeks later, he opens this company. He attracts a number of White Russians, who had apparently fled Lenin, and he attracts some Chinese and others, and he creates a phenomenal enterprise.
By the time [the company] was nationalized by the Red Chinese in 1949, he had at one point owned the equivalent of the Time magazine of China, multiple newspapers, a real estate company, a bank, and Chrysler and Ford auto dealerships. He was quite an entrepreneur to say the least.
It’s also the story of China. First the company was founded there, then it left, then went back there after the Japanese were defeated, then it left. My first big assignment at AIG was to get us invited back when Nixon visited China. I got us an invitation and we went back in 1975. Even since then, it’s still the most important foreign insurance interest in the country. I say this is certainly about Starr and his expansion in building this company around the world and bringing in the extraordinary individuals that he brought—with the most extraordinary of all being Hank Greenberg.
RM: There’s one story where you arrive 10 minutes late to a lunch with [automation pioneer] John Diebold and after you apologize, he says “Don’t worry, Ron…We all know who you work for.” How was it working for Hank?
Shelp: I had my bad days, but I didn’t have many. I always thought he was very fair. He tolerated me a lot. There were several instances that I mention in the book where I would have fired me if I was him. He knew that if he yelled at me, I’d probably just go back to my office and not be very productive. So it just depends on your situation.
RM: In the book, you actually don’t spend that much time talking about Greenberg’s fall from grace. Why do you think Spitzer went after him over, as the term you use in your book puts it, “what amounted to modest fiddling with accounting numbers”?
Shelp: The situation with Spitzer is interesting and intriguing and hard to understand. On one hand, you can say Spitzer was politically ambitious, but I’m more or less convinced that Spitzer thought that what he was doing was right. However, I don’t think he handled Greenberg—or his son Jeff—as fairly as he should have.
What I thought was the really unfortunate part was when Spitzer, on the George Stephanopoulas show, virtually accused [Greenberg] of being a crook. That’s outrageous.
RM: What do you think Hank’s lasting legacy will be?
Shelp: He had an impeccable record. For thirty-something years, he ran the biggest insurance company in the world, and one of the biggest companies by any standards.
I don’t know if anything that was done was wrong or not—that’s up to the courts to decide. But obviously, there wasn’t enough sensitivity [by AIG] to a changing economic climate, combined with an extraordinary attorney general. If AIG had been in another state, this might not have happened.
He had a great legacy, he built a great company, but the trouble is when you’ve been wrung through the newspapers for a year and a half, it’s hard to ever un-tarnish your reputation.
Then again, it’s already so much better than it was. I see him often in the social pages being the honoree at an event. There’s been a big change, but he’s not there yet.
