Is a Piece of AIG on Hank Greenberg's Shopping List?

A lot of water has flowed under the bridge between former American International Group CEO Hank Greenberg and the company he once ruled. But it could be time to float the idea that Greenberg might want to buy a piece of the ailing insurer.
Looking back a few years that idea would have seemed far-fetched. Greenberg was ousted from the job he held for more than 30-years by an angry board after a battle with New York Attorney General Eliot Spitzer, who filed civil charges against him. He faced lawsuits from AIG, which wanted the 12 percent of its shares that he controlled. He testified before the Securities and Exchange Commission, which was somewhat dissatisfied with his answers. Criminal charges were pending against one of his former executives, as well as others who were involved in a spurious deal regarding an insurance contract that made AIG's earnings look better than they were.

But things are better now. Greenberg bested AIG in court and still owns 12 percent through companies he controls. While the former executive who worked for him was found guilty, and may serve time, no one has pointed the finger directly at Hank. And Greenberg settled with the SEC for a mere $15 million.

Best of all, it appears that AIG has put out the welcome mat. Greenberg has met with CEO Robert Benmosche and the two have nothing but good things to say about one another. And according to the New York Times, one of Greenberg's companies might sell some of AIG's property casualty insurance.

AIG's property casualty unit is hanging on by a thread. It changed its name to Chartis to distance itself from AIG's reputation. Revenue is declining, people are defecting - in part due to salary caps - and just today AIG's price target was cut nearly in half by Wall Street research firm Sanford C. Bernstein because of an $11 billion shortfall in reserves to pay property casualty claims. "AIG would likely have to take some kind of a reserve charge" before selling AIG/Chartis, says analyst Todd Bault in a Bloomberg story.

And if AIG were to sell this unit, would Greenberg have the money to buy it? Greenberg controls private companies, so the amount of available cash to do a deal is unclear, but probably substantial. He previously indicated that he wants to make multimillion investments. Since he owns 12 percent of AIG's shares, they could theoretically be swapped for control of an AIG business. But would he want Chartis? Probably, if he could get it for the right price.

Greenberg launched an unsuccessful proxy fight for AIG two years ago. Many would like to see him come back. And with taxpayer backing of $182 billion to pay that reserve charge, it might be a match made, if not in heaven, then on Wall Street. Ironically, most, if not all, of those who ousted Greenberg are gone, casualties of the 2008 collapse of this once giant insurer. Spitzer, himself disgraced by scandal, is a blogger.

Imagine Greenberg's triumphant return to his former company captured on camera. Hank probably has it already scripted.