Last Updated: Oct. 29 11:45 AM ET
Maurice "Hank" Greenberg, the man who built the A.I.G. empire that barely stayed afloat during the financial crisis, is building up an insurance company that could compete with his brainchild, according to a New York Times report Tuesday.
Greenberg, 84, spent nearly four decades at A.I.G.'s helm before his 2005 ouster amid an insurance scandal. He has insisted he bears no responsibility for the risky behavior of A.I.G.'s financial products division that prompted the largest government rescue package in U.S. history last year.
Now Greenberg is investing in an existing insurance company in his portfolio, C.V. Starr & Company. The firm is focused on highly specialized lines of insurance and bears at least some resemblance to A.I.G.'s complex structure, minus the financial product services unit. He's even luring top AIG executives away to help launch the venture.
C.V. Starr is privately held and, with no financial disclosures, specifics about its business plan are largely unknown.
And as it turns out, the government may be inadvertently helping him. Because A.I.G. has yet to wind down and sell off its various businesses to pay back the $85 billion aid package, it is still subject to the executive pay limits recently announced by federal pay czar Kenneth Feinberg. With little incentive to stay, A.I.G.'s top talent may just migrate toward their former boss. Greenberg has hired 13 former AIG executives since the beginning of the year, according to a C.V. Starr & Company spokesperson.
"Basically, he's just starting 'A.I.G. Two' and raiding people out of 'A.I.G. One,'" Douglas A. Love, of insurer Investors Guaranty Fund, told the New York Times.
In a touch of irony, Greenberg's latest move and an exodus of AIG executives to other insurance firms may actually hurt taxpayers. As the report notes, an AIG brain drain may hinder the company's ability to efficiently wind down and repay the government bailout.
Greenberg's C.V. Starr & Co. issued a statement regarding the A.I.G. hires, excerpted below:
"Over the last year, we understand that a number of AIG's 100,000+ employees have left A.I.G. to join the company's direct competitors in the global property and casualty and life insurance businesses. Only thirteen of those employees have joined C.V. Starr & Co., Inc., which was formed in 1950 and focuses on highly specialized insurance lines; far more, we believe, have joined other, larger companies.
"The reason that employees are leaving A.I.G. has less to do with these other companies, and more to do with the current approach to A.I.G., which is unlikely to result in the repayment of the American taxpayer."