Jane Martinson in New York
Thursday April 5, 2001
"http://www.guardian.co.uk"

Asked yesterday whether the Prudential would continue its fight for US insurer American General, one Wall Street analyst was incredulous: "What, and take on Hank?"

The reputation of Maurice Greenberg - nicknamed Hank after a 1930s baseball star - is so great that his name is often used as an alternative for the firm he leads, American International Group. Mr Greenberg, 75, has been described as the most powerful man in the global insurance business.

As head of the business since 1967, he is credited with making AIG into the most highly valued insurer in the world through expansion and tight cost controls.

His shareholders are unlikely to question his desire to buy AG in the same way those in the Pru did. For a start, AIG shareholders have received a compound return of 20% a year, compared with 9% for the S&P index. Second, AIG tends to be asked fewer questions than any other US company and offers the bare minimum of financial information.

Colin Devine, an analyst at Salomon Smith Barney, said: "The Street really tends to take everything he does as a leap of faith. But if they can't justify the valuation, they just say: 'It's Hank'."

Much of Mr Greenberg's reputation is based on an ability to consistently outperform Wall Street expectations. Maitland Lammert, an analyst at Edward Jones, said: "He has built AIG into a global business and is considered a genius."

A large part of his reputation is also related to his fiercesome ego, and an inability to suffer fools lightly. "Crotchety", "charismatic" and "a monster" are all words used about a man who fired his two sons after designating them as his heirs.

One analyst said: "If you write something he doesn't like, you will get a personal phone call from him and he will rip your face off."

His reputation goes some way towards explaining the deferential tone of the analysts' questions during yesterday's meeting to discuss the AG bid. Most congratulated him before asking about the cost savings to be gained from the deal - at least $200m and more than the Prudential.

When one reporter asked the question that has long been whispered on Wall Street, Mr Greenberg showed his temper. "This call is about the acquisition and not about the succession," he snapped.

Although he runs the company like a family firm in many ways, he controls just over 20% of the votes with a 3% stake. He is only the second chief executive in AIG's 72-year history, having taken over from Cornelius Starr - who had no heir - in 1967. Mr Starr, a former ice cream parlour owner, established the business in Shanghai by selling life insurance policies to the Chinese.

Mr Greenberg, the son of a New York dairy farmer who was honoured for his role in the first world war, had joined the firm seven years earlier to enhance its international operations. AIG now does business in 130 countries around the world and earned $5.6bn from its operations last year.

Buying AG would enhance AIG's domestic life insurance business and make it rival Citigroup as America's largest financial services firm, with a combined market value of about $206bn. About half its revenues would come from life insurance, the remainder from car insurance, mortgage guaranty, annuities and aircraft leasing.

The deal would be the AIG's second huge acquisition since 1998, when it bought SunAmerica for $18bn.

Despite his age, few analysts believe the planned AG deal will be Mr Greenberg's last. Mr Devine at Salomon said: "He'll go out of there when he's dead."

Mr Greenberg, who has five children and lives in New York, earned a base salary of $6m last year.

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