Lawrence A. Cunningham

"In the early 1990s, it became clear to Greenberg that, in the decade ahead, some $2 trillion of infrastructure investment would be needed across Asia, Central Europe, the post-Soviet Commonwealth of Independent States, and Latin America.4 The need was driven by increased economic activity, growth, and privatization. For instance, as more people in Malaysia bought cars, the number of vehicles on the streets of Kuala Lumpur mushroomed, creating need for new and better highways. Similarly, as China’s economy expanded, the country needed a massively larger electricity grid to power it. As the economies of Latin America grew and living standards rose, countries needed new airports, communications networks, energy projects, highways, port refurbishment, and utility construction."

"AIG’s engagement with domestic policy issues of the day was vital because of the vast scale of its business. It did not win every position, and not every policy debate was exciting, but AIG was always at the table and its victories translated into real gains for the company, the insurance industry, and its customers. While many other CEOs considered them extracurricular affairs, Greenberg saw participation in these activities as central to running AIG’s business, and real gains to AIG resulted."

"There was no single trait that Greenberg looked for but these employees tended to fit a model type that he called the “white blackbird.”1 These were individuals with an entrepreneurial conviction and a unique tenacity to forge profitable change."

"American Home’s rising profitability was due in large part to an organizational innovation Greenberg implemented called the profit center model, which would become a distinctive hallmark of all businesses in the organization. The concept refers to assigning full profit and loss responsibility for a business area to a single manager."

"AIG began to accumulate substantial corporate capital in the 1980s, which grew to enormous sums through the 1990s and early 2000s. Investment of AIG’s capital was always handled separately from the insurance operations that generated the underwriting profits that drove this capital accumulation. Unlike other insurance companies, success for the insurance executives was defined solely in terms of insurance operations, rather than in terms of the yield on investments."

"These steps would promote the cardinal principle Greenberg brought to the insurance business: to make a profit by underwriting insurance, not simply relying on the returns from investing premium payments received. Greenberg asserted that it was a mistake to rely on the prospect of generating income from investing money held between the time premiums are received and expenses and losses are paid (called “float” in the insurance field)."

"Greenberg also perceived that while the foreign policy establishment of the 1970s in the United States tended to think of the world in geopolitical terms, the world would increasingly be defined in geoeconomic terms. With that inspiration, he created"

"Property and casualty insurance exposed AIG to Mother Nature’s vicissitudes: earthquakes, floods, and tsunamis. The business is also volatile as a result of myriad other factors from the vagaries of interest rates to the uncertainties of litigation. A property and casualty insurance company can generate an underwriting profit for several years only to face a massive loss due to such circumstances. It is therefore desirable to diversify such risks by entering into businesses that operate in different ways. In comparison, life insurance is stable, at least so long as premiums received are invested conservatively, and in any event the variability in life insurance is usually different in both kind and time compared to property and casualty. The two lines together, therefore, provided an optimal mix for AIG, especially as it diversified its life insurance business across the world and in many product lines."

"managers were trained that nothing but effectiveness mattered, so employees were hired, rewarded, and promoted without regard to other litmus tests, such as pedigree or politics. AIG invested heavily in employee training programs at all levels, in all countries. At training sessions, presentations would be made by AIG’s top global executives, including Greenberg. These programs stressed professionalism, referring to the importance of good judgment, integrity, and personal responsibility."

"To implement the profit center model, Greenberg held regular budget meetings: weekly with the handful of most senior executives, monthly with a larger group that oversaw the entire company, and quarterly with each manager."

"by Victor Hurd,"

"AIG’s culture of effectiveness was reinforced by the profit center model and the cardinal principle of earning an underwriting profit."