With headquarters in Paris, France and Hong Kong, China, and operations in more than 130 countries, the New York City-based AIG Insurance Company is one of the largest of its kind in the world. It stands for American International Group and, according to Forbes, it is the sixth largest company in the world. If that was not enough to make it known to the world, the company has also become a sponsor of one of the most popular English football clubs, Manchester United.
However, the story of this company is one that stretches back to the early 1900s, and not only represents a fine example of entrepreneurship, but also of a man who made popular a unique business model and stuck to it. In 1919, Cornelius Vander Starr became the very first Westerner to sell insurance in Shanghai, China. After growing large enough, he then expended into Asia, Latin America, Europe and the Middle East. He could not, however, find matched success in America.
In 1962, Starr gave his U.S. holdings to Maurice “Hank” Greenberg, who reoriented the company’s focus. No longer was it going to concentrate on personal insurance, but rather on corporate coverage. He also began using independent insurance brokers, rather than company agents, in order to save costs. Using this method, Greenberg could keep the price of his insurance high without having to worry about paying agents when sales were not as great.
Greenberg had such success in the U.S. market that in 1968, Starr resigned and appointed Greenberg his replacement. Under Greenberg, AIG Insurance became the world’s largest and leading international insurance company, serving individuals, corporations, and institutions alike. And, he did it primarily by focusing the company on a unique business model that was based on the concept of underwriting, or making a profit on the amount of premiums taken in over claims paid out before any returns on investment.
Greenberg was known to have run the company with an iron fist, micromanaging every department to his satisfaction. Even taxi vouchers for his employees would have to be approved by Greenberg. No detail was left unturned. And, that was precisely how Greenberg took the company from its $13 million profit in 1967 to its more than $100 billion in revenues today.
Starting on the day he first returned from the Korean War, Greenberg demonstrated his entrepreneurial flair. The young lawyer went door to door trying to find work when he first came upon the doorstep of AIG. He was immediately rebuffed, but refused to give up. He tracked down the employee’s boss, complained about his behaviour and won himself a job.
Since then, Greenberg has continued to demonstrate the need to take risks and follow the path less ordinary in order to reach success. Under him, AIG Insurance began to aggressively enter new markets and develop new products. “We don’t wait around until there is a history of knowledge and judgment,” Greenberg once said. “We are always out front in product innovation compared to our competitors. After we’ve done something, they follow.”