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Friday, November 10, 2006

AIG: The Ghost Of Hank Greenberg

Hank Greenberg may be gone, but he is not forgotten. Ousted by pressure from NY State’s new governor, Greenberg built what is arguably the most successful insurance firm in the world. He now works in exile, perhaps appropriately, but his multi-decade effort still bears fruit.

AIG profits more than doubled, to some extent because it did not have the huge hurricane related claims that it did last year.

Life insurance contracts, a very steady source of revenue, hit $7 billion for the first nine months.

AIG now trades at about $68.

Greenberg left AIG in early 2005, under a cloud based on financial irregularities found at the insurer. Before he left, the stock was at a two year high of $73. It has not traded above that price since then. Under Greenberg the stock rose 80x from 1971.

As Morningstar said recently: "AIG's multifaceted moat originates in a series of long-ago decisions that established a powerful distribution foundation and the sustained execution that built one of the insurance world's strongest balance sheets."

Greenberg may be gone, but it is still his company.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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