Book Review: Fallen Giant
I am glad I read this book, but I found it less than satisfactory. Why? Wait a moment on that question, while I tell you about the book’s strong points, which I appreciated.
AIG’s founder was Cornelius Vander (C.V.) Starr, sometimes called Neil Starr. (Alas, but the book does not explain the nickname.) He was an amazing guy who worked like crazy to create an insurance brokerage in China for US companies, and then brokered insurance in many other places in the world. The success was so significant that the company returned to the US and bought up some of the companies that it had placed business with.
C. V. Starr was a fascinating man who appreciated art, skiing, golf, global travel, and was open-minded toward other cultures, incorporating bright local managers into his firm. He had an aptitude for sensing management talent, which seemed to correlate with willingness to embrace multiple cultures. He was also a business animal, which led to a tight-knit culture with his top lieutenants, and an inability to keep a wife acquired later in life happy.
He created a complex corporate structure to reward significant long-termers with AIG. That would later prove to be a major source of contention when Greenberg was forced out.
The book divides into four sections:
- The Life of C. V. Starr
- The Arrival and Success of Maurice Raymond (M. R. “Hank”) Greenberg.
- The author’s experiences working for AIG (1973-mid-80’s). He was a lieutenant of Hank’s dealing with foreign affairs.
- The fall of Hank Greenberg and the demise of AIG.
Do you see the big gap? The story jumps from the mid-’80s to 2005. There is a 20-year gap of which little is said. There are snippets, yes, but there is nothing comprehensive. The book is written chronologically in a micro-sense, but not in a macro sense. Chapters are topical, but chronological within the chapters. The chapters are chronological, but the periods overlap, chapter to chapter.
There are other weaknesses to the book as well:
- It doesn’t really explain how Greenberg became so influential at AIG, and gained the trust of Starr. (There are stories that I heard, but I have no idea how true they were.)
- It doesn’t tell the story of growth in the middle years. Why did they succeed? What of the takeovers that they missed?
- It doesn’t deal with critical business decisions like why AIG acquired ILFC, SunAmerica, and American General. With the latter two, why was Greenberg willing to pay up? That was not his style in prior days, which was why AIG did not buy The Equitable.
- How the strategy of AIG changed from nimbleness (entering and leaving markets at will) to omnipresence (we do business everywhere.
- Not recognizing the continuing increase in debt at AIG.
- The author sees the “small” issues that led to the ouster of Greenberg, but does not find anything larger that merits attention. The Financial Products unit gets a mention, but the insolvency of the life companies does not.
- For the lawsuits that emerged after Greenberg’s ouster, the author takes a slightly pro-Greenberg slant.
Who would benefit from this book? Anyone who wants to learn about the amazing C.V. Starr. That is the main benefit of this book. If you are looking for a history of AIG, well, this may be the best book out there, but it has the inadequacies that I listed above.
Unlike other reviewers, I read every book I review, and in the few cases where I scan a book, I disclose it. Any reader entering Amazon through my site and buying anythig there, I get a small commission. You can buy today’s book here: Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG
September 26th, 20098:08 am at
Passing along a couple of interesting links I recently came across that shed more light (for me at least) on what exactly happened at AIG leading up to the crisis:
http://economicsofcontempt.blogspot.com/2009/09/risk-held-at-aigfp-was-not-surprise.html
http://www.purearb.com/purearb/wp-content/uploads/2009/08/desco_market_insights_vol_1_no_2_20090706.pdf
September 26th, 20093:34 pm at
good pieces both. Thanks, Josh.
September 26th, 200910:57 pm at
I apologize in advance for what I’m going to say, but it’s a pet peeve of mine.
You meant to say “skim” instead of “scan”. If you scan a book, you’ve read every word.
Sorry. You may now return to your regularly scheduled blogging.
September 26th, 200911:33 pm at
Highgamma, I appreciate your point, but in modern English scan and skim can be synonyms in the way that I used “scan.” A scan is cursory; when I read a book, I read quickly compared to most people, but it is not cursory. I drink it in and dwell on it. I try to read every word, unless it is something that I am so familiar with that I could have written the book, in which case I skim to see if the author has gotten the salient points.
September 27th, 20093:36 pm at
Uh, no. The synonym for scan is scrutinize. You can look that one up, too. Modern English or no.
William Safire died today. I only respond as a tribute to him.
September 27th, 20093:48 pm at
Consider this a formal request to review “End the Fed” by Ron Paul. The book was released on September 16, 2009.
Thanks for all that you do.
September 28th, 20099:07 am at
Will look into it, though his publisher does not make it easy to get a review copy.
September 28th, 20099:24 am at
Scan has more semantic range to it than you admit — you have the main meaning, I agree, but the word has enough range that my meaning is included as well:
http://www.thefreedictionary.com/scan
English is a tough language because context plays a role in helping us understand the meaning of vague words.
September 28th, 200911:06 am at
Another gap I’d love to see filled: How on *earth* did Martin Sullivan gain the confidence of Hank Greenberg such that he ended up succeeding him as CEO?
A theory: Greenberg did not tolerate dissent, and thus by the end of his tenure he was surrounded only by yes-men.
September 28th, 200911:54 am at
Daniel — that is a theory of mine as well. My twist on that was that they compromised the accounting as a result.
As for Sullivan, he was competent over divisions for internal management, but not made for public interface with investors.
September 28th, 20092:23 pm at
Neil occasionally is a nickname for Cornelius.
September 28th, 20092:44 pm at
I feel *so* dumb. Cor-NEIL-ius. Ugh.
