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Interview conducted by JACK ROBERTS, former editor-in-chief of Risk & Insurance® and Executive Editor MATTHEW KAHN.

ON SELECTING RISKS

It's not a black and white thing. You have a sense of what you want. You don't want to roll up the company with indefinable risk. At the end of the day, you have to balance the risk with whether you expect to receive an underwriting profit. But you have to understand the risk.

You say you rely upon people to bring you opportunities. Let's say, for example, that somebody came to you and said "Mr. Greenberg, we want to write more mold coverage." What is your approach to evaluating that opportunity?

First, is it a single risk or is it a risk that could have a big tail and thousands of risks that could have the same problem. You have to look at a single risk or a multiplicity of risk coming out of the same event; that is the problem. This is the problem in the pharmaceutical industry. You have to be very, very thoughtful about risks like that.

Where do you feel comfortable today, in terms of underwriting new business?

We're expanding constantly the number of classes of business that we specialize in. We've been in the marine field and we have been there for a long time. We operate globally in that area. We're in the energy field. It's a good opportunity because the world is constantly looking for new energy sources. We're constantly researching what opportunities are there. We have a reputation there. We're big in the aviation business, and space launches. We're big in the accident and health area, and construction.

How do you look at the North American market?

Rates are going up in some classes. Other classes are down. We're not going to chase business downhill in terms of rate. Our job then is to be inventive and creative finding areas that have not been hit by price cutting.

At this point in the cycle, do you think some of your competitors are becoming too aggressive and taking risks that they should not?

Some are. There are some that are doing that. Some are behaving better than others.

ON BUILDING AN ORGANIZATION

How do you get the most out of people rather than systems?

You have to build a culture in an organization. Leadership can't be discounted. A good leader makes people perform better than they would otherwise.

What are the characteristics of that good culture?

People who really understand the business and take pride in what they do. They have to know what the basics of the company are. They have to know what is expected of them. And they have to live up to those expectations and beyond.

You have a reputation of getting people who work for you to work really hard. How do you do that?

Because I work really hard. You lead from the front not the back.

ON CREATING NEW PRODUCTS

You were known for, in effect, creating certain kinds of insurance such as directors' and officers', employment practices liability insurance, and environmental insurance. How did it happen?

Take directors' and officers' for example. Actually what happened there, the then president of Marsh came to see me. He said there is a growing need for directors' and officers' liability coverage. There is only one underwriter doing it and he's in London.

So I went over there and talked with him. I came back and we did some research on the cases that had been brought against directors and officers. We wanted to find out how much liability really was out there. What was the need for that coverage and how would that need grow.

I thought, yes, it will grow. I had some people working with us who had the talent and vision and the relationships with brokers, so that we could pick and choose the risks we wanted to write. I could also arrange reinsurance through Lloyd's.

ON MANAGING PEOPLE

What about evaluating people. What qualities do you look for?

That's a personal thing, but either you have the skills or you don't. You're not right all of the time, but you have to be more right than wrong.

How do you identify good people?

You look at their background, obviously. What's their communication background? Are they telling the truth. It also depends upon the job you are interviewing for. What are the expectations for the person? You have to know what your own expectations are. Is that person going to meet those expectations? Compromising on that is not a great idea.

Your successor, Martin Sullivan, seemed so different from you in personality and approach?

There are a lot of reasons for that. First of all, the intent was that he'd be the CEO (of AIG) and I'd stay on as the chairman for at least two or three years to see how he performed. If he didn't perform, he wouldn't have been there. And he wouldn't have done the dumb things that he did. But (Eliot) Spitzer had a different idea. (He wanted Greenberg out of AIG). And the board went along.

October 15, 2011

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