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June 15, 2007
The friends of Joe Wilson (updated)
Do you ever wonder what Joe Wilson's up to these days? Over at Just One Minute, JOM'er Rocco found this:
Thomas Lifson adds:
AIG is one of the biggest investors in the world, responsible for placing a relentless stream of capital (totaling in the hundreds of billions of dollars) gushing its way from highly successful insurance operations. AIG bought International Lease Finance Corporation, a huge lessor of airliners, to have a profitable opportunity to invest billions of dollars a year in commercial aircraft, for instance. No company this big lacks connections.
One cannot discuss AIG without mentioning Maurice R. "Hank" Greenberg. As of 2005, he no longer has anything to do with AIG, but he built it and his people still run it. Greenberg is a titan of international finance. (See below.)
As an outlet for investment capital, AIF is small potatoes. But it may lead to extraordinary future profit opportunities while mobilizing capital from sources that do not put profits first. AIF is headed by an AIG career guy, Phillipe Heilberg, who is also a managing director in the Hong Kong office, apparently running a rock and rolling part of the company, metals trading and FX trading. Fast-moving, closely connected to politics, and able to make or lose fabulous sums of money. If he is an old hand in Asia, he may also be familiar with business environments in which the courts and police cannot always be relied upon. And you never know the sort of friends you might make over the years.
AIG used to be headquartered in Hong Kong, where it moved to from Shanghai, until it moved to the United States after growth there altered its center of gravity.
AIF has assembled a package of funds from quite a cast of characters. It's too early to draw conclusions, but Wilson certainly is positioned for interesting opportunities for a connected and famous enemy of the Bush presidency.
A note on Greenberg
Greenberg (also sometimes spelled "Greenburg") rose to the heights among the world's biggest investors by becoming the protégé and successor of Cornelius Vander Starr, an overseas American entrepreneur who built an exceedingly lucrative insurance presence in Asia. Read this admiring Fortune Magazine profile of Starr in the mid 1930s, as one of the "Men of Shanghai."
Greenberg was sent to the United States to make American insurance operations perform better ion the early 1960s. The rest is history. Using a low overhead sales structure (relying on independent agents who were paid commissions), Greenberg avoided the periodic price wars that drove down his domestic insurance competitors' profits.
When insurance rates were driven to the point where underwriting profits were nil and investment income had to subsidize underwriting losses, Greenberg refused to write insurance at such low prices. His independent agents tightened their belts, wrote less insurance, and got part time jobs at the hardware store. His competitors, meanwhile, with their internal sales forces to pay, kept writing higher volumes of insurance, deducting underwriting losses from investment profits.
As a result, Greenberg was able to earn a better return on his capital. AIG was significantly more profitable than competitors because it didn't lose money on underwriting, so more of its investment profits went to the bottom line. Attach the concept of "better return on capital" to the vast pool of capital found in the world's insurance business, and you have a recipe for growth.
Like Starr before him, Greenberg seems to have been a very smart and shrewd spotter of opportunities, as with his purchase of ILFC.
Greenberg's formal ties to AIG in 2005 were severed by the board on 2005, when New York Attorney General Elliot Spitzer began criticizing the company and eventually (according to Wikipedia)
Greenberg is now head of C.V. Starr & Co., Inc., a multi-billion dollar investment company named for his mentor.
Updated: Clarice Feldman writes:
Rocco has found more: