not important. she has the ability to stay focused on the big picture house what is happening in afghanistan what they do in the middle east impact what they tried to do in asia. what is the strategy? i have to carry my own suitcase but that allows her to stay focused. you don't have to worry if lunch will be served to sink about the bigger picture.

>> good evening. would welcome you to the center for national interest and i would like to think the president to bring us together this evening for that i would also like to welcome hank greenberg and first for your dedication to the center for many years starting at the creation and development and advancement devoting time and money and passion to the center for the national interest. hank greenberg has not only

made a financial contribution to this center intellectually and in many capacities but has also made a substantial contribution was vice chair of the council on foreign relations. i happen to be the head of the washington office and my first meeting with hank greenberg by the way was an interview. so we were sitting outside of hank greenberg office he said we're going in to meet hain't greenberg he is a renowned businessman who has made a tremendous mark on the rise of a.g.. he is very direct and

no-nonsense and he said major you are directing and look him in the eye and get to the point*. the good news is i got the job. [laughter] but that was my eighth introduction to hank greenberg. today we're gathered to mark and congratulate hank on his book "the aig story" i think it underpants -- underpins what he is about. i like kissingers inscription in the back that he talks about you being a major figure in the 20th century that is principled, strongly committed and does not waver in a time of crisis.

i think that substantiates that. it is not delay a chronicle of his personal story from the departure of an army officer in the korean war and injury into the insurance industry industry, but the head and ceo of aig into what became literally the largest insurance company in the world was $1 trillion worth of assets. the other side of the story is instructive. the substantive side of the book has a profound question about government regulation

in the financial industry. what are the unintended consequences? and what it does actually the rise and fall of the aig. on the personal level, organization and a business that is a national asset for the united states. it is a must read but i must turn to han't greenberg. [applause] >> thank you very much. i also want to recognize dmitri. nine live-in new york and he lives in washington and nitride to talk frequently.

so there's no misunderstandings i also want to recognize him we work together for many years and ran companies in the philippines i'm glad he has been recognized. why did i write this book? there were hundreds of thousands of people at aig who worked with me for years and i believe this story needed to be told. going public at $300 million market to value when i left

march 2005 it was 180 billion. we had great grows and it was accomplished by many people. many have left. but agee was theo grosse of a small collection of the insurance companies and may join him and i succeeded and took them public and called them aig but the star companies was never called ag they founded it they were too small to put in and i'm thankful we did that. [laughter] but it made no sense at the

time. we grew rapidly. everything's in the genes if you recall was maverick sort innovators we broke the typical traditional insurance underwriting with the automobile or homeowners is very little growth or going to lloyd's of london we believe we should be a market in the united states to accomplish that. on the life insurance side we have a small company that did not stay small for a long.

as he did with other companies we had a company in many countries and roamed the world. we brought a new vision to the industry with products and management structure. it was a great company but most companies have an agency department and underwriting department. if they lost many, one would blame the other. we introduced in a profit structure one person was in charge of the products, marketing, there was no blaming anybody else. the structure was so imbedded at aig the people

who understood stayed with the company and those who could not live that kind of a structure to not be held accountable went off. that made us stronger. this operated worldwide. there was a culture, it doesn't happen automatically. you create a culture. it was a winning culture. senior people to work together very well and the board of directors initially made up of inside people, and outside people, all that changed with the first part of the book but to show what we

meant to the country. a couple that i will talk about briefly, a book was written that was about a russian submarine that went down in the northwest pacific and the russians did not know where the hell it was and could not find it. the u.s. knew exactly where was and wanted to recover it because code books were important and technology was important. there is a meeting in my apartment in new york this the day and a of the howard

hughes they had to build the vessel with a hole in the center to scoop up the sub but what if the russians decided would fire on it? we could not bring it to hawaii. they had to find a pacific island tenuous position -- possession and build the pork. we provided the insurance not many companies would have the vision to have the underwriting skill to take on a project like that i was

in hong kong with the board meeting of aig and i had a call that the "l.a. times" had broke the story. obviously the did not provide the intermission we had even if i got technology at of it. here is one example of our value to the country. there are many stories like that. i was asked by a high government official to meet with president marcos to buy a new very well with our relationship he served more terms as president he

declared martial law. a revolution was possible and then on dialysis. one was said of the naval forces had retired. john reed was the head of citicorp in the philippines. we had dinner with the president i decided i would wait until dinner was over. [laughter] use step down at the top of

the game rather than and lose. i will win the election but nobody would believe that. step down while you can. he went on and the election was held there was uprising and it went to hell and to take him out by a helicopter where he died. how many insurance companies provide those services to the country? [laughter] there are many others. but the point* is to say how different we were in the valuable assets to the country. thousands of people made that possible.

the second part is what happened. new york disgraced attorney general, than decided there was a lot on the books called the martin act enacted 1921 designed to go after bootleggers, it is silent as to intent. if you accuse somebody of a fraudulent act, he took the position to prove intent. if anybody made a mistake and forces him into submission date go to trial.

they use that against many companies and agreed to settle to pay the fine. i would not do that. and two things to mention, i was on a conference call with securities analysts and one asked me what is the environment? this is after enron with the sea change of reagan as a one negative regulation. trying to explain the severity of the regulatory environment. it did. sarbanes-oxley brought about corporate governance and directors felt vulnerable so

they wanted their own lawyer so the ceos were downgraded to the management of the institution. in many cases it was not good. when a board would try to run a company operating in 130 countries and management knows moment to moment, no matter how diligent, it is difficult to have a detailed knowledge of what it takes to run the company. the management travel constantly and our regional executives reporting was on

a real-time basis. i could tell ag results by today's anything and wanted to know so strapped a quarter we would know how we we're doing. so in the year 2000 we had transatlantic that we started the year before was a 40% interest i was trying to catch up with senior managers we will show a

reduction of reserves it may be down 50 million. what does that mean? when you have reserves, when you pay claims is the normal process. the reserve comes down. transatlantic and we just consolidated had catastrophe losses so they went for the out of 56 million and that is a consequential number. someone said that the finite reinsurance treaty that says this is common in the

insurance investing with premiums of losses for the finite period of time and in order to be counted as reinsurance we have a 1% risk factor. we have 500 million of loss reserves from a born buffett company they are the largest reinsurer. it was logical to talk with them. animated call to the president and he said he would check if they had the proper porfolio. he said yes. i was out of it after that.

i would have people follow up on that. buffett had a company in virginia that led to the company's bankruptcy. the two top people went to jail for medical malpractice insurance company. buffett was asked did he do the of their deals? when he referred back five years ago approved every year by the auditors and for the transactions they had done. he did not know reserves from premium. baseball would be the same thing.

he had no knowledge but he used that to bludgeon the board. my friend was on the board at the time, the only to that fought this silliness. and they withdrew their approval. if the auditors don't sign off that will cause you shakiness in the value of the company. we were triple-a-rated in a growth pattern that was the envy of the whole industry.

it was clear spitzer would demand my head. the change of corporate governance really became a great example and the destruction it led to was unbelievable. there was a meeting held with dick be the and spritzers jogging partner. and the other firm was a corporate lawyer was an associate. it was even-handed. they had a meeting to decide i should step down.

this was made of the annual meeting and it was in march and i would remain as the chair a couple of years to see how the transition would work. spitzer demanded by the then. i could remain as chair and i said no. they came back and said you could stay as chair. i had to go to malaysia i decided on that trip i would not remain as tear so to write a letter of resignation. bill cone asked to the auditors does this affect

shareholder equity or earnings? he said no. he approved it five years in a row. it was clear they are getting pressure but circle that there was no effect on earnings so what is the difference? so it is clear that spitzer one aig over then paid $1,600,000,000 that led to a class action suits. think about what this man

did. national television, accused me of criminal fraud without ever having invited me me, presenting any evidence. john whitehead wrote the op-ed in "the wall street journal" commenting how can the attorney-general do this to america's leading co? spitzer called and threatened him after that. clearly in corporate america the boards lost power, a ceo hp, the board's took over responsibility was that good for the economy?

it is one of the reasons i have written the book. we're at a crossroads. it is disgraceful what they have done. i would not settle for a dime. i will not do that. we're in the courts of appeals the highest court in new york of the martin act as currently written and being used is constitutionally proper. it can't be you have to prove we did something wrong, intent. i was so far away from the transaction -- transaction but the justice department looked at me for five years. five years. nothing improper.

after that, now you go aig is coasting along on its strengths but all of the risk management controls disassembled. we had an enterprise risk-management system and it has been claimed aig had so many different companies have could anybody manage it? diversification is not bad but it is a proper strategy for a company. we had geographical and business interests so if one thing goes wrong the others carry it to and for decades

to claim that diversification to become a simple insurance company company, will get their records. terrible. there is nothing wrong with the strategy. . .