Risk & Compliance

Greenberg Company Sues AIG

C.V. Starr and Co. alleges that the insurance giant is trying to prevent Starr and its agencies from competing fairly.
Stephen TaubJanuary 30, 2006

Maurice “Hank” Greenberg and his insurance company are locked in a legal battle with American International Group Inc., the insurance company he had served as chief executive officer and built into a global giant, over who controls privately owned C.V. Starr and Co.

On Friday, reported The Wall Street Journal, Starr and four agencies it owns filed a lawsuit in a New York state court, alleging that AIG is trying to prevent Starr and its agencies from competing with the insurance giant. That same day, the paper added, AIG filed a lawsuit seeking to prevent a Starr agency from selling insurance for other companies.

According to The New York Times, Starr’s lawsuit alleges that three AIG executives, including CEO Martin J. Sullivan — sold their shares in Starr for $63 million, then tried to harm Starr’s insurance business by withholding documents, kicking Starr employees out of offices, and telling clients to cease doing business with Starr.

“It’s all about fair competition between AIG and C.V. Starr,” said Howard Opinsky, a spokesman for Starr and Greenberg, according to the Journal. AIG spokesman Chris Winans told the paper: “We’ve already taken related legal steps. Our litigation speaks for itself.”

The Journal pointed out that Starr and AIG had enjoyed a long-term relationship. Greenberg served as the chairman of Starr, which sold policies underwritten by AIG. The Times noted that Starr was also used as a long-term compensation vehicle for AIG senior executives.

These days, Starr is also selling policies underwritten by rival insurance companies, such as Ace Ltd. and a unit of Berkshire Hathaway Inc., according to published reports.

The Times reported last week, AIG sued Starr Tech, one of the private company’s agencies, trying to stop it from engaging in agreements with other insurance companies and asserting that Starr and AIG had an exclusive relationship.

AIG also sued American International Aviation Agency, another Starr agency. In this case, it is claiming that American International should no longer be selling AIG policies because their relationship was ended.

“AIG is trying to terminate some agency agreements and maintain others,” Opinsky told the Times. “Regardless, the agency relationships are nonexclusive, and AIG’s efforts to avoid competition and interfere with C. V. Starr’s successful business will fail.”