Hank Greenberg yesterday lost about $1.2 billion on his shares in insurance giant AIG, but he expects to make it back many times over in his comeback as Wall Street’s newest – and oldest – activist shareholder.
The spry 82-year-old insurance mogul was awaiting word of the company’s weak earnings following the close of markets yesterday, and expects to leverage AIG’s sudden new weakness into a shake-up of the company.
AIG, which was controlled by Greenberg until he was forced to step down last year in what he calls a regulatory “witch hunt,” said third-quarter profit skidded 27 percent to $3.09 billion, or $1.19 a share, from $4.22 billion, or $1.16 share.
Shares tumbled nearly 7 percent to $57.90, off $4.15, ahead of the earnings, and continued to dive another $1.40 in the first hour of after-market trading.
AIG said it also suffered a $352 million pre-tax charge related to junk mortgage paper.
Analysts said the bad news was good news for Greenberg because it strengthens his hand in his new obsession to shake up the far-flung insurance empire he built into the world’s largest.
“He’s got a large following and is going to get some sympathy from shareholders because they’ve also lost a lot on AIG. It used to be a $72 stock earlier this year,” said Ron Shelp, a former top aide to Greenberg an author of “Fallen Giant: The Amazing Story of Hank Greenberg and AIG.”
Greenberg is the largest-single shareholder with more than 12 percent of the firm, and knows all the twists and turns in the company’s Byzantine structure, which includes hundreds of entities.
“This is the first time in two years since he was ousted that he’s finally got a good hand to play,” said Shelp. “There’s also a nice twinge of revenge, getting even for having to give up the company he built over 37 years.”
He was accused by former New York Attorney Eliot Spitzer of setting up improper investment vehicles to help companies cover up losses, but was never indicted.
Greenberg is expected to push for two board seats and campaign for asset sales to win big dividend payments for shareholders.
“He knows things others don’t know about the company,” said Shelp. “There’s a lot he can shed.”
AIG had no immediate comment last night.