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London and Bermuda have surpassed New York as the centres of the world’s insurance industry, Hank Greenberg, the former chairman of AIG, said on Thursday.
In a speech to insurance industry insiders and in an interview afterwards with the Financial Times, Mr Greenberg cited the US regulatory environment as the main reason for what he sees as New York’s decline. “The insurance world moved to New York from London. I believe it has now moved back to London and to Bermuda. You have to ask yourself why. It’s regulation,” said Mr Greenberg, who was forced to retire from AIG in 2005 amid a regulatory inquiry into the firm’s accounting and use of reinsurance. AIG later paid $1.6bn to settle the investigation but Mr Greenberg denies wrongdoing and is continuing to fight a civil fraud case brought by the New York attorney-general’s office.
Insurance in the US has historically been regulated by the states, forcing national companies to deal with up to 50 regulators, and the last two New York attorneysgeneral, Eliot Spitzer and Andrew Cuomo, have both been hard-nosed about questioning industry norms.
Mr Greenberg now heads CV Starr, an investment vehicle that owns four specialised insurance agencies. While the firm’s main office is in New York, Mr Greenberg said, “I’m doing more business outside of New York than I am here.”
Bertil Lundqvist, the firm’s general counsel, praised the UK’s Financial Services Authority as a “more predictable regulator” and said the firm is “focusing the business out of London whenever we can. That’s a better place to be.” CV Starr is looking for investments, and Mr Greenberg said he remains interested in newspapers, including the New York Times, in which he owns a stake. But he said the company’s dual class stock structure stands in his way. “I’d like to [buy it] but they won’t change the stock structure,” he said.
Mr Greenberg also used his speech to the Schiff’s insurance conference to offer a rousing defence of the way he handled AIG’s accounting and to roast his former board for restating more than $3.9bn in earnings. AIG declined to comment.