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After serving for the United States in World War I, 27-year-old Cornelius Vander Starr traveled to the Far East with only 300 yen in his pocket searching for fame and fortune. He found it in Shanghai, China in 1919. By the time he was finished he had amassed a multi-billion dollar company named American International Group Inc. (AIG)
Starr loved the bustling international commercial center of Shanghai and established his business niche by founding a small insurance agency, American Asiatic Underwriters (AAU). His first company represented a number of American insurance companies and initially offered fire and marine insurance coverage.
The success of AAU led Starr to set up the Asia Life Insurance Company (ALIC) and within 10 years he had established offices across China, Hong Kong, the Philippines, Indochina, Jakarta and Kuala Lumpur. The key to the rapid growth of Starr's companies was his willingness to hire, train and promote local people to managerial positions, a practice that remains at AIG today.
In 1926, Starr opened his first office in the United States - American International Underwriters (AIU) was based in New York and wrote insurance on American risks outside the United States. The business began modestly enough, but provided the chance to diversify business risk.
Starr's insurance companies performed well until World War II, when business in the orient became difficult. In 1939, Starr moved the company headquarters to New York and also began a successful expansion into Latin America. After World War II Starr not only rebuilt in Asia, he entered into business in Japan and established a presence in Europe.
One of the companies in Starr's expanding network was the Philippine American Life Insurance Company, which was incorporated in 1947. Later renamed the Philippine American Life and General Insurance Company, Philamlife is now the largest life insurance company in the Philippines.
With his business expanding around the globe, Starr and his board decided to split company operations into domestic and international groups. The domestic business would be headquartered in New York and the international business would be consolidated and based out of Bermuda.
Bermuda offered a stable political environment, a fair legal system, tax incentives and close proximity to the United States. By the mid-1950s AIG, as it was now called, had 300 employees working out of its Bermuda offices. AIG also received a windfall of sorts in the 1960s, when political instability in the Bahamas led a few large oil companies to move the base of their operations to Bermuda.
Two of AIG's major companies were entirely managed from Bermuda, including American International Reinsurance Company (AIRCO) and American International Underwriters Overseas, Ltd. (AIUO). The latter became the parent company for general insurance interests outside the U.S. AIRCO owned the life insurance companies, managed their investment portfolios and acted as a professional re-insurer for both American International companies and third party risks.
Starr died in 1968 at the age of 76, but his penchant for being a global entrepreneur remained at AIG. The Bermuda operation of AIG became an industry leader in developing new initiatives including finite risk insurance in the 1970s. The Bermuda operation also managed a number of joint ventures with insurance companies in socialist countries such as China, Hungary, Poland and Romania.
A forward thinker, Starr established The Starr Foundation in 1955. He then left his entire estate to the Foundation, which is now one of the largest in the U.S., holding assets of approximately $4.78 billion. In 2002 The Starr Foundation made over $245 million in grants to areas that included education, human needs, public policy, culture, healthcare, medicine and environment.
AIG, which celebrated its 50th anniversary in 1997, is the leading international insurance and financial services company in the world. With operations in approximately 130 countries and jurisdictions worldwide, the company now holds assets of over $561 billion.
And it all began with only 300 yen.
For more information about The Starr Foundation please visit:
http://fdncenter.org/grantmaker/starr/
For more information about AIG please visit:
http://www.aigcorporate.com
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