Governments had to come to the rescue of many firms during the 2007-09 financial crisis and one of the largest rescues was that of American International Group (AIG). Unlike most of the other firms teetering on the brink, AIG was an insurance company and not a bank. It was also a particularly international firm; not so surprising perhaps given its name. Indeed, the company was founded outside the United States, the foreign creation of an American abroad. Its founder, Cornelius Vander Starr, established what would become AIG in China, almost as foreign a land as possible from the one he came.

Early Career

           Cornelius Vander Starr, the globe-trotting founder of what became American International Group, was born in Fort Bragg, California in 1892. C.V. Starr, as he preferred to be known, dropped out of the University of California, Berkeley to open an ice cream parlor in 1911, a humble start to his entrepreneurial career. After selling that business, he began selling automobile insurance on the streets of San Francisco for the Pacific Coast Casualty Company. He held this job while reading law under a local attorney, passing the bar exam in 1917 without having attended law school, a once common practice now rare or impossible to achieve.

           Now an attorney, C.V. Starr helped form an insurance broker named Shean & Deasy but his involvement in this project too was short-lived; Starr enlisted as a private in the army in March 1918 but he was never deployed as the First World War then underway would end that same year. Starr left the service a sergeant after just a year. Still looking for a job that would take him abroad, he found work with the Pacific Mail Steamship Company which took him to Asia.


           During his time with the Pacific Mail Steamship Company, Starr was based in Yokohama, Japan. Bored with this after just a half a year, and at least in part because he never quite got along with his boss there, Starr left Japan. He moved to Shanghai in China where he found himself once again in insurance. In Shanghai, he took over the insurance business that another American from California, Frank Jay Raven, had spent fifteen years building in the city.

           The young Starr also formed a new firm of his own, American Asiatic Underwriters (AAU), in 1919. The company sold policies covering a broad range of risks. Coverage sold included insurance against rainstorms sold to a baseball team and a policy insuring the cargo of a Czech ship carrying refugees from Vladivostok in Russia back to Europe during the Russian Civil War. Of course, the young C.V. Starr did not have the reserves himself to cover potential losses but this was not the firm’s business. Rather than covering its clients directing, AAU was essentially a Chinese agent for American insurers who actually carried the risk. What capital he did need to establish the company, he funded with his proceeds from the earlier sale of Shean & Deasy.

           Shanghai, which was then divided into foreign ‘concessions’ that in some ways resembled colonies, was a desirable place for foreigners to do business. The government permitted the establishment of companies incorporated under foreign laws; thus, AAU was essentially an American company headquartered in Shanghai, perfectly situated to be a conduit between American insurers and opportunities in China. New to the city himself, Starr hired a local, Zao Pah Siu, who brought him business.     

           Starr was not only active in Shanghai’s insurance sector; he was also significant to the city’s newspaper industry. He combined an American and a British newspaper already in print for a combined $12,500 to form The Shanghai Evening Post and Mercury. The paper would survive the Japanese occupation, during which it was a front for American spies in China, and was only shut down following the communists’ victory in the Chinese Civil War. As it happens, just like his newspaper, Starr’s insurance company was also employed to gain intelligence; insurance firms had access to documents pertaining to desirable military targets.

           Though Starr himself never became proficient in Chinese, his newspapers served more than just the city’s English speakers as Starr launched a Chinese-language version of the paper. Outside of insurance and journalism, Starr engaged in land speculation, a common pastime for foreign businessmen in the city. He did this through the Metropolitan Land Company, which he owned, and through the Asia Realty Company, which he co-owned with Frank Jay Raven.

Cornelius Vander Starr

Asia Life Insurance Company

           Up until now, Starr’s business was largely a Shanghai operation serving only foreign business interests in the city. However, that changed when, in 1921, Starr formed Asia Life Insurance Company out of American Asiatic Underwriters. Asia Life would sell life insurance to Chinese consumers, opening up a much larger and unserved market. Locally collected actuarial data was not yet available in China but Starr predicted that improvements in life expectancy were on the way.

           Nonetheless, Asia Life did not only offer products protecting against premature death. The firm’s most popular product was a twenty-year endowment policy that insured against early death but also built value that would be paid out at maturity if the insured outlived the policy. The product itself was not new but other insurers in Shanghai hadn’t marketed such policies to locals. Asia Life began selling to the Chinese in Shanghai and soon opened offices in other cities, from Harbin in the far north to Guangzhou in the south. By the end of the decade, the company would expand abroad, with offices opened in Saigon, Jakarta, Singapore, Kuala Lumpur, and elsewhere.

           Where the company found new markets, Starr gave locals management and board positions at the company. Some of these jobs took their holders around the world. Many of those working for Starr in China were relocated to Hong Kong and New York after the communist victory in the civil war. That said, some of these Shanghai employees were neither locals nor Americans; more than a couple were refugees fleeing Russia’s Civil War which ended in the early 1920s, just as Starr’s operation was taking off. They may have been former diplomats or soldiers but after finding their way to Shanghai, they found work with Starr’s insurance business.

           One of the refugees was Basil deBordesky, a Russian naval cadet who was forced off his ship for being against the revolution underway in Russia. He went on to run AAU’s Saigon operations. Another émigré, George Moszkowski, was a Polish cavalry officer who also found himself on the losing side of Russia’s civil war; he eventually led the company’s Latin America operations, a part of the business not yet in existence. Still another was Artemis Joukowsky, a Russian diplomat who also wound up in Shanghai; in addition to leading the company’s future Middle East business, he would become its CFO.

American International Group

           American International Group was essentially an amalgamation of the scattered insurance firms Starr founded. The business expanded outside of Asia in the mid-1920s, first to the United States. Asia Life opened a subsidiary in New York in 1926 called American International Underwriters (AIU) Corporation. This company wrote insurance policies covering foreign risks for American customers and improved the company’s statue among New York investors. Starr’s firm began to acquire other American insurance firms in the 1930s, adding to the relative importance of the New York operations over time. These acquisitions transformed the company from a mere agent into a real insurer actually risking its capital.

           The business’s next great frontier outside Asia would be elsewhere in the Americas. Starr formed insurance businesses in Latin America when operations in Asia were temporarily suspended during the Japanese occupation of China. Starr saw an opportunity; the major European insurance firms that had dominated the market in Latin America were distracted and bogged down by the war underway in Europe. In time, Cuba became the company’s greatest success in the region, though operations there would be lost following the communist revolution led by Fidel Castro. As would have already happened in China by this time, another major operation of the company was lost to communist revolution.

           In any case, Allied victory in the Second World War allowed AIU to expand into Europe and Japan, initially just to serve American soldiers abroad. However, the company eventually expanded to serve the entire market. Just as it had in China, Starr transformed the business from one that served foreigners in those markets into one that served locals. By now, the firm had spanned several continents; by the end of the 1950s, AIU was active in seventy-five countries. It was this well-travelled company with its equally well-travelled chief executive that consolidated to form American International Group (AIG) in 1967.

           Starr saw insurance as a kind of self-philanthropy, providing a customer with the discipline and security that allowed them to better help themselves. His philanthropic legacy continues through the Starr Foundation. For his work and philanthropy, Starr received some honors, among them the Philippine Legion of Honor and an honorary Doctor of Laws from Middlebury College. At the company meanwhile, Maurice “Hank” Greenberg was chosen by Starr to be his successor before he died in 1968. Greenberg would lead the company until 2005. The two executives would together lead the firm for well over eighty years, from its inception until shortly before its near demise.


           That China was the birthplace of AIG can be at least somewhat surprising by itself. That its founder, Cornelius Vander Starr, left America at 26-years-old and within a few years led an insurance firm active in numerous countries is even more surprising. Early 20th century China would not have been the obvious place to enter the insurance business but this fact probably goes some way towards explaining Starr’s early success. It would perhaps be even more difficult to anticipate Starr achieving what he did in the global insurance capitals, where success was already in plane sight to everyone. It was in the less conspicuous markets where the potential was most overlooked.

More from the Tontine Coffee-House

            Learn about the start and growth of life insurance in Japan. Also, consider subscribing to this blog’s newsletter here.

Further Reading

1.      Cornelius Vander Starr, 1892-1968. Starr Foundation, 2018.

2.      Davis, Florence A. “Cornelius Vander Starr, His Life and Work.” Columbia University Libraries, C.V. Starr East Asian Library, Columbia University.

3.      Greenberg, Maurice R., and Lawrence A. Cunningham. The AIG Story. Wiley, 2013.

4.      Shelp, Ronald Kent, and Al Ehrbar. Fallen Giant: the Amazing Story of Hank Greenberg and the History of AIG. Wiley, 2009.

Leave a comment

Your email address will not be published. Required fields are marked *

Social Share Buttons and Icons powered by Ultimatelysocial