AIG has agreed to sell Asian life insurance subsidiary American International Assurance (AIA) to UK insurer Prudential for $35.5bn and American Life Insurance Company (Alico) to US insurer MetLife for $15.5bn.
"Of course I was sad to see AIA and Alico sold. They were anchor companies at AIG,"Greenberg told Reactions. "But they are doing what they think they have to do, so I can't comment."
Greenberg is busy building up his present firm CV Starr & Co and is open to doing acquisitions. However, he says he was not interested in buying AIA or Alico. Greenberg has previously described pan-Asian life insurer AIA as the crown jewel of AIG.
Greenberg believes the US government must change the terms of its bail-out of AIG if the firm is to pay back the money it owes.
"I thought the terms were unnecessarily harsh and I think in order to have the taxpayer paid back some changes are necessary in the bail out terms, and I hope that will take place," he says. "You have got to extend the loans over a period of time. And you have got to get the government out of owning roughly 80% of the company. You can't raise private capital in a government-owned company."
Greenberg does not criticise the work done by AIG's chief executive officer Robert Benmosche, however.
"I think Benmosche is doing his best to try and crawl out of government debt and you can't do that overnight, given the terms that exist. As I said, the terms have got to be renegotiated so that you don't have to sell off all the assets of the company."
Greenberg adds that the pay restrictions imposed on bailed-out firms by Kenneth Feinberg, the US Treasury's special master for executive compensation, do not help. "You can't have somebody telling you what you are going to pay your people if you are going to get good people," says Greenberg.
When asked whether AIG can pull through and pay back all of its debts, Greenberg says: "I think it will ultimately, yes."
But AIG will be a lot smaller than when Greenberg left the firm in 2005. "I think it will retain principally the property/casualty business and the domestic life and retirement savings business," he says. "Those will be the bedrock companies. And those are not small entities. They are a pretty big size."
Speculation about AIG's insurance units slashing prices has been rife since it was originally bailed out in September 2008. Reserves were also increased for Chartis, AIG's general insurance division, by $2.3bn in the fourth quarter, primarily for casualty and excess workers' compensation lines for accident years 2002 and before.
"They were taking down reserves the last several years so to start putting up reserves I don't understand it," says Greenberg. "But not being there, how can I tell you? Are they moving IBNR around from year to year? I don't know what they are doing."
Greenberg had been involved in a bitter dispute with his former firm since resigning in 2005 amid an investigation of finite reinsurance deals AIG did with General Re. Arguments between AIG and Greenberg erupted over ownership of items, not least over the ownership of Greenberg's present firm CV Starr.
But in November last year, AIG and Greenberg announced a settlement to release each other from all claims. AIG also agreed to reimburse Greenberg and other parties for legal expenses up to $150m, as well as return personal possessions including a treasured Persian rug.
Greenberg is happy that the disputes with AIG are now firmly behind him. "I think the chapter on that is closed," he says.
Reactions was speaking to Greenberg on March 11, the day after he testified about controversial deals involving AIG and General Re.
New York State Supreme Court Justice Charles Ramos ordered that Greenberg testify on the alleged sham reinsurance transactions that Gen Re entered into with AIG in 2000.
However, Greenberg refused to comment on the issue.
This is the first of three parts of Reactions' exclusive interview with Hank Greenberg. The second part on the future of insurance regulation will be posted on Tuesday March 30 and the third part on the strategy for CV Starr will be posted on Wednesday March 31.
The full interview, including interviews with CV Starr's divisional presidents, will appear in Reactions' upcoming April issue.