(Updates with comment from Starr in the seventh paragraph.)
March 21 (Bloomberg) -- Maurice “Hank” Greenberg, who built American International Group Inc. into the world’s largest insurer before his ouster in 2005, is leading an effort to help Grandparents.com Inc. pitch coverage to seniors.
Greenberg, 87, is personally directing the website’s efforts to establish deals with insurers to offer health, auto, home and life coverage, Grandparents.com said today in a statement. The company operates an online social media site that rivals services offered by AARP, the organization that promotes the interests of older people.
Greenberg pioneered the practice of selling coverage to groups of retired teachers, according to his autobiography published this year. The efforts paved the way for the establishment of the AARP, the executive said in the book, “The AIG Story.”
“Hank basically says ‘I can recreate what I did at AARP,’” Joseph Bernstein, co-chief executive officer of New York-based Grandparents.com Inc., said by phone. “He’s putting in personal time and effort. He picks up the phone and he calls the CEO of you-name-it.”
Bernstein said it took more than two years of negotiation to reach a deal with Greenberg, who told the company it had to assemble a top management team, hire pitchmen and raise $5 million before he’d work with them. The parties reached an agreement in January that went into effect this month.
Grandparents.com will pay Greenberg’s Starr International Co. $80,000 a month and commissions from future policy sales, according to Bernstein. Starr is also in discussion with the site to take a 25 percent stake, he said.
The company has a market value of about $13 million, according to data compiled by Bloomberg. Leilani Brown, a spokeswoman for Greenberg, described the arrangement as a “strategic alliance” and declined to comment further.
The website added former CNN talk-show host Larry King and author Deepak Chopra as spokesmen as it seeks to build its base of almost 2 million users. Advertising sales plunged for Grandparents.com in 2012 amid pricing pressure, the company said in the statement.
Revenue in the nine months ended Sept. 30 fell 30 percent to $224,330, as advertising sales declined. Operating expenses more than tripled to $8.85 million, fueled by increased spending on salaries and marketing, according to a regulatory filing.
Grandparents.com said today it will “focus on developing revenue-generating activities led by an insurance division.”
The firm currently sells some insurance products from Humana Inc. Bernstein declined to mention any other insurers that may sell through the site, citing non-disclosure agreements. Grandparents.com also plans to offer a branded debit card from JPMorgan Chase & Co.
AARP offers auto policies to members from Hartford Financial Services Group Inc., life coverage from New York Life Insurance Co. and long-term-care protection from Genworth Financial Inc., according to the organization’s website.
Greenberg took AIG public in 1969 and built the firm over four decades before his ouster amid a probe by then-New York Attorney General Eliot Spitzer. Greenberg is now chairman and CEO of Starr Insurance Holdings Inc.
--Editors: Dan Kraut, Steven Crabill