The Biggest Loser: Hank Greenberg

September 17, 2008— -- Everyone who owned shares in AIG took a hit Wednesday, following the announcement that the iconic insurance company was the latest casualty of the financial crisis -- but no one lost nearly as much as the firm's former CEO, Maurice "Hank" Greenberg.

In his 27 years as CEO of AIG, Greenberg was credited with vastly expanding the company, turning it into the world's largest insurance firm. Forced to relinquish the reins in 2005 amid a fraud investigation by then-New York Attorney General Eliot Spitzer, Greenberg went on to run two companies that remained highly invested in the American International Group (AIG).

In the matter of a weekend, however, Greenberg watched the company he built over a lifetime collapse and, with it, his personal fortune and greatest legacy.

His genius, said Ron Shelp, a former AIG executive and the author of "Fallen Giant," a book about Greenberg, was in putting the company into sectors other than insurance. In addition to being the world's largest insurer, it is also the world's largest lessor of airplanes.

But that diversity would ultimately bring about the company's downfall. Though AIG's traditional insurance departments remain profitable, it was its London-based financial services group that threatened to destroy the firm. The group sold credit-default swaps, instruments that allowed investors to insure securities backed by the same bad mortgages responsible for the ongoing financial crisis.

Greenberg on Wednesday -- just hours after the federal government announced it would provide AIG an $85 billion loan secured by an 80 percent stake in the company in an effort to prevent its collapse -- appeared on ABC's "Good Morning America" to decry the actions of the current board and to admit that he had lost much of what he had built over the course of four decades.

"I've lost my entire net worth, literally my entire net worth," Greenberg said. "I worked 40 years building the greatest insurance company in history, one that everyone in the world envied – who was in this industry."

Greenberg, who privately or through the companies he runs still owns a private jet, an office on Park Avenue and homes in New York City and Brewster, N.Y., likely lost 95 percent of his total assets, or somewhere in the neighborhood of $3 billion, analysts say.

As the editors of Forbes today made last-minute tweaks to the list of America's 400 wealthiest people, Greenberg was cut from the club. To make the list, individuals must have at least $1.4 billion.

"[Greenberg] is the largest shareholder in the company. Taken together, he and the companies he runs -- C.V. Starr and Starr International -- own 313 million shares of AIG combined," said Ben Silverman, director of research at Insiderscore, a company that tracks executive stock transactions. "Right now that stock is worth $2.05 a share or $625 million. If you go back to the market on Dec. 31, 2007, we're talking about holdings valued at over $17.9 billion."

While he might not end up out on the street, the company's precipitous decline took the former CEO by as much surprise as it did the other shareholders. He last sold shares of AIG in October 2007.

"He is well aware of what is going on in the insurance industry. He knows how important AIG is to the sector. He wasn't selling stock, he was holding on to it," Silverman said.

On Wednesday, Greenberg said he would "get by" despite the loss.

"I'll get by," he said, "but my heart goes out for the thousands and thousands of employees and their families who are shareholders, and not only in the United States but worldwide."

He blamed AIG's current board of directors. He has been at loggerheads with the company since stepping down in 2005 and has been a regular critic of its management.

"After I left the company, all the risk management procedures that we had in place were obviously dismantled," he told "GMA." "I can't explain that. There was a new board of directors. One should be asking that board of directors what they did and why."

Speaking on the condition of anonymity, one board member said Greenberg was bitter and lying, and called the former CEO's comments "unadulterated nonsense."

"[It is] extraordinary he would go public and say something like this. He's just trying to purify his reputation," the board member said.

Shelp, who for more than a decade occupied an office down the hall from Greenberg at AIG, said he believed the company began investing in credit swaps tied to mortgages while Greenberg was still in charge.

"He was CEO at the time. The company has been doing credit swaps for more than three years," Shelp said. "I don't know what risk-management control would have been removed, but it doesn't make any sense that the board would do that."

Greenberg's losses come just four days after he settled a lawsuit filed by some AIG shareholders, including the Teachers Retirement System of Louisiana, over the same shady dealings that got him investigated -- but never prosecuted -- by Spitzer.

"The truth is, I can't help but feel sorry for him," said Stuart Grant, the lawyer representing the Louisiana teachers who won a $115 million settlement."Ninety-five percent of his assets have disappeared. Maybe he's left with $1 billion, maybe several hundred million, to most mortals that's a heck of a lot of money, but think about all that work over all those years, and now it's all gone."

ABC News's Eileen Murphy contributed to this report.