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The Starr Foundation

The Starr Foundation

The mission statement of the charter for the foundation that Cornelius Vander Starr began in 1955 was appropriate for an insurance magnate who had spent the previous forty years redefining the dynamics of risk venture and risk management. The foundation recognized the value of initiative and taking risks, as well as the importance of managing risk to a positive result. The Starr Foundation defines an umbrella of concerns that are united by Starr’s conception of the importance of risk and how an ingenious individual (or a commission or a research team) can conceive of solutions to pressing problems only by taking a chance on investigating solutions that were previously ignored or dismissed.

The majority of the foundation’s grants are awarded to projects in the Manhattan area of New York City. The organization encourages projects in six areas. In education, the foundation provides need-based scholarships and student exchange programs. In the area of medicine and health research, the organization offers grants designed to help New York City hospitals serve the underprivileged. Human needs projects include literacy programs, job training, computer skills introduction, care of the elderly, housing for the disabled, and refugee relief. In the area of public policy, the foundation supports the work of commissions that investigate the adoption of democratic principles in countries in which individual freedoms have been contested or denied. The organization’s culture and arts projects include financing for museums and community-based arts programs geared to particular groups of people, such as the disabled, minorities, or children. Environmental initiatives include funding for research projects and committees that are actively involved in conservation, ecosystem management, and the preservation of irreplaceable wetlands in areas being developed.

Unlike many foundations with grandiose mission statements, the Starr Foundation thinks locally rather than globally, in specifics rather than generalities, and aims at solutions rather than recommendations. Cornelius Vander Starr combined the characteristics of pragmatism, business acumen, and risk taking. He encouraged his foundation to recognize the value of ideas and of tackling thorny and persistent problems, using the foundation’s resources to achieve results.

In 2008, American Insurance Group (AIG), the insurance corporation that Starr founded, was embroiled in financial scandals that prompted concern about the solvency of the Starr Foundation. The stock and assets of AIG are inextricably bound with the foundation, which owned more than fifteen million shares of AIG stock. On May 8, 2009, the Starr Foundation sued AIG, claiming the insurer had misrepresented the foundation’s exposure to billions of dollars of losses in AIG’s portfolio of credit default swaps. The lawsuit, filed in the New York State Supreme Court, sought damages of $300 million for the alleged fraud. However, on November 17, 2009, the case was dismissed by a judge, who called the lawsuit a “waste of time.”


See Also

John D. MacArthur

Great Lives from History: The Incredibly Wealthy

Cornelius Vander Starr

by Joseph Dewey

American insurance executive

With broad vision and an international sensibility, Starr pioneered the expansion of the insurance industry to untapped markets in China, enabling him and others to introduce Western business practices to the massive East Asian markets. Under his leadership, the American International Group (AIG) became the largest insurance company in the world.

Source of wealth: Insurance

Bequeathal of wealth: Relatives; charity

Early Life

Cornelius Vander Starr (kor-NEE-lee-uhs VAHN-duhr stahr) was born in 1892 in Fort Bragg, a tiny, picturesque town along the Pacific coast in northern California. His father was a first-generation Dutch emigrant who worked as a railroad engineer. After his father died when Starr was two, Starr was raised by his mother on the income from a modest boardinghouse she ran. Early on, Starr was taught the impact of unexpected death and the importance of managing income in unforeseen circumstances—the foundations for success in the insurance field.

As a child, Starr was restless with small-town life. In 1910, with aspirations in excess of his resources, he enrolled at the University of California. He dropped out within the year and began his first business: running an ice cream parlor in Fort Bragg. It did well, but Starr was ambitious. He decided to venture into the real estate business, where he perceived that money could be made quickly.

However, he was subsequently introduced to the more lucrative and more financially secure insurance business. He moved to San Francisco, where he pursued a law degree at night and sold automobile insurance door-to-door during the day. In 1918, he passed the California bar exam and set up a small insurance business, but his heart was not in settling down. Eager for adventure, he enlisted in the U.S. Army in the waning months of World War I. However, the war drew to a close before he would see any action overseas.

First Ventures

Starr’s brief stint in the army only piqued his frustrated sense of adventure. After his discharge, he joined the Pacific Mail Steamship Company, and in 1919 he arrived in Shanghai, China, to work as an office stenographer. Once there, he gravitated to several small-scale insurance outfits. He was convinced there was a viable market for insurance in China, which was rapidly introducing greatly improved hygiene practices and Western medical techniques provided by trained physicians. Starr believed these improvements in health care delivery would increase life expectancy, making the vast country a prime market for insurance.

In the same year he arrived in China, Starr founded the American Asiatic Underwriters, the first Western insurance agency in China. It represented five insurance brokers from the United States and specialized in marine disaster and fire insurance. Because he never learned the Chinese language, Starr surrounded himself with business-savvy locals who worked the neighborhoods of Shanghai with confidence and tact, thus creating a sense of trust among the Chinese, which other Western entrepreneurs struggled, most often unsuccessfully, to achieve. Starr’s insurance business quickly thrived, and it expanded to become the Asia Life Insurance Company. His insurance agencies underwrote the development of both commercial and industrial facilities, becoming a dominant force in China’s rapid industrialization between the two world wars. Instead of hiring employees from other countries, Starr staffed his offices with Chinese workers, teaching them Western business techniques and management skills.

Mature Wealth

In 1926, Starr expanded his operations to the United States, opening an office of the American International Underwriters in New York City. Although his American operations thrived, Starr was principally interested in his enterprises in China. By World War II, Starr’s company was the dominant insurance broker in China.

The onset of World War II, however, radically changed the course of Starr’s career. During the war, he was enjoined by the Office of Strategic Services (OSS), a precursor of the Central Intelligence Agency (CIA) that gathered covert intelligence about military operations through a clandestine web of informants, including businesspeople, such as Starr. Although the extent of Starr’s actual intelligence work during the war has never been made public, he helped monitor the early days of the Chinese Communist movement and Mao Zedong’s Red Army, which was originally supplied arms and money from the United States as a valuable ally in the war against Japan. Ironically, after the war it was this same Communist army’s takeover of mainland China that compelled Starr in 1949 to relocate the headquarters of his multibillion-dollar insurance conglomerate, now known as the American International Group (AIG), to New York City.

However, Starr never abandoned his zealous advocacy of providing Western-style insurance to the Far East. He began selling insurance in the Philippines shortly after the war, and within five years his Philippine American Life and General Insurance Company became the dominant insurer in that nation. The corporate growth of AIG made company reorganization a necessity. In the early 1950’s, Starr directed the company to separate its domestic and international agencies, headquartering the domestic groups in New York and the international groups in Bermuda, which Starr’s advisers regarded as politically stable and friendly to the West. During the next two decades, AIG continued to be a major force in the global insurance business.

Starr remained director of AIG, focusing his considerable energies on its expansion and its international reputation. He never married, never had a family, and, except for a love of skiing, was seldom not directing the business. At the height of his tenure, AIG expanded into Latin America, the Middle East, and Western Europe. By the early 1960’s, it was the largest insurance company in the world.

Now among the wealthiest financiers in the world, Starr became increasingly interested in using that wealth to promote the gospel message he held most dearly: the unlimited potential of the individual given the right opportunities and right resources. He had published a popular series of motivational books designed to encourage self-development. In 1955, Starr chartered the Starr Foundation, headquartered in New York City. The mission of the foundation, which shared many of its directors with AIG management staff, was to provide grant money for projects and research protocols aimed at offering solutions to a wide variety of pressing urban problems.

Nearing seventy, Starr accepted a diminished role in the direction of AIG’s operations in 1962 and retired entirely in 1968, just months before his death. At the time of his retirement, AIG, despite aggressive competition from dozens of firms that used Starr’s model for corporate development, retained its dominant position in the insurance industry and was among the top ten largest corporations in the United States. When Starr died, his entire estate was given to his foundation, which in the twenty-first century was among the most successful endowments, with resources of almost $5 billion and annual distributions of slightly more than $200 million. Long after his death, Starr continued to hold near-legendary status in the insurance field for his bold initiatives overseas. He was posthumously inducted into the prestigious Insurance Hall of Fame in 1975.

Twenty years after Starr’s death, AIG insured more than thirty million people in the United States alone, serviced more than 130 countries, and employed more than 120,000 people internationally. In 2008, AIG became entangled in the housing, banking, and credit collapse that led to the most severe economic downturn since the Great Depression. In September, 2008, the company obtained $85 billion in government assistance in order to maintain its operations—the largest government bailout of a private company in U.S. history. This bailout, combined with allegations of corporate wrongdoing and financial malfeasance, generated a firestorm of public protest over AIG’s business practices. However, AIG’s business operations remained largely intact, and the firm was still ranked among the top twenty companies in America—a monument to the solid business foundation Starr had set more than half a century earlier.

Legacy

Any assessment of Starr’s fortunes must take into account his global vision. Born of his childhood restlessness and his love of the peripatetic life, Starr’s international sensibility defined the importance of his threshold position in American economic history. Born at the close of the century that marked America’s economic maturity and confidence, Starr was among the visionaries of the early twentieth century who brought American ingenuity and business savvy to the international arena. Starr’s considerable financial stake in China and his years of covert operations during World War II have made both Starr and AIG the subject of conspiratorial theorists, who allege that there was government intrigue in Starr’s operations and in subsequent ties between the government and AIG. What is indisputable, however, is that Starr’s fortunes expressed America’s move to become a global economic force in the twentieth century.

Further Reading

1 

Fisher, Ken, and Lara W. Hoffmans. The Ten Roads to Riches: The Ways the Wealthy Got There. Hoboken, N.J.: Wiley, 2008. Accessible account of twentieth century financiers, among them Starr, that distills from each lessons on how to emulate the formula for wealth and acquisition.

2 

Persico, Joseph E. Roosevelt’s Secret War: FDR and World War II Espionage. New York: Random House, 2002. Inevitably any discussion of Starr includes his clandestine work with the OSS. This is a clear account of that shadowy operation and AIG’s part in it.

3 

Shelp, Ron, and Al Ehrbar. Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG. Hoboken, N.J.: Wiley, 2008. Detailed account of the generation of AIG managers after Starr. Includes a helpful history of the company and a vivid portrait of Starr.

4 

Stuttard, John B. The New Silk Road: Secrets of Business Success in China Today. Hoboken, N.J.: Wiley, 2000. Solid history of Western business enterprises in Asia, with an explanation of the formidable challenges. Emphasizes post-Mao China but includes the story of Starr as a groundbreaking entrepreneur in the Far East.

Citation Types

Type
Format
MLA 9th
Dewey, Joseph. "Cornelius Vander Starr." Great Lives from History: The Incredibly Wealthy, edited by Howard Bromberg, Salem Press, 2010. Salem Online, online.salempress.com/articleDetails.do?articleName=GLIW_1380369001380.
APA 7th
Dewey, J. (2010). Cornelius Vander Starr. In H. Bromberg (Ed.), Great Lives from History: The Incredibly Wealthy. Salem Press. online.salempress.com.
CMOS 17th
Dewey, Joseph. "Cornelius Vander Starr." Edited by Howard Bromberg. Great Lives from History: The Incredibly Wealthy. Hackensack: Salem Press, 2010. Accessed December 14, 2025. online.salempress.com.