AIG is now not in ‘restructuring section’: CEO Zaffino

American Worldwide Group Inc. (AIG) Chairman and CEO Peter Zaffino mentioned the corporate is now not in a “turnaround” and is targeted on development by profiting from market alternatives whereas sustaining underwriting self-discipline.

Zaffino made the remarks throughout a fireplace chat throughout the 2024 KBW Insurance coverage Convention on Wednesday (September 4).

By means of that section, Zaffino is optimistic about AIG’s prospects, together with its generative synthetic intelligence (gen AI) technique and market alternatives for extra and surplus insurance coverage (E&S) strains.

AIG added that because it pursues new avenues of development, it would proceed to prioritize disciplined underwriting with a complete reinsurance program throughout all strains of enterprise.

“Our present problem is the necessity for additional capital to assist our present core P&C insurance coverage enterprise, nevertheless it will resolve naturally as we proceed to implement our capital administration technique and realise our anticipated development potential,” Zaffino mentioned.

“We proceed to prioritize prudent threat choice, restrict administration and acceptable contract phrases.”

E&S dealer distribution “highly effective development engine”

In a extremely aggressive market, AIG has honed its extra and surplus strains (E&S) capabilities, which Zaffino describes as a robust development driver. The North American E&S market, particularly, presents AIG distinctive alternatives to increase by elevated new enterprise and improved buyer retention.

“The market has been extremely sturdy for us. Wholesale distribution by E&S brokers has been extremely sturdy,” the CEO mentioned.

Zaffino acknowledged that the basics of buyer retention within the E&S enterprise have improved dramatically, with buyer retention charges rising from the low 60s to the mid-70s.

This enchancment in enterprise retention is a key indicator of AIG’s transition from sustaining to increasing its portfolio.

Zaffino mentioned exercise within the sector has not slowed regardless of issues concerning the affect of rate of interest adjustments within the first half of the yr, and AIG is seeing enhancements in all features of its E&S enterprise.

The CEO spoke concerning the insurance coverage firm distribution community and emphasised how a give attention to technical underwriting and constant threat urge for food has helped construct belief throughout the dealer neighborhood, a key component to AIG’s continued success.

“Brokers all the time need to make as a lot cash as potential, however what they want most is consistency and threat tolerance,” Zaffino mentioned.

The place are different market alternatives for AIG?

Inside private strains, AIG’s wealth enterprise is one other space the place Zaffino sees potential for development, however the sector presents challenges, significantly managing aggregation threat, the place an excessive amount of focus in a specific area can go away the corporate at vital threat to occasions resembling wildfires.

AIG is addressing these points by rebalancing its portfolio and leveraging its claims capabilities, which Zaffino describes as a key differentiator available in the market.

“The long-term technique we’re executing on is claims, capability, loss management, coverage phrases and buyer intimacy,” he mentioned.

Cyber ​​insurance coverage is one other space AIG is approaching cautiously: “It’s important to watch out if you’re pricing and allocating capital in a enterprise line the place there’s systemic threat and the stochastic outcomes are extremely unpredictable,” Zaffino mentioned.

AIG has diminished its mixture limits and is relying extra closely on reinsurance to handle its publicity to systemic threat. The corporate’s common mixture limits on cyber insurance coverage at the moment are roughly $4 million to $5 million, considerably decrease than up to now, serving to to cut back the affect of potential losses.

“(We) ensure that we worth issues pretty. There’s some competitors within the area, however we’re protected by sturdy reinsurance,” Zaffino mentioned.

What do you concentrate on AIG and its future development alternatives? Please go away a remark beneath.