Eric Andersen, new CEO of American International Group (AIG), offered an in-depth view of the company during his first earnings call at the helm, referring to opportunities within current marketplace conditions.
Andersen said the market is “transition from an extended phase of broad positive pricing into a more selective environment where profitability and growth are increasingly dependent on line-specific dynamics.”
The dynamics include an influx of capacity in some spots, from excess & surplus lines carriers, delegated underwriting authority structures, and other sources, he told analysts. While these entrants have increased competition and put pressure on pricing – particularly in property – it has also created opportunities, Andersen added.
Clients tend to become more discerning about the origin of capacity,” he explained. “The
distinguish among providers that are simply pass-throughs for third-party paper or focused solely on excess coverage from those that offer holistic solutions along with underwriting excellence, client service, and responsive claims handling.”
In property, Andersen said, AIG’s diverse global property portfolio is an advantage. And in North America, where E&S competition is dropping rates, AIG has de
See more beautiful photo albums Here >>>
cided to intentionally shrink its property portfolio at its surplus lines insurer Lexington “in targeted areas,” resulting in a 9-point reduction in premium retention at Lexington during Q2. Meanwhile, AIG focuses on growing the overall property book where profit can be had, in places such as its renewal rights transaction with Everest.
“We are offering terms that reflect our view of the risks,” Andersen said. “As a result, we are retaining business where we can achieve acceptable terms while walking away from business that does not meet out underwriting standards.”
Strategically deploying capital toward the highest returns is one leg of a five-point plan Andersen laid out for growth at AIG. The company will also use reinsurance efficiently, expand capabilities of artificial intelligence, maintain expenses, and invest in talent.
On AI, Andersen said AIG has used it to scale underwriting and claims via AIG Assist.
“Where deployed, our underwriters are reviewing more submissions and generating quotes significantly faster, improving productivity,” Andersen said. The insight gained in underwriting can be used to “analyze broker-level results to gain greater visibility into their performance and distribution trends, including where we see the most success.”
“We’re able to learn pretty quickly where we’re seeing better opportunities,” said Andersen, adding that the outcome was “derivative” to the work put into Underwriting by AIG Assist. “We think we’ll make it more efficient. It may not be more submissions, but it might be better submissions – submission that match our appetite with partners and clients that want to use our organization.”