American International Group (AIG), the global insurance and reinsurance player, has expanded its activities in the pension risk transfer space during the second-quarter of this year.
Reporting its results recently, AIG highlighted the Life and Retirement business segment as one experiencing strong premium growth.
AIG explained that its Life and Retirement division recorded income of $881 million, down $168 million compared to the prior year quarter driven by private equity losses, continued spread compression on the investment portfolio and also elevated mortality experience related to the COVID-19 pandemic.
But one bright spot within that unit is the growth in pension risk transfer, a key area of opportunity for AIG as it looks to bring in large premiums from these types of deals.
Brian Duperreault, AIG’s Chief Executive Officer, commented, “Life and Retirement benefited from its diversification and agility, and continues to meet client needs despite an uncertain economic environment.”
Life and Retirement premiums and fees rose an impressive 72% for the quarter, year-on-year, reaching almost $2.3 billion in Q2 2020.
Driving this growth was largely the premiums from two large pension risk transfer reinsurance transactions, which helped to lift the premium total for the quarter to $1.6 billion in Q2 2020, up from $598 million in the prior year quarter.
Given the significant levels of activity in pension risk transfer and related reinsurance transactions over the last few years, AIG looks a little late to the party.
With major players such as Prudential, the big four European reinsurers, L&G, Canada Life Re, among others, all soaking up significant deals in recent quarters, it shows the potential in this marketplace.
Pension risk transfer should fit the AIG portfolio mix well though and having transferred a significant amount of its life and retirement legacy risk to Fortitude Re in the last year, AIG now stands well positioned to break into this market and potentially become one of the larger players in what is a still-growing space.