AIG’s Chairman and CEO, Peter Zaffino, highlighted the company’s strategic focus on the rapidly expanding Excess & Surplus (E&S) insurance market, which he sees as a significant avenue for growth.
Zaffino emphasised the remarkable growth trajectory of the E&S market, which has surged from $34 billion in 2003-2004 to an impressive $114 billion today. This growth underscores the increasing market share and capabilities of the E&S sector, outpacing the retail insurance market.
He noted that the compound annual growth rate for E&S from 2017 to 2023 has been an impressive 20%.
“Their capabilities are broadening, and their ability to drive outcomes is substantial,” Zaffino stated. This growth is further evidenced by the surge in submission activity to wholesale brokers, setting new records each quarter.
Beyond the E&S market, AIG is directing its attention to international expansion, notably in Japan and India.
In Japan, which represents AIG’s largest business outside the US, Zaffino anticipates significant organic growth driven by digital enhancements in personal insurance.
Meanwhile, in India, AIG’s joint venture with Tata is expected to achieve “20% organic growth over the next five years. This will double the size of the business to between $3.5 billion and $4 billion top line.”
Zaffino acknowledged the challenges and potential of the Indian market, highlighting significant opportunities in personal insurance and accident health, supported by robust digital capabilities and a growing middle class.
Furthermore, Zaffino emphasised that AIG’s advantage lies not in its size but in its skill in assessing and managing risks at the point of sale. He stressed the importance of leading the market with expertise in setting terms and pricing for insurance, rather than competing solely on price.
“We’re not a capacity player that tries to find risks through an open market and ‘the best price wins.’ That’s a failed strategy,” said Zaffino.
Moreover, he emphasised the importance of consistent, long-term price increases over time. Even if rate increases aren’t as substantial as in previous quarters, maintaining a stable profit margin and retaining clients is crucial.
For instance, he notes, “if I received a 30% increase last year and a 10% increase this year, it’s still 10% above the loss cost increase. That’s a good outcome. So, I don’t want to look at the sequential rate increases in some of our businesses.”
