AIG’s reliance on reinsurance will continue to be strategic but, since the company has repositioned its portfolio, it should be able to do more things with reinsurance without taking more risk, according to President and Chief Operating Officer Peter Zaffino.
This could give AIG opportunities for less spend, but more strategic purchasing within reinsurance.
Commenting at the Barclays Global Financial Services Conference, Zaffino praised the “incredible progress” AIG has made on the underwriting side and how it has reduced overall exposure over the past several years while also significantly reducing volatility.
“It’s not just limits deployment, it’s how we actually position the businesses, whether it’s on the Property side, the Casualty side, our Global Specialty businesses, our global multinational business,” Zaffino explained.
“We’re just better positioned because of the excellent underwriting transformation that’s taken place.”
Overall, Zaffino expects AIG’s philosophy to remain the same, which is to have high-quality global reinsurers that trade across multiple lines of business in the portfolio.
“We look at it as a partnership,” he added. “There’s an evolution process of how one approaches structuring reinsurance to make sure that you’re not taking more volatility. And I also think, just taking a look at the index of the market, it doesn’t really reflect AIG. We’re a big company.
“We buy reinsurance across multiple lines and reinsurers partner with us because they choose the company, they choose the underwriters and they choose us as an insurance company in terms of how they want to deploy capital.
“So I think all of that will evolve next year to reflect the book we have. And I think our reinsurance will be revised accordingly.”