AIG cut spend by $200mn on 1.1 property cat reinsurance program: Zaffino
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AIG cut spend by $200mn on 1.1 property cat reinsurance program: Zaffino

Its property cat aggregate cover renewed with improved coverage.

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AIG has reduced its overall spend for property cat reinsurance coverage by $200mn compared to last year, according to chairman and CEO Peter Zaffino.

“The headline is that we were able to significantly improve our property cat structure and reinsurance coverage provided,” he told analysts during the insurer’s Q4 2023 earnings call.

“For all of our major proportional treaties across a range of classes, we improved or maintained our ceding commission levels, reflecting our market-leading underwriting expertise and position in the market.”

Providing details of the renewed program structures, Zaffino said the international property cat per-occurrence structures renewed with a reduced retention in Japan to $150mn, a $50mn improvement from the prior year.

The attachment for the rest of the world and North America remained unchanged at $125mn and $500mn, respectively.

AIG achieved broader coverage across all of its core occurrence towers, with modelled probability of attaching its cat reinsurance improved with respect to key perils and across every major territory, Zaffino added.

Its property cat aggregate cover also renewed with improved coverage, to include a standalone supplement dedicated to secondary peril losses in North America and contributing losses from AIG’s personal lines high-net-worth portfolio.

The program’s annual aggregate deductible for North America is $825mn, while the other perils deductible for the region, which was newly added this year, is $350mn. For Japan and rest of the world, they are $200mn and $175mn, respectively.

Casualty treaty

Regarding casualty reinsurance, Zaffino said that AIG’s program renewed on January 1 with no impact on ceding commissions, allowing it to maintain the same net retained lines.

“When you look at what we place on the quota share today, it's basically 20%,” he added, comparing it to the firm’s 2016 and 2017 programs, where it placed a 50% quota share on primary casualty and 37.5% on excess casualty.

“So we've taken that down while we've improved ceding commissions over 800 basis points from the original placement to 20% from north of 50%,” said the executive.

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