Duperreault gets AIG top job, AIG gets Hamilton Re’s reinsurance capital

by Artemis on May 15, 2017

As the market had expected, Brian Duperreault was named as the new Chief Executive Officer of insurer American International Group (AIG) today. At the same time AIG and Hamilton Re have announced a new agreement, that will enable AIG to use Hamilton as an “alternative source of reinsurance capital.”

Brian Duperreault has been named as President, Chief Executive Officer and Director of AIG, effective yesterday 14th May, and has resigned as Chairman and Chief Executive Officer of Hamilton Insurance Group.

AIG’s previous leader Peter Hancock has resigned as President, Chief Executive Officer and Director at the same time.

Meanwhile, Hamilton Insurance Group, which includes the Bermuda reinsurance operations and its Lloyd’s activities, has named William C. Freda as the new Chairman of the Board and industry veteran David Brown (founding CEO of Flagstone Re) has been named Interim Group CEO.

AIG’s Chairman of the Board, commented on the appointment of Duperreault; “Brian is uniquely qualified to lead AIG at this important time. Brian has spent his entire career in insurance. He worked for AIG for 21 years at the start of his career, so he knows this company well. He was the CEO of ACE, one of our main competitors. He ran Marsh & McLennan Companies, one of AIG’s largest broker partners. At Hamilton, he introduced cutting edge data science and analytics into the insurance business. He is a hands-on leader who has consistently delivered strong bottom-line results. He has demonstrated a passion for deploying new and innovative ways to serve clients. All of this will enable Brian to help AIG achieve its full potential to be the leading insurance company.”

Duperreault himself said; ““It is a privilege to return and lead AIG. I look forward to building on AIG’s nearly 100-year heritage as one of the world’s leading insurers for its next century.

“In my discussions with the Board and management team, I have been impressed with the progress made. I look forward to working with AIG’s global team to build on this momentum to grow the business, and continue delivering innovative solutions and extraordinary service to clients. I also welcome the opportunity to continue AIG’s work with Hamilton and Two Sigma to become the most technology-enabled and capital-efficient carrier in the industry.”

The changes don’t stop at management though, as AIG has agreed in principle to acquire Hamilton USA, the U.S. platform of Hamilton Insurance Group. Also announced today, Attune, the data underwriting joint-venture between Hamilton, AIG and investment managers Two Sigma will have its target market expanded to include companies with annual revenues of up to $35 million, a total market segment of up to $150 billion in annual gross written premiums. Hamilton will continue to own one-third of Attune.

An intriguing announcement is the fact that Two Sigma Insurance Quantified, LP (TSIQ), a unit of Two Sigma Investments, LP, the asset manager that looks after investments for Hamilton Insurance Group’s total return strategy, is to partner with AIG as well, so the pair can leverage TSIQ’s data science and technology across a broad spectrum of commercial insurance underwritten globally by AIG.

Whether that could see Two Sigma’s investment skills put to work at AIG as well is not clear.

Perhaps most intriguingly though, AIG gains the use of Hamilton Re as a source of reinsurance capacity, with the pair entering into a reinsurance strategic partnership.

The arrangement will see Hamilton Re given the opportunity to participate on market terms in an increased volume of AIG’s ceded reinsurance, which effectively means it will act in as a kind of active sidecar for the insurer, with the reinsurer able to take a share of AIG’s business at market agreed pricing, when deemed attractive.

AIG sees this as a way to secure itself an “alternative source of reinsurance capital”, while the arrangement is expected to result in “material premium growth for Hamilton Re.”

Hamilton Re will get access to up to $150 million of reinsurance premiums from AIG initially, with that figure able to rise by 7% each subsequent year, a significant boost to its portfolio.

So AIG gets the leadership it needs to put its active and more passive shareholders at their ease (for now), while Hamilton gets an extremely beneficial tie-in with one of the world’s largest insurers, and preferential access to its reinsurance program.

Two Sigma also wins with this announcement, getting the chance to put its technology prowess to work alongside AIG and benefitting from what could be a significant expansion of Hamilton Re’s investable assets which could boost its total return strategy considerably, once this new reinsurance arrangement kicks in.

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