AIG “a little worried” about MGA – insurer alignment. Sees reinsurance opportunities: CEO Andersen

As the excess and surplus (E&S) lines segment of commercial insurance becomes increasingly competitive with sidecars and non-traditional players bringing new sources of capital, AIG CEO Eric Andersen explained today that his company is “a little bit worried” about the alignment of MGA and insurer paper.

AIG announced its third-quarter results late yesterday (read more over at our sister publication Reinsurance News) and during today’s analyst call, Eric Andersen highlighted some concerns that are causing the giant insurer to be more selective in parts of the commercial insurance market.

Asked about trends in the commercial and E&S space, Andersen said, “In North America commercial insurance, as we have discussed in recent quarters, new entrants and excess capacity have intensified competition in our Lexington business, particularly in property and increasingly in casualty. We have been very proactive in our response since those trends began, directing growth in Lexington toward the middle market and small and medium enterprise segments, while reducing our participation in property and casualty large accounts, which are facing the greatest pressure. Lexington is an important part of our portfolio, and we remain committed to the E&S channel. We are actively managing the business through the cycle, balancing targeted growth, focusing on renewals, and being very selective on new business.”

Later in the call Andersen explained how he sees that competitive landscape at this time.

“We actually have not seen a migration in any significant way back from E&S into the admitted market, and obviously, as a player that does both, we’re watching it pretty carefully,” the AIG CEO said.

Adding, “We’ve seen submissions increase, demand continues to increase. There’s obviously some competition that is more significant in the E&S space, and we’ve talked a lot about property and I mentioned in the prepared remarks a little bit about casualty too, where we’re starting to see it.

“Some of that is who’s competing in the marketplace. You know, you end up seeing in the E&S space a lot more MGAs, sidecars, non-traditional players.

“So we are a little bit worried that the alignment of MGA and insurer paper are not as aligned and managed as tightly as it should be. But we see it, and we’re reacting to it as best we can.”

Increasingly, sidecars and alternative capital are coming up in executive commentary about the state of commercial insurance markets and E&S. With the advent of casualty sidecars and ILS structures really still in the ramping up phase, it will be interesting to watch this commentary evolve over time, as well as which major carriers look to embrace the opportunity to partner with investors in these areas of the market (something AIG is certainly more than capable of doing should it choose).

A report released by ALIRT Insurance Research today also highlighted the growing competition in E&S markets.

ALIRT stated, “The proliferation of managing general agents (MGAs), managing general underwriters (MGUs), program administrators, and fronting insurers—partly supported by private equity investment and alternative reinsurance capital—has expanded market capacity and intensified competition.”

ALIRT also said that,”Future E&S market performance will depend increasingly on disciplined underwriting, prudent capital management, and the ability to adapt to more competitive market conditions.”

Alternative capital structures and techniques seem to be changing the dynamic in E&S faster than ever at this time, something even causing the largest players, like AIG, to take notice.

Andersen also commented on reinsurance market conditions during the earnings call and feels AIG can benefit from the softening of rates here.

“You know the reinsurance programme, for us, we’ve always viewed as a very strategic and critical part of our growth strategy. We’ve been spending a lot of time on that question since coming out of Monte Carlo a couple of months ago, and then following a bunch of other meetings that have been happening, working with our partners, both traditional and alternative, thinking through what our strategy is.

“I would say, we like the programme where it is. We’re going to look at tweaks, obviously, to take advantage of either market pricing or areas where we think we can retain more risks. But ultimately, how we view reinsurance as a major supporter of how we look to grow and deploy capital hasn’t fundamentally changed,” Andersen said.

Asked later about his expectations for the key January reinsurance renewals, which is a juncture at which AIG renews a large amount of its reinsurance protection, Andersen explained, “You are seeing it play all the way through from retail property, E&S, into reinsurance property, and it has been really just the balance, as you know, of a lack of significant losses and excess capital and new capital that’s trying to get into the market.

“As we approach it, though, you know we are seeing pricing pressure across North America, as we talked about, and a little bit in international. International is currently a little bit better than North America, and we do see opportunities for growth in international. But the key in this will be how do you maintain the disciplined underwriting and the rate adequacy and the terms and conditions and the attachments and the limit management, all the things that you know we’ve been working on over the last five years, really comes home as a critical function when you’re at a market like this.

“As a buyer of reinsurance, I think we’re going to see opportunities to either save money, and I think it’ll give us some real tactical choices to make. Strategically, as you look at our portfolio, it was built to manage our volatility.

“We were able to capture some savings in 2026 without having to make any real fundamental changes in terms of the risk profile, and I think that opportunity might be in front of us again as we work through the marketplace and the 1/1 renewals with our partners. So, I think we’re going to get a good balance between some of the front-end pressure and some of the ability to save money on some of the reinsurance support.”