AIG shrinks aggregate reinsurance to $2.05bn, but lowers attachment

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American International Group (AIG) has reduced its aggregate reinsurance tower’s limit to $2.05 billion for 2021, down from $2.5 billion in 2020.

AIG logoThe 18% reduction in limit for AIG’s aggregate reinsurance tower is not the whole picture though, as the global carrier has also lowered the bottom-end as well, with the aggregate property catastrophe reinsurance protection set to attach excess of $500 million for 2021, down from the $750 million attachment this aggregate tower had in 2020.

It’s one of a range of changes to AIG’s property catastrophe reinsurance program at the January 2021 renewals, detailed in the carriers’ 10K which was published Friday.

AIG has also lowered the attachment for its U.S. per-occurrence catastrophe reinsurance, which will now attach excess of $200 million, or excess $500 million for Southeast US and Gulf State Named Storm losses, down from a $500 million standard attachment in 2020.

Coverage for the North America high net book of business is also down for 2021, at $1.275 billion of per-occurrence reinsurance, down from $1.525 billion in 2020.

Per-occurrence reinsurance for Japan and the rest of the world remains the same as 2020, but the shared aggregate limit for those regions is of course down in line with its main aggregate.

The effect of these changes is that, despite the reduction in limit, AIG’s aggregate retention for any catastrophe events, after the impact of the per occurrence deductibles, is $750 million for 2021, down from $1 billion of retention a year earlier.

AIG has also lifted the property catastrophe retrocession cover of its Validus Re unit, with $475 million of limit excess $300 million of retention from world-wide exposure via an aggregate excess of loss cover for 2021, up from $400 million.

Validus also benefits from capital markets backed retrocessional reinsurance, with its multi-year industry loss index Tailwind Re Ltd. (Series 2017-1) catastrophe bond.

The Tailwind cat bond matures at the end of 2021, meaning there is every chance AIG returns to the insurance-linked securities (ILS) market this year to renew this slice of its reinsurance arrangements.

Also read: Zaffino highlights critical evolution of AIG reinsurance program at 1/1.

Read all of our reinsurance renewals news here.

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