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AlphaCat CEO Zeng to help AIG attain best practice in risk modelling


American International Group (AIG) has expanded the role of Lixin Zeng, the CEO of its AlphaCat Managers third-party reinsurance capital and insurance-linked securities (ILS) unit, asking him to help the insurer to improve its risk modelling.

Peter Zaffino, Executive Vice President and Chief Executive Officer of AIG’s General Insurance business unit, explained that the company is looking to improve its underwriting and move the insurance business towards profitability.

Part of that is strengthening the performance of the general insurance operations at AIG, which has been addressed partly with more robust reinsurance programs and lower retentions of catastrophe losses.

This trend is set to continue, as AIG looks to shake up its catastrophe reinsurance for regions like Japan, as our sister publication Reinsurance News reported earlier today.

But another part of this is in underwriting process and discipline, as well as the use of technology to assist the underwriting of general insurance business, including analytics and risk models.

To that end, AIG is expanding Zeng’s role to include working closely with Chief Underwriting Officer of general insurance Tom Bolt to “bring Validus’ best practice in model development to AIG,” Zaffino explained during the firms earnings call.

“As we reposition our portfolio we are using reinsurance to support sustained profitable growth, while prudently managing gross and net exposures and protecting AIG’s balance sheet,” Zaffino said, all of which requires the use of advanced risk modelling tools to help in understanding core exposure and limits of coverage.

AIG is in the market for significant purchases of reinsurance, including a new casualty reinsurance cover and the firm will also aim to enhance some of its existing reinsurance layers at January renewals Zaffino said.

Risk modelling will sit at the heart of the optimisation of the AIG general insurance book and any future reinsurance purchases it seems, hence Zeng’s expanded role will provide important input to these key decisions as the insurance giant looks to raise profitability.

Zeng had a background in risk analytics and catastrophe modelling through his career, before joining Validus in 2005 and AlphaCat first as a portfolio manager and CUO in 2008, then as CEO of the ILS specialist unit in 2011.

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