Duperreault: AIG Will Seek Growth, Diversification as It Champions Data Analytics
May 16, 2017 by David Pilla
NEW YORK – (Adds A.M. Best rating commentary on Hamilton companies.) Both organic and inorganic growth, along with diversification and technology-enabled solutions, are key to American International Group Inc.’s strategy, according to its new chief executive officer.
In his first public appearance since taking over as president, CEO and board member, Brian Duperreault said AIG will seek growth opportunities, even in commercial lines where certain lines have caused the group trouble over the past two years. He said technology and diversification in commercial lines will get AIG there, but not at the expense of growth.
“I didn’t come here to break the company up; I came here to grow it,” he said.
Duperreault gave opening comments at a previously announced webcast for AIG’s consumer insurance segment in which he said “it’s great to be back” after a previous 21-year stint with AIG.
He said his priorities as new CEO of AIG will include “a commitment to technology and a focus on growth accompanied by underwriting discipline.”
He emphasized he views technology as essential to long-term growth, pointing to the announced deal between AIG, his previous company Hamilton Insurance Group and tech firm Two Sigma Insurance Quantified that expands the tech venture between the three companies known as Attune (Best’s News Service, May 15, 2017). As part of the deal, AIG will acquire Hamilton USA, the U.S. platform of Hamilton Insurance Group, which AIG said will enable AIG to expand the target market of Attune.
“The work going on at Hamilton USA will increase the underwriters speed to market and efficiency,” said Duperreault. He added Hamilton USA will continue as a separate operation within AIG.
“Attune will remain our technology-based distribution joint venture for the small and middle market, and will expand its reach,” said Duperreault. He added the two underwriters’ venture with Two Sigma “will support the creation of a next-generation insurance platform.”
“I see technology, data analytics and innovation as transforming the delivery and underwriting of insurance and these initiatives will put AIG at the forefront of the industry,” Duperreault said.
Even as technology is seen as essential to AIG’s long-term strategy, Duperreault said “let me be clear, I am here to grow AIG.” He added AIG will be looking at growth opportunities both organic and inorganic. He noted while AIG has been committed to returning capital to shareholders, the group will be looking to deploy capital to grow its business wherever possible.
Duperreault said underwriting discipline, along with what he called “a more balanced commercial business,” are keys to positioning AIG “to delivering more sustainable underwriting profits.
He noted “the very tough commercial markets create a challenge for our commercial property/casualty businesses,” adding diversification and growth, along with underwriting discipline, will be needed to deliver underwriting profit.
Meyer Shields, an equity analyst with Keefe, Bruyette & Woods, said in a research note given Duperreault’s “very strong track record building up the former Ace, and leading MMC’s turnaround, we think this is a phenomenal choice.” Shields added the appointment “strongly argues that AIG’s current challenges are fixable, and we believe that his presence will materially alleviate employee, broker, and insureds’ concerns.”
Following his previous work with AIG, Duperreault was CEO of Ace (now Chubb), one of AIG’s main competitors, and headed Marsh & McLennan, one of AIG’s largest broker partners. Most recently, as chairman and CEO of Hamilton Insurance Group, he championed data science and analytics within the insurance business.
Shields noted AIG is likely to see a rise in its share price on the news, which “could see modest weakness in competing large specialty insurers” such as Berkshire Hathaway, Chubb, and XL, “although we don’t think their long-term plans are at risk.”
With Duperreault’s accession to AIG’s leadership, Hamilton Insurance Group, the company he was leading, appointed William C. Freda as chairman and David A. Brown as interim group CEO.
A.M. Best on May 15 placed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of Hamilton Re Ltd., Hamilton Specialty Insurance Co. and Hamilton Insurance Co. under review with developing implications following Duperreault’s resignation.
Additionally, the rating action reflects AIG’s tentative agreement to acquire all outstanding shares of Hamilton U.S. Holdings Inc. for approximately $110 million; the transfer of Attune ownership from HUSA to Hamilton Insurance Group Ltd.; as well as other provisions, as outlined in the memorandum of understanding between AIG, Hamilton, and Two Sigma Insurance Quantified.
The under review with developing implications status reflects the complex nature of the transaction, with potential financial and operational benefits and disadvantages, according to A.M. Best. The ratings will remain under review pending A.M. Best’s evaluation of Hamilton’s final revised business plan and full analysis of the transaction, as well as the appointment of a permanent replacement for Duperreault.
Underwriting affiliates of American International Group Inc. have current Best’s Financial Strength Ratings of A (Excellent).
On May 15, shares of American International Group Inc. (NYSE: AIG) closed at $61.82, up 1.36% from the previous close.
(By David Pilla, news editor, BestWeek: David.Pilla@ambest.com)
