Inside AIG Re and how it engages with the world’s insurance industry

AIG is best known for helping people and organizations manage risk and recover in the event of loss. What’s perhaps less known is how AIG contributes to the broader global insurance industry.

This is done in several ways, including through AIG Re, which is a key part of AIG’s growing businesses. Additionally, a critical part of AIG Re is its standalone research company, which gives underwriters a truer picture of the risks they assume.

AIG Re’s reinsurance businesses provide insurance companies financial protection against a range of risks from policies they write. This allows insurers to disperse risk from their books of business and ultimately reduce their exposure in case of loss – especially losses related to catastrophic risks, such as hurricanes and other natural disasters.

Reinsurance also allows insurers to serve more clients because by shifting risk to reinsurers, insurance companies create more capacity for themselves to write business. Reinsurance is, in essence, insurance specifically for insurance companies.

“Insurance is a complex business, and a knowledgeable reinsurer is able to step up to the table and understand that business immediately,” says Chris Schaper, who took the helm as AIG Re’s CEO in 2019 following AIG’s acquisition of Validus Holdings. AIG consolidated its assumed reinsurance businesses -- Validus Re, AlphaCat, Talbot Treaty and Validus Research -- under the AIG Re umbrella.

Reinsurance, Chris notes, is becoming more critical for insurers. Because of the increasingly uncertain and complex nature of global risks like cybersecurity and climate change, carriers have signaled a strong appetite for reinsurance coverage. 

The AIG Re team is prioritizing strategies to continually build a profitable portfolio, which includes diversifying the range of risks the business assumes as well as recruiting and retaining talent.

For example, AIG Re has accelerated its transition from a monoline to a multi-line reinsurer - thereby bringing to AIG Re’s overall business a more diverse mix of insurance lines. These lines of businesses are wide-ranging, and include agriculture, casualty, financial lines, marine, property, and specialty risks, such as aviation. AIG Re’s diversification efforts also have a geographic component, as the company seeks to reinsure risks across different countries and regions around the world.

What sets AIG Re apart from other reinsurers

An important way that AIG Re manages its risk portfolio and differentiates itself from other firms is through not only diversifying risk on its own balance sheets, but also engaging with AlphaCat, AIG Re’s asset management arm, and utilizing Validus Research, AIG Re’s independent research arm. AlphaCat works with pension funds, hedge funds and other institutional investors looking to gain exposure to the insurance market through securities linked to insurance risk. While this asset class offers investors a way to diversify their portfolio, it also enables AIG Re to transfer risk from insurers to investors across the global capital markets.  

“We think of ourselves as capital providers to the insurance industry,” Chris says. “The more capital that comes in, the better it can be for the overall industry because that capital has the ability to provide more protections to more clients who are seeking insurance throughout the world.”

Validus Research rigorously assesses the risks presented to AIG Re. Validus Research has a team of mathematicians, statisticians, technologists, and other experts focused on risk analytics that enable them to form a truer understanding of the risks under consideration.

The process involves using different techniques and technologies to evaluate industry data and draw a range of insights – including loss expected from a particular risk, such as a storm in a specific region or an accident in a certain industry. These insights empower AIG Re’s underwriters, as it helps them understand risk better when setting the price and other conditions on the business they are considering. Further, these insights inform AlphaCat’s decision making, which ultimately benefits investors by providing them with more insights into the scope of the insurance risks they may be considering.

“This is a key differentiator for us, and a core component of our business,” Chris notes. “As we construct a portfolio, we can actually build a much better portfolio as a result of those insights.”

Looking ahead

AIG Re is expanding and is continually recruiting top talent to drive innovations across the approximately 250-person company. The business values those who are collaborative and analytical with a penchant for thinking through complex problems.

“We have a very strong business proposition for those who are thinking in this vein,” says Chris, recalling the start of his own career in insurance.

Unlike many who unexpectedly enter into the insurance business, Chris knew early on that he wanted to make a career in this industry. Having specifically studied business at Johns Hopkins University, Chris came away passionate about the study of data – and its potential to inform and even predict how businesses and financial markets behave.

He considered a range of careers, including accounting and even medicine, before ultimately going into the insurance business.

“I knew I liked finance, investments and statistics, and I was searching for a business aligned with an important purpose, and interestingly, I found that the insurance industry brought all these key components together.”

As AIG Re drives profitable growth, Chris adds, the talent it recruits and develops will continue to help differentiate the business. AIG Re engages with today’s global insurance market in critical ways, and those eager to delve into a career that is both challenging and reflect a broad purpose are likely to find their place at AIG Re.