AIG, Hamilton, Two Sigma Sign Agreement to Expand Data-Driven Underwriting

American International Group, Hamilton Insurance and an independent affiliate of Two Sigma Investments signed a multifaceted agreement with an eye on boosting their use of data-driven underwriting on multiple levels.

The trio invested in late September 2016 in Attune, a data-enabled technology platform launched to serve the U.S. small to midsize commercial insurance market, and their new memorandum of understanding expands the three companies’ collaboration both within Attune and into other areas. AIG, Hamilton and the Two Sigma affiliate, Two Sigma Insurance Quantified, will seal their deal pending final negotiation and obtaining required regulatory approvals.

New AIG President and CEO Brian Duperreault, most recently leader of Hamilton Insurance Group, said that using more data science in underwriting continues to be a significant priority for him in his new role with the struggling insurance giant.

“Putting data science and technology to work in our industry has been on my agenda for some time,” Duperreault said in prepared remarks. “It was the genesis of Hamilton Insurance Group’s formation and will be a primary agenda item at AIG.”

He added that his experience with Attune has taught him that “cross-industry partnerships—what’s now called InsurTech—are the way to go.”

The memorandum of understanding between AIG, Hamilton and Two Sigma Insurance Quantified includes the following terms:

• Attune’s target market will be expanded to include companies with annual revenues of up to $35 million, a target market segment of up to $150 billion in annual gross written premiums. Hamilton will retain its one-third ownership of Attune.
• AIG has agreed in principle it will acquire Hamilton USA, the U.S. platform of Hamilton Insurance Group, to continue accelerating its application of data science and analytics to transform underwriting.
• AIG and TSIQ will enter into a partnership to leverage TSIQ’s insurance-focused data science and technology expertise for a broad spectrum of commercial insurance underwritten globally by AIG.
• Hamilton Re and AIG will enter into a reinsurance strategic partnership in which Hamilton Re will be provided with the opportunity to participate on market terms in an increased volume of AIG’s ceded reinsurance. The relationship could result in material premium growth for Hamilton Re and provides AIG an alternative source of reinsurance capital.

David Siegel, co-founder and co-chairman of Two Sigma Investments and a frequent collaborator with Hamilton and Duperreault, said that the three companies’ expanded partnership underscores how “data science and technology open a world of opportunity for this industry, from more practical protection and smarter processes to a better understanding of risk.”

Hamilton Chairman William Freda agreed.

“Since our founding, Hamilton and its strategic partner, Two Sigma, have been committed to data-driven underwriting and risk management using automated systems, algorithms and data analytics,” Freda said in prepared remarks. “We are excited by the transformative potential the [memorandum of understanding] represents for Hamilton through the expansion of Attune’s target market and as new reinsurance opportunities of mutual benefit to AIG and Hamilton Re are explored.”

Sources: AIG, Hamilton Insurance Group, Two Sigma Insurance Quantified