AIG President and CEO Brian Duperreault said that the evolving, hardening market is sustainable and dovetailing nicely with the insurer’s ongoing efforts to shed excessively risky business.
“We are seeing strong rate improvement across most of our global portfolio,” Duperreault said during American International Group’s Q2 2019 earnings call on Aug. 8. “In addition to industry dynamics, rate increases reflect our comprehensive and disciplined strategy to reposition our business as market leaders, by refining our risk appetite…tightening terms and conditions and reducing capacity in certain areas.”
Duperreault said he saw rate increases accelerating in the 2019 second quarter, “in some cases materially.” He framed the hardening market as having more positive elements than in previous cycles.
“I would describe this market as one where there is more underwriting discipline and rigor around the deployment of capacity rather than a major decline in capacity,” Duperreault said. “That discipline seems to be playing out through the pricing models and underwriting processes that are recognizing increased loss costs, frequency … and other emerging risks.”
Duperreault added that the nature of the current hardening market means “the turn is based on facts, rather than emotion and is therefore more sustainable.”
“The market is reacting in a natural way, a way that one would expect a well managed industry to do,” Duperreault said. “I am encouraged by it.”
Duperreault’s comments echo recent statements from carrier CEOs such as Chubb’s Evan Greenberg and Berkley President and CEO W. Robert Berkley Jr., who in April was among the first to publicly express a belief the market was showing signs of hardening. Greenberg, speaking during Chubb’s Q2 2019 earnings call on July 24, explained he saw the hardening market as “income and loss reserve driven, not capital driven.”
Duperreault commented on a number of other topics during the analyst call.