AIG passes upper-middle market clients to Liberty, Heritage as it focuses on high net-worth business

By Covey Son · June 29, 2020

American International Group has agreed to cede some of its upper middle market clients to a pair of rival firms as it refocuses its business around serving high net worth individuals with specialist insurance needs, the carrier said Monday.

AIG will transfer “a select portion” of its upper middle market personal insurance business to Liberty Mutual’s Safeco Insurance and Heritage Insurance Holdings beginning in the fourth quarter of 2020.

The move follows AIG’s launch of Lloyd’s Syndicate 2019 in October, the largest syndicate in the market’s history, to reinsure risks from its Private Client Group, a leader in the high net worth market. 

“Building on the recent launch of Lloyd’s Syndicate 2019 and the refinement of [the group’s] risk appetite, this agreement optimizes our portfolio and allows us to focus on our relationships with our high net worth clients and distribution partners, thereby strengthening our core value proposition,” said Kathleen Zortman, president and chief executive of AIG’s Private Client Group. 

The deal gives agents handling upper middle market clients an option to move their policies to either Safeco or Heritage.

Boston-based Safeco, which provides vehicle and home insurance nationwide, boasts a network of over 10,000 independent insurance agencies.

“We look forward to partnering with AIG agents to leverage our expanding selection of premier products to help them grow their preferred, upper middle market book with Safeco,” said Gary Fischer, senior vice president of independent agency channel growth and engagement at Safeco

More than 90% of Heritage’s portion of the transfer are policies outside Florida, giving the Tampa-based regional carrier a greater foothold in the northeast U.S.

“We’re excited to partner with Safeco on this opportunity and look forward to developing relationships with new agents and providing a seamless transition for policyholders,” Heritage Chairman and CEO Bruce Lucas said. “Most of the premium is located outside Florida, furthering our multi-state growth initiatives and providing reinsurance synergies.”

The Private Client Group provides property and casualty policies to wealthy individuals that cover everything from antique cars to rare art collections. 

The reinsurance syndicate supporting the AIG unit is expected to write up to $1 billion in gross written premiums, AIG said. 

In October, AIG revealed that Lloyd’s Syndicate 2019 will begin writing business effective Jan. 1. The company estimates that the syndicate will write up to $1 billion in gross written premiums. 

The syndicate is managed by Talbot Underwriting Limited, a managing agency AIG acquired in 2018. Talbot will also underwrite risks in the U.S. high net worth segment. 

“AIG’s industry-recognized Private Client Group and its differentiated distribution network are highly compatible with Lloyd’s blueprint for innovation and sustained growth, said Peter Zaffino, CEO of general insurance and global chief operating officer at AIG, in October. 

AIG also purchased an insurance policy tower in the U.S. to support the Private Client Group separately from the Lloyd’s syndicate, AIG CEO Brian Duperreault said in an earnings call in February.

Dupperrault added that the group will benefit from AIG’s $1.3 billion commitment to replacing “legacy technology” to streamline workloads.

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