Share of AIG’s new and renewal U.S. Casualty portfolio to be ceded to Swiss Re

American International Group, Inc. (AIG) announced on Wednesday that it has entered into a two-year reinsurance arrangement with Swiss Re, under which a share of AIG’s new and renewal U.S. Casualty portfolio will be ceded to the reinsurer.

The arrangement is consistent with the plans announced by AIG in its Jan. 26 strategic update to investors, the global insurance organization said in a press release.

“The reinsurance arrangement is an important step in AIG’s strategy to improve its Commercial Insurance diversification and return on equity (ROE), and it highlights AIG’s focus on capital efficiency,” the release said. “This risk sharing agreement complements AIG’s leadership position as a premier provider of insurance products and services in the U.S. Casualty market.”

Rob Schimek, CEO of AIG Commercial, said that Swiss Re and AIG have had a “strategic relationship for a number of years and the trust and knowledge-sharing between the two companies facilitated this mutually attractive economic transaction. We have been very clear about our desire to partner with our reinsurers to help achieve our strategic objectives, and this agreement with Swiss Re is an example of what is achievable with longstanding counterparties.”

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Christian Mumenthaler, CEO of Reinsurance at Swiss Re, added that the company is “delighted” to continue its long term partnership with AIG, providing solutions across their business. “We know this portfolio, the leaders, and the underwriters very well and believe in AIG’s plans,” Mumenthaler said. As a result, we are happy to accompany them on this journey by taking a significant position in this business. It’s a transaction that allows both AIG and Swiss Re to improve their diversification.”

AIG provides a wide range of property casualty insurance, life insurance, retirement products, mortgage insurance and other financial services to customers in more than 100 countries and jurisdictions. Reinsurance is Swiss Re’s largest business in terms of income, providing about 85% of gross premiums and fee income through two segments – P&C and Life & Health.