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May 10, 2020

AIG launches Syndicate 2019

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In a follow up of our article last year, AIG has announced on 4 May (click here for Press Release) that Lloyd’s had given it approval for the launch of Syndicate 2019 with a capacity of US$1bn which will make it the largest ever new syndicate.

The syndicate will write AIG’s Private Client Group (“PCG”) High Net Worth business which includes high net worth homeowners, auto, collections, yacht, personal umbrella and specialty coverage for earthquake, excess flood and workers compensation insurance coverages

The managing agency will be AIG’s subsidiary at Lloyd’s Talbot Underwriting Ltd, acquired in 2018 as part of the Validus transaction. Talbot will now become the ninth largest managing agency with syndicates 1183 and 2019.

In the AIG Q1 2020 earnings presentation mention was made of the formation of the syndicate by Peter Zaffino -- President and Chief Operating Officer and Chief Executive Officer, General Insurance:

“Yesterday, we announced the official launch of our strategic partnership with Lloyd's called Syndicate 2019, which is now accepting new and renewal business. Syndicate 2019 is managed by Talbot and is dedicated to supporting our U.S. high and ultra high net worth business.

“This innovative business model is another example of actions we have been taking to derisk and reposition our portfolio, reduce volatility, preserve capital and strategically pursue profitable growth. Syndicate 2019 is an important step forward for PCG and allows us to reposition the portfolio and reduce peak zone and concentration risks, which are inherent challenges with a portfolio of this nature. We were pleased with the support Syndicate 2019 generated from highly regarded third-party investors and capacity providers, many of whom have partnered with us and supported a broader general insurance turnaround since late 2017. In addition, Syndicate 2019 provides us with an alternative solution to traditional reinsurance, thereby reducing overall reinsurance costs of PCG and for the core program for AIG.

“Our PCG business is a recognized market leader, and the new management team that we put in place in 2019 is making significant and excellent progress in improving the financial and operating performance. We continue to execute on a disciplined underwriting strategy in the first quarter with PCG achieving meaningful rate increases across the portfolio, which we expect to continue through 2020.”

The Press Release mentioned that “significant capital support has been received from high-quality investors and capacity providers, which is a testament to the quality and growth potential of the PCG franchise.” According to Artemis.bm, the group Hudson Structured Capital Management, which invests in (re)insurance-linked assets, was a lead-backer of the new syndicate.

In mid-January this year Lloyd's announced that Jon Hancock would be stepping down during 2020 as Lloyd’s Performance Management Director, and in late February it was announced that Jon would be joining AIG as CEO of the International General Insurance. Subsequently, Jon has extended his tenure at Lloyd’s to help Lloyd’s deal with the Covid-19 issues.

Hampden has declined to support the syndicate at this time.