AIG enhances overall coverage and anticipates fee revenue from its new sidecar syndicate, says CEO Zaffino.

At the January 2025 reinsurance renewals, AIG enhanced the terms of its aggregate catastrophe reinsurance protection by lowering the deductible in North America, according to CEO Peter Zaffino. He also highlighted that the company’s newly launched third-party capitalized syndicate is expected to generate fee income.

Speaking on AIG’s earnings call, Zaffino stated that the insurer successfully met its reinsurance purchasing goals at the 1/1 renewals, aiming to optimize capital and stabilize earnings by actively managing underwriting volatility.

In its core North America commercial property catastrophe occurrence reinsurance program, AIG will maintain a $500 million retention for the third consecutive year, despite growth in its underlying portfolio. Additionally, the company expanded coverage, retained its international occurrence attachments, and renewed its dedicated occurrence tower for high-net-worth clients, which begins at $200 million.

Regarding aggregate catastrophe reinsurance, an area where AIG has consistently benefited from protection, Zaffino pointed to improved contract terms at the 2025 renewals. He noted that AIG reduced its annual aggregate deductible for North America, created a designated non-peak section, and expanded coverage for high-net-worth portfolios. He added that, depending on loss distribution, AIG’s modeled net first-loss exposure remains similar to 2024, while exposure for second and third events is significantly reduced.

Across its major proportional reinsurance arrangements, AIG either maintained or improved ceding commission levels. It also introduced two new proportional treaties to support its high-net-worth business.

Zaffino highlighted the success of AIG’s strategy to establish Private Client Select as an independent MGU, securing capacity beyond AIG’s balance sheet. The platform now includes five leading underwriting companies, which collectively reinsure 30% of AIG’s homeowners and auto portfolios through quota share agreements.

He also discussed the recent launch of AIG’s Syndicate 2478 at Lloyd’s, a multi-year participant in the insurer’s outward reinsurance program, backed by third-party capital from Blackstone-managed funds through the London Bridge 2 PCC ILS structure. This structure functions similarly to a reinsurance sidecar, directly linking insurance risk with sophisticated investors.

“This pioneering approach exemplifies how insurance risk can be directly connected to investors, offering attractive returns for both parties,” Zaffino said. “The syndicate provides AIG with a long-term reinsurance partner and a new source of fee income.”

By acting as a third-party capitalized reinsurance sidecar, Syndicate 2478 helps AIG reduce balance-sheet exposure to losses while generating additional fee income from ceded portfolios. Zaffino also emphasized the benefits for investors, noting that Blackstone gains access to a high-quality, diversified underwriting portfolio with strong return potential through participation in most of AIG’s outward reinsurance treaties.

“We’re pleased to partner with a leading global asset manager on this innovative structure,” he said.

Concluding his remarks, Zaffino underscored the critical role of AIG’s reinsurance strategy in positioning the company as a top-tier global P&C underwriter. He expressed gratitude for the long-term support of industry-leading reinsurers, which has been instrumental in AIG’s progress.