The defection of four top executives from American International Group to Berkshire Hathaway signals an aggressive attack by Ajit Jain, head of Berkshire Hathaway's reinsurance business, on AIG's dominant surplus lines business.
According to SNL Financial's latest data, AIG's surplus lines unit had $5.04 billion in E&S direct premiums written in 2012, or about 19.8 percent of the total $25.44 billion U.S. surplus lines market. About $4.23 billion came from AIG's Lexington Insurance Co.
That constituted a 5.7 percent drop from its market share in 2011 as competitors aggressively tried to grow their businesses. AIG was the only insurer in the top 23 to experience a drop in direct premiums written (DPW) in 2012.
According to SNL, “While premiums were down, AIG continued to devote roughly the same portion of its property and casualty business to excess or surplus lines in 2012 as it did in 2011.”
AIG's DPW in E&S in 2012 is more than three times its closest competitor, Nationwide, according to SNL.
Berkshire, by contrast, ranks 18th, with $2 billion in DPW and a paltry 1.6 percent E&S market share. Berkshire was ranked 17th in 2011, according to SNL. But, as of now, Berkshire's $404.6 million in E&S direct premiums written accounts for just 2 percent of its total DPW.
The percentage may be changing.
The defection of Peter Eastwood, David Bresnhan, Sanjay Godhwani, and David Fields is the second attack AIG's excess business has faced in recent years.
In 2008, Kevin H. Kelley and Shaun Kelly, left Lexington to form Ironshore, also based in Boston.
Ironshore now ranks 9th in the market, with a 2.65 percent share of the excess market, according to SNL.
Jain heads Berkshire Hathaway's Berkshire Hathaway Reinsurance Group, which made the decision to add AIG's four top surplus lines executives late last week. The reinsurance unit is considered to be one of the most profitable units of Warren Buffet's Berkshire Hathaway.
According to industry officials, Jain is “widely considered” to be the most likely candidate to succeed Buffett when he decides to step down as chairman and CEO of Berkshire.
Jain has worked for Buffett since 1985.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
