(Bloomberg) – American International Group Inc., the largest commercial insurer in the U.S. and Canada, agreed to join with Hamilton Insurance Group and the Two Sigma Investments hedge fund firm to start a business focusing on coverage for small- to medium-sized enterprises.
"The joint venture will combine Two Sigma's proprietary data science and technology platform, Hamilton's technology and underwriting expertise" and AIG's scale, the companies said Tuesday in a statement, without disclosing terms.
The deal reunites AIG with Brian Duperreault, a former executive at the New York-based company who went on to lead Ace Ltd. and insurance broker Marsh & McLennan Cos. before starting Hamilton with Two Sigma more than two years ago. The hedge fund firm, founded by David Siegel and John Overdeck in 2001, relies on computer models to bet on securities markets. Two Sigma has also sought to bring increased data analysis to insurance underwriting, a strategy that AIG Chief Executive Officer Peter Hancock has emphasized at his company.
Two Sigma will also help AIG with the venture's investment portfolio.
|Siegel, Friesenhahn
"This partnership brings tremendous scale, the ability to provide a more convenient and systematic insurance experience for small businesses, and an opportunity for us to address the challenge of optimal insurance asset allocation," Siegel said in the statement.
Duperreault will be the chairman of the new entity, and Richard Friesenhahn, the executive vice president of U.S. casualty lines at AIG, will be CEO. The companies said the market in North America for small- and medium-sized enterprises, or SME, is a $76 billion industry.
Charles Sebaski, an analyst at BMO Capital Markets, said Tuesday in a note to clients that he would have expected AIG to already have the sufficient technology resources in house.
"This joint venture leads us to the conclusion that AIG's current capabilities and recent investments in data analytics have not yielded the results necessary for the company to utilize technology within the large SME market independently," Sebaski said.
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