Summit News: AIG addresses "urban myths"
AIG’s UK subsidiary has retained 95% of its business since the near collapse of the US insurer at the end of last year, managing director, Lex Baugh told delegates at the Insurance Day Summit London.
Baugh said he was keen to address some of the ‘urban myths’ surrounding the current state of the insurer’s operations in the UK and added that its position was a ‘strong one’.
“The impact of the events of 2008 have not been terribly dramatic on core operations,” Baugh said.
“One of the first myths is that AIG is losing its business, “ he continued. “Overall, retention levels have been resilient and broadly in line with those we experienced in the preceding year.
Commenting on Lloyd’s chief executive Richard Ward’s observation earlier in the Summit that a survey had revealed that one third of chief financial officers, risk managers and treasurers had said they had specifically cut the amount of insurance they placed with AIG, Baugh responded: “That survey obviously concerns US risk managers. The situation has been different outside the US compared to within it.”
Baugh also denied that AIG was cutting prices in order to maintain market share. “I would have to say that the motivation is just not there right now for AIG to be undercutting the market.
“As our chief executive (Ed Liddy) has said: ‘why solve one problem by creating another’. The capital management and capital-watching of today, I have never seen before in my history at AIG.”
Regarding recent well-documented reports of an exodus of staff from AIG, Baugh again said it was important to distinguish between what was happening in the US and the UK.
“The level of turnover has been roughly what we would expect in present market conditions. Turnover has remained around the industry norm and level year on year.”
However, he noted there was an opportunity, bearing in mind the present wider employment scenario in the UK ”for us to capitalise on this and bring new staff, training programmes and developments into our industry”.
Baugh did concede that AIG’s handling of claims was an important differentiator for the insurer and said that a slippage in this area would be the one thing that would see its customers depart.
He concluded that AIG had to continue to be seen to be innovative: “It is very easy to take your eyes off the ball in a time of crisis but it is precisely during a time like this when we need to be at our most innovative.”
