Chartis companies have been able to retain 90 percent of their customers despite the economic turmoil American International Group has endured since 2008, AIG CEO Robert Benmosche said at a mid-February investment conference in Manhattan.
"We still do business today with 97 percent of the Fortune 1000," Benmosche said. "This is not about getting clients; it's about doing more with clients."
Discussing a broad range of topics at the Bank of America/Merrill Lynch Insurance Conference on Feb. 15, Benmosche said AIG is in the process of upgrading its worldwide accounting system and taking a hard look at its "catastrophe load and its reinsurance contracts" as it assesses how to budget for potential catastrophic losses going forward.
Benmosche added he's not concerned about the company being designated as systemically significant and therefore subject to regulation by the Federal Reserve Board. "People say, 'Are you worried about being a SiFi? Are you worried about the Federal Reserve?' No. I welcome it."
He said AIG has "an enormous amount of money" sitting at the holding company, not at the regulated insurance entities, so the company has enough capital to be flexible in dealing with problems at the operating level.
Benmosche also discounted talk that Chartis has been able to maintain its customer list by substantively underpricing its products. "The fact is, that is not true," he said. "We've demonstrated that with the data."
He added that the company wants to make sure it gets "a risk-adjusted profitability in Chartis, which means at least earn your cost of capital.
"Don't kid yourselves that you can earn money in investments and other things outside the combined ratio," he added. "Get it right and earn your cost of capital—and then make a profit on top of it."
He said the reorganization of Chartis is almost complete, and AIG plans to grow Chartis "by doing more consumer business around the globe and by continually focusing on growth economies."
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