MediumVII Reinsurance & Specialty Risk4 November 2026, Wednesday

AIG expects reinsurance savings at the January renewals

AIG chief executive Eric Andersen said on 4 November that he expects reinsurance savings at the 1 January renewals. The company's general insurance combined ratio deteriorated by 4.5 points to 91.3% in the third quarter; the savings will be used to offset pricing pressure at the front end.

Location: NEW YORK

AIG reported third-quarter net income of 844 million dollars, up 63% year on year. General insurance underwriting income, however, fell 29% to 564 million dollars. Catastrophe losses of 283 million dollars added 4.4 points to the loss ratio, against 100 million dollars a year earlier. Net premiums written rose 7% to 6.7 billion dollars, with North America ex-property growing 10%.

On the analyst call, Andersen said prices were falling at every layer, from retail property to property reinsurance. In his view, the absence of major losses in 2026 and new capital entering the market are pushing rates down. The company will not change its reinsurance programme; it will use the 1 January savings for tactical choices and retain more risk if needed. AIG also secured savings at the 2026 renewals without altering its risk profile.

Competition intensified most in 2026 at Lexington, the company's specialty arm. Andersen said AIG had cut its share of large property and casualty accounts because of new entrants and excess capacity. On the 4 November call he added that he was concerned about alignment of interests between insurers and the managing general agents (MGAs) that write policies on their behalf.

Talay assessment

Bottom line

Large cedents are using cheaper reinsurance to cut costs without shrinking the protection they buy. AIG's 91.3% combined ratio shows margins narrowing at the front end, with reinsurance savings cushioning the squeeze. The likeliest path is savings on property reinsurance at 1 January and continued rate cuts in primary property.

Likely effects

Property reinsuranceNegativeWeeks
Large buyers such as AIG expecting savings narrows reinsurers' room to resist rate cuts at 1 January.
Primary property pricingPositive1–6 months
Insurers whose reinsurance costs fall can absorb rate cuts in primary property; corporate property insurance bills ease.
Specialty marketNegative1–6 months
Lexington's retreat from large accounts shows MGA and sidecar capacity pushing prices down faster than the leading carriers.

Possibilities, ranked

1
Savings, programme unchanged60%
AIG renews the same protection more cheaply at 1 January and makes minor adjustments to its retention.
Watch: AIG's comments on 1 January reinsurance costs in its 2026 full-year results
2
Savings go into retention25%
AIG retains more risk, purchased limit falls and reinsurers' volume shrinks.
Watch: A change in retention disclosed in AIG's year-end statement
3
Losses wipe out savings15%
A major catastrophe or war loss in the fourth quarter halts the pre-renewal decline in rates.
Watch: A single catastrophe loss above 10 billion dollars before the end of December

Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.

Market reaction

Indicators affected

AIG combined ratio (Q3)▼ 91.3%
AIG cat losses (Q3)▼ $283m
Net premiums written▲ +7%

Bottom line

Likely effects

Possibilities, ranked

Sources