For AIG its deeper partnership with asset manager Blackstone, which was established with the launch of a multi-year reinsurance sidecar-like syndicate last year, represents a way to optimise for the most efficient capital and an opportunity to generate sizeable fee income, according to Charlie Fry, EVP Reinsurance & Risk Capital Optimization.Speaking during a recent investor day, Fry was asked to provide some background and rationale on the sidecar syndicate that was established for the 2025 underwriting year.Recall that, , with the structure set to become a multi-year participant on the insurer’s outwards reinsurance program.The syndicate is supported by third-party capital from funds under the management of asset management giant Blackstone, with that capital channelled into the Lloyd’s market using the London Bridge 2 PCC insurance-linked securities (ILS) structure.

During the 2025 investor day, AIG’s Fry provided some insights into how the company thinks about its recent reinsurance syndicate launch at Lloyd’s.Peter Zaffino, CEO of AIG asked Fry to explain why this initiative, which they call a special purpose vehicle (SPV) within the company, provides a “foundation for the future”.“We’re extremely proud of what we’ve done here.

We collaborated with Blackstone in what we believe to be a truly innovative first of its kind, given some of the features of this vehicle,” Fry explained. What we’ve essentially done is we created a brand new reinsurer.But it’s a reinsurer that is exclusive to AIG.” He went on to say, “A little bit of context, it’s the second largest new syndicate in the history of Lloyd’s, and it’s one of the most sizeable capital raises for reinsurance since the class of 2005 and 2006 and KRW, and it involved a lot of strong collaboration across all of our business.” How the company thinks about accessing efficient sources of capital in this way, was next explained by Fry.He said, “If you think it through, it’s long-term exclusive reinsurance to AIG backed by absolutely first rate capital and a first rate partner.

But it also provides us with access to some fee income, which is highly accretive in terms of capital base.“You then go a little bit further and you think, for them, they’re going to get access to the vast majority of the treaties, a sizeable share of our outwards reinsurance, which of course, gives them access to the platform that we talked about, which is an incredible platform in terms of our ability to originate risk.“I think that’s what’s so exciting for me about the SPV.

It’s fantastic what we’ve achieved, but it’s where we can go which I really feel excited about.” Fry further explained, “This ability to originate risk, and, in actual fact, match the risk and optimise portfolios to the most efficient capital available, of course, being our balance-sheet, but also third-party capital. So we retain the balance within our own business, but also have the opportunity to generate sizeable fee income into the future.So I think it’s really, really exciting.” AIG has undertaken significant work to model and understand its portfolios of risk, helping the company to identify how best to integrate efficient third-party capital into its business.The company said during the investor day that 30,000 hours of enterprise modelling have been conducted to construct the optimal portfolio for AIG and its risk capital partners.

Fry highlighted that, “There’s an astonishing amount of work that goes into it.It’s foundational, right? So what we’re looking at, it’s the entire portfolio of AIG.So it’s not just looking at the data.

It’s looking at the trends, applying macro trends, in terms of what we think inflation will happen, climate change, social inflation.But also looking at the underwriting changes we both made but plan to make into the future.“The good news is, with that foundational modelling done, you don’t need to do it again, repeating it, to continue to build.” Fry went on to say that the modelling and portfolio work that has been done across the entire AIG business, “turbo charges our ability to develop these structures as well, it’s super exciting.”.

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