Posted on 16 Dec 2009
According to a survey released yesterday, more customers are remaining with American International Group (AIG) after cutting their exposure to the troubled insurer earlier this year.
Barclays Capital analysts surveyed big buyers of commercial insurance recently and early results show that roughly 80% use Chartis, AIG's property and casualty unit, for some of their insurance needs, compared with 90% six months ago.
However, of that amount, three-quarters of them plan to keep their business with Chartis, up from 41% six months ago, the analysts said in a note to investors. They also reported that 16% of Chartis customers plan to switch to another insurer, down from 41% six months ago.
"Risk managers appear less concerned about Chartis' financial strength, and in some cases Chartis was able to offer more capacity than competitors," wrote Jay Gelb, an analyst at Barclays Capital.
AIG almost collapsed last year and had to be bailed out by the U.S. government, which committed roughly $180 billion to save the company. Since then, strict limits on compensation and lingering concern about the insurer's financial strength have caused some employees and customers to leave.
While the Barclays Capital survey suggests this trend may be ending, Gelb noted that many customers continue to reduce their counterparty exposure to AIG by buying some of the coverage they need with other insurers.
"Actions were taken to reduce exposure to Chartis over the past 12 months, resulting in easier comparisons in our most recent survey," Gelb also said.