Boss says insurer will walk away from unprofitable business and denies talk of a staff exodus
AIG UK is not cutting rates to hold on to business, managing director Lex Baugh insisted this week in the face of persistent speculation.
Baugh said the troubled insurer would walk away from unprofitable deals and accused its rivals of undercutting it.
Numerous insurers and brokers have privately suggested that AIG has dropped its prices to retain business following the well-publicised financial problems of its US parent company.
“Any objective person would have to question if it was really in AIG’s interests to be slashing rates,” said Baugh. “[Global chief executive]
Ed Liddy has said that we are not going to solve one problem by creating another, and that’s the sentiment throughout the business.”
Baugh cited an internal review of 21 major risks that had come up for renewal, saying AIG had been undercut in 10 of those cases and had walked away from the business.
He added that in some lines such as property and liability risks over £50,000 premium, the insurer had pushed through rate increases.
Asked if he had a message for his rivals, Baugh said: “The long-term profitability of the business we are writing will prove the position.”
Baugh also expressed frustration at the rumours. “It’s a bit of a nuisance to have that out there constantly without any facts behind it.”
He added that AIG UK had not experienced a big increase in staff turnover. The percentage turnover before summer had been in the high teens or low twenties and it had risen by a couple of points, he said. “The core team is intact and we are not finding it difficult to attract new staff.”
He said the broker community had continued to support AIG and blamed the market rumours on rival insurers.
AIG’s New York-based parent company was effectively nationalised by the US government in September following a series of write-downs related to subprime loans.