Chartis CEO Says Europe Still Safe; Insurer Seeks ‘Value Over Volume’

By | October 3, 2011

AIG’s global property and casualty insurer Chartis continues to see opportunities in Europe despite the sovereign debt crisis, the chief executive of the unit said in an interview last Friday.

Peter Hancock also said Chartis is pursuing a strategy of “value over volume” in all of its markets, meaning it is not chasing market share despite heavy industry interest in expansion, particularly in Latin America.

Chartis is by far the larger part of American International Group Inc., which was rescued by the government in 2008. Hancock, a banker by background, joined AIG in 2010 to help get the company’s finances in order.

Despite his having no direct insurance background, AIG put Hancock in charge of Chartis earlier this year, cementing for many a view of him as the heir apparent to Chief Executive Robert Benmosche.

Hancock, who was en route to Europe to speak at a risk conference, said on Friday that there is still business to be done there despite the sovereign debt crisis.

“I don’t think there is any country that I would say is no-go,” he said in a telephone interview, citing Argentina as an example of a large nation that defaulted on its debt. “We made money in Argentina before their crisis, during their crisis and after their crisis.”

BRAZIL, COLOMBIA, MEXICO

At the same time, Chastis — like every insurer — must be mindful of where it invests the premiums from the business it is writing, particularly with the problems the debt crisis is causing in financial markets.

“We need to be very thoughtful about how we invest on the asset side, and we’ve been very careful to position ourselves to be well prepared for economic stresses in Europe and elsewhere,” Hancock said.

The executive, who has been touring Chartis’s international operations, recently visited Latin America as well. A number of U.S. insurers have said they are eager to expand there, potentially by acquisition.

But Hancock said Chartis is focusing on writing good business rather than lots of business. In particular, he said, Chartis is concentrating its Latin American efforts on Brazil, Colombia and Mexico.

Those countries have good growth prospects, he said, and a particularly friendliness to foreign insurers that some other countries do not.

“Value over volume is our watchword. The market share will be what it will be,” he said.

Even as geographies are shifting, so is the company’s business mix. Chartis has recently been known as much more of a commercial insurer, with about 60 percent of its business leaning toward the corporate market.

But Hancock said the company is working on shifting that and moving deeper into consumer products.

“I wouldn’t be surprised in five years to see it 50/50,” he said.

(Reporting by Ben Berkowitz in New York; editing by John Wallace)

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