Recent harden markets usually last a short while, primarily due to market responses based on knowledge of the underlying pricing trends. Once one company takes the initiative to undercut the competition to gain market share, the market begins to soften.
I expect Dupie has a plan for the not-too-distant-future softening of the P&C market.
AIG is making improvements in many areas, specifically in leadership brought in from outside AIG. Dupie comments in this article about expense levels far above what he prefers and believes are optimal. I agree. But IT isn’t the only way to achieve optimal expense levels. In the long run, greater volume levels with less or fixed overhead costs will improve results.
But ‘shedding excessively risky business’ isn’t a step toward reducing expenses as a percent of expanding revenue… due to reduction of revenue. Further, risky business carries higher rates of return, especially in hard markets. So, ‘shedding it’ should be preceded by ‘reviewing it’ for alternative ways to assume such risks without putting a drag on income levels and volatility, short term and long term.
Attention: IJ staff: this post was sent to my lawyer for review for compliance with your rules.
Actual corporate turnarounds are rare. The problem is often culture, or psyche, if you will, and that’s the hardest thing to change. It has been done and Steve Jobs, whatever you think of him, did it. Dupie may do it. I actually see the AIG debacle of the previous decade as having been toxic to the culture. It takes a long time for that kind of thing to be forgotten. Except for certain lines, I don’t see a hard market lasting very long. The trend has been for the existence of protracted soft markets. Business, all business, is simply tougher than it used to be.
Recent harden markets usually last a short while, primarily due to market responses based on knowledge of the underlying pricing trends. Once one company takes the initiative to undercut the competition to gain market share, the market begins to soften.
I expect Dupie has a plan for the not-too-distant-future softening of the P&C market.
AIG is making improvements in many areas, specifically in leadership brought in from outside AIG. Dupie comments in this article about expense levels far above what he prefers and believes are optimal. I agree. But IT isn’t the only way to achieve optimal expense levels. In the long run, greater volume levels with less or fixed overhead costs will improve results.
But ‘shedding excessively risky business’ isn’t a step toward reducing expenses as a percent of expanding revenue… due to reduction of revenue. Further, risky business carries higher rates of return, especially in hard markets. So, ‘shedding it’ should be preceded by ‘reviewing it’ for alternative ways to assume such risks without putting a drag on income levels and volatility, short term and long term.
Attention: IJ staff: this post was sent to my lawyer for review for compliance with your rules.
Their unannounced moratorium on writing construction risks in NY certainly caused some headaches on renewals and new biz last fall.
Actual corporate turnarounds are rare. The problem is often culture, or psyche, if you will, and that’s the hardest thing to change. It has been done and Steve Jobs, whatever you think of him, did it. Dupie may do it. I actually see the AIG debacle of the previous decade as having been toxic to the culture. It takes a long time for that kind of thing to be forgotten. Except for certain lines, I don’t see a hard market lasting very long. The trend has been for the existence of protracted soft markets. Business, all business, is simply tougher than it used to be.