AIG will leverage reinsurer Validus Re for agility, not volatility

AIG will not side-line its reinsurance unit Validus Re in its drive to reduce volatility, but rather leverage the unit for faster and broader positioning to capture risk-adjusted opportunities worldwide, CEO Peter Zaffino has indicated.

Validus Re, which bills itself as a volatility risk reinsurer, has fallen into AIG's broader programme of volatility reduction. Zaffino made quick example of a 60% reduction in Florida exposures since 2018.

"The reason why I think it is strategic and helpful is that treaty reinsurance companies can pivot much faster to take advantage of risk-adjusted returns in different areas of the business than an insurance company," Zaffino said to defend the Validus Re role int the group.

While AIG can frequently shift between primary lines on its current markets to capture the right opportunity, any tactical move on international markets requires the reinsurer's agility.

"You just can't do that on the insurance company side."