AIG takes the plunge in Latin America with the announcement of a new reinsurance operation in Puerto Rico...
The American International Group (AIG) is the first company to set up a reinsurance unit through Puerto Rico’s insurance regulator CIS (International Insurance Centre). The news came as a report confirmed the Latin American market was going from strength to strength.
AIG invested $8bn to set up the special purpose vehicle and is authorised to operate at a maximum level to cover catastrophe risks of up to $100m.
It is understood that the new reinsurance company, American International Underwriters Overseas (AIUO), will begin operating later on this year. The new venture is expecting to write reinsurance business in Mexico, Brazil, Argentina and Chile on behalf of AIG.
Reinsurance will be provided selectively for all lines of business within the property casualty segment with a focus on commercial lines such as property, energy, casualty, and financial lines. AIUO will also act as a direct writer of offshore programmes in the areas of accident & health and kidnap & ransom.
“With AIG setting up in Puerto Rico, it is possible that we will have a positive exposure to the whole world
Ruben Gely, director of CIS in Puerto Rico
Rubén Gely, director of CIS in Puerto Rico, said: “We started our international facilities in 2005. With AIG setting up in Puerto Rico, it is possible that we will have a positive exposure to the whole world... It is my impression that this will help everybody know that we are open to consider other applications and that we are serious about business.”
It was originally reported by San Juan-based daily El Vocero that AIG was considering “transferring some of its Bermuda-based captive businesses to PuertoRico’s international insurance centre”. However this was strongly denied by the company in an interview with the Royal Gazette in Bermuda.
According to Benfield’s recent report on Latin America, “The insurance markets in Latin America are small but demonstrate strong growth potential relative to other markets globally,” the report said. “Brazil and Mexico dominate the landscape in Latin America, with the two countries combined accounting for twothirds of total insurance premiums.”