Chartis, the global property insurance unit of AIG, will keep raising premiums on commercial policies in the United States as the economy strengthens and the company rebuilds capital after record claims world-wide in 2011, the unit's chief executive said.
Chartis has been raising prices an average of three months ahead of its competitors, following a year in which insurers globally lost more than $100 billion on natural disasters, Peter Hancock said in an interview at a Vermont ski resort owned by the company. "The US property catastrophe capacity, whether it's in residential or commercial, is something that's been underpriced," Hancock said late Thursday. "When you look closely, this is an industry which over the past 30 years has not earned its cost of capital."
The company also plans to continue a retreat from volume businesses such as workers compensation insurance, which pays employees when they're injured on the job. It will instead pursue customers such as medium-sized businesses that operate internationally, companies with long supply chains in need of business interruption insurance and consumer markets in fast-growing nations such as Brazil, Indonesia and Turkey. "We do business with 97 percent of the Fortune 1000, it begs the question as to whether we should be," he said. Growth prospects in Europe, where the company operates in 30 countries, will be dimmed by the continuing eurozone debt crisis, he said, notwithstanding recent generally positive developments about Greece.
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