The recent agreement between AIG, a prominent player in the global insurance industry, and Everest, one of the world’s largest reinsurance and insurance solutions firms, marks a significant milestone in AIG CEO Peter Zaffino’s ongoing transformation efforts at the century-old insurance company. This collaboration is designed not only to expand AIG's portfolio but also to assist Everest in addressing its loss reserve management challenges, which arose from an underestimation of claim costs in its U.S. casualty insurance sector, leaving Everest in search of additional capital.
Insiders indicate that AIG plans to begin writing policies for existing North American clients of Everest by the start of 2026. In addition, AIG is poised to initiate work on the European Union portfolio during the first quarter of 2026, contingent upon receiving the necessary regulatory approvals. This strategic move aligns with AIG's goal of enhancing its market presence while simultaneously supporting Everest in its operational recovery.
AIG, valued at approximately $44 billion, serves over 88 million commercial and personal customers across more than 200 countries and jurisdictions. In contrast, Everest, valued at around $14.5 billion, also caters to millions of policyholders but operates on a comparatively smaller scale. Recently, Everest has been actively recruiting senior executives from AIG, including its former legal chief, Anthony Vidovich, who was appointed executive vice president and general counsel of Everest on October 16.
Notably, the agreement between AIG and Everest did not necessitate AIG to seek external capital or incur debt. AIG will acquire the portfolio and client relationships associated with the deal, while all existing liabilities and prior exposures will remain with Everest. This structure allows AIG to access a broader customer base and future business opportunities without assuming responsibility for previous claims and obligations from policies that were written before the transaction was finalized.
This strategic move is expected to significantly advance AIG's portfolio growth in general insurance, an area that has shown consistent progress under Zaffino’s leadership. In 2024, AIG reported $23.9 billion in insurance premiums, reflecting a 6% year-over-year increase on a comparable basis, with new business generating $4.5 billion—a 9% increase from the previous year. Early earnings reports for Q1 and Q2 suggest promising growth trends, with Q1 premiums rising by 8% and Q2 premiums totaling $6.9 billion.
For Zaffino, the focus on growth potential and the avoidance of additional financial risks are central to his vision for AIG’s turnaround. The company has faced significant challenges stemming from its involvement in the 2008 global financial crisis. Leading up to that crisis, AIG engaged in substantial volumes of largely unhedged credit default swaps, insuring over $440 billion in assets, including $57.8 billion backed by risky subprime mortgages. The collapse of the subprime mortgage market led to considerable losses, necessitating a $182 billion government bailout in exchange for an equity stake.
In the decade following the crisis, AIG experienced over $30 billion in underwriting losses, highlighting issues with excess capital, inadequate risk controls, and a lack of accountability in underwriting outcomes. When Zaffino assumed the role of CEO in 2021, AIG had already undergone substantial downsizing, asset sales, and management changes, yet it still grappled with operational inefficiencies and poor profitability, particularly in underwriting.
Since taking the helm, Zaffino has implemented an aggressive transformation strategy that emphasizes disciplined underwriting, operational streamlining, and technological modernization. AIG has divested non-core units, successfully reduced its risk exposure by over $1 trillion, and invested in artificial intelligence capabilities. This includes partnerships with Anthropic and Palantir to develop AI-driven risk assessment and operational tools aimed at enhancing underwriting precision and claims efficiency.
