Venture links Hamilton Insurance and AIG
Hamilton Insurance Group along with American International Group and Two Sigma, plan to work together to create an insurance platform for small and medium-sized enterprises.
The three companies are looking to become the leader in the sector in North America, where the market is estimated to be worth $76 billion.
Bermudian-based Hamilton Insurance Group has entered into a non-binding memorandum of understanding with AIG and affiliates of Two Sigma Investments to form the joint venture.
The plan reunites Brian Duperreault, Hamilton’s chairman, with AIG. He started his international business career with the company in the 1970s and worked for the group for about 20 years. He also partnered with hedge fund firm Two Sigma to form Hamilton Insurance Group.
The proposed venture will establish “a technology-enabled, customer-centric insurance platform for the small to medium-sized enterprise market”, according to a statement issued by the three companies.
Each of the partners will bring specific expertise to the venture. In Two Sigma’s case it will be its proprietary data science and technology platform, while Hamilton brings to the table technology and underwriting expertise in the sphere of small and medium-sized enterprises.
Meanwhile, AIG’s already established capabilities in the target market and its global presence is seen as bringing added weight and reach to the proposed insurance platform.
“The venture is expected to deliver pricing and servicing using predictive analytics and an easy-to-use customer interface. Additionally, Two Sigma will partner with both AIG and the joint venture to develop specialised asset allocation solutions for the unique characteristics of insurance investment portfolios”, the companies stated.
Mr Duperreault, the former chief executive officer of Ace Ltd and Marsh & McLennan, and the founder of Hamilton Insurance Group, will serve as board chairman.
“Hamilton was founded on the premise that technology will redefine the manner in which insurance products are assessed, priced and distributed, particularly in the small commercial market,” he said.
“Since establishing our partnership with Two Sigma and our start-up operations in New Jersey, our belief in this premise has been validated by the enthusiastic reception we’ve received from wholesale and retail partners throughout the US.”
David Siegel, Two Sigma’s co-founder along with John Overdeck, said: “From the formation of Hamilton, we have worked closely with Brian and his team to bring Two Sigma’s capabilities in data science and technology to transform the insurance industry.
“This partnership brings tremendous scale, the ability to provide a more convenient and systematic insurance experience for small businesses, and an opportunity for us to address the challenge of optimal insurance asset allocation.”
It is proposed that Richard Friesenhahn will take the role of CEO of the joint venture. He is currently executive vice-president of US casualty lines at AIG.
Peter Hancock, president of AIG, said: “With this venture, we want to revolutionise the small and medium-sized enterprises’ market through technology that creates a more tailored and compelling value proposition for clients in this critical segment.
“Our collaboration with Two Sigma will help provide innovative and integrated solutions to the complex optimisation problems related to the assets, liabilities and capital of an insurance company.”
Completion of the venture among the three companies is subject to negotiation of definitive agreements and obtaining required permits and other regulatory approvals. The terms of the transaction have not been disclosed.
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