The Changing Landscape of Risk November 17, 2015 Rob Schimek CEO, AIG Americas Region
Standing by your side for 95+ years.
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s U.S. Treasury Yields at Near Record Lows U.S. Treasury Yield Curve 1990-2015 9% Dec 1990 8% 7% Excess Workers’ Excess Occurrence Compensation Primary Workers’ Casualty -6% 6% Compensation Primary Claims -6% 16 Years Dec 2000 -6% Made Casualty 8 Years 6 Years -6% 5% Property 4 Years Dec 2010 -7% 4% 1 Year Dec 2012 3% Oct 2015 2% 1% Maturity 0% 3 month 6 month 1 Year 2 Year 3 Year 5 Year 7 Year 10 Year 20 Year 30 Year = Primary Workers’ = Excess Workers’ = Property = Primary Claims = Excess Occurrence Made Casualty Compensation Casualty Compensation Source: U.S. Department of Treasury. 5
International Interest Rates Exhibiting Similar Patterns Global 5 Year Government Bond Rates 1990-2015 12% 10% 8% 6% 4% 2% 0% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Japan Germany UK Canada 6
One Size Does Not Fit All GREECE: ~80% U.S.: 100% COMBINED RATIO COMBINED RATIO JAPAN: ~94% COMBINED RATIO ARGENTINA: ~111% COMBINED RATIO 7
The Wide Spectrum of Insurance Solutions Insurer Insurer Insurer Insurer Insurer CUSTOMER Insurer PRODUCT CENTRIC CENTRIC $ Market Innovators NON TRADITIONAL (CAPITAL HEAVY) 1 - Capital heavy 2 - Cost effective 1 - INNOVATION & SCIENCE 3 - Additional capacity (excess layer) 2 - Claims handling 4 - Narrow focus but good contract certainty 3 - Underwriting expertise and experience 5 - Risk transfer 4 - Global network 5 - Loss control and engineering 6 - CAPITAL 7 - Broad risk appetite 8 - Beyond insurance… 8
PAST FUTURE
INNOVATION … or EXTINCTION
SCIENCE UNDERWRITERS of the 21 st Century THEN NOW
Big Data
Drones 2015 40,000 Drones 2025 160,000 Drones • AIG was recognized by Business Insurance with a 2015 Innovation Award for its Unmanned Aerial Vehicle product • AIG was one of the first insurers approved by the FAA to operate drones for risk assessment and management
Automated Vehicles COMING… ….2030 ….2020 ….2018 • Self-driving vehicles could eliminate 90% of U.S. auto • Google’s 23 autonomous cars have traveled over 1.7 • The Delphi Drive, America’s first 3,400 mile cross accidents, prevent up to $190 billion in damages and million miles with 14 minor accidents. Google states no country-drive, was successfully completed by the health-costs annually and save thousands of lives collisions were caused by its computer systems. Roadrunner in March 2015
Questions Rob Schimek AIG CEO, Americas Region 175 Water Street New York, NY 10038 (212) 458-6080 robert.schimek@aig.com
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