Chartis Combines Its Claims, Operations, Systems Under Single Management

February 22, 2012

Chartis, the flagship property/casualty operations of American International Group Inc., said it has combined its claims management with its operations and systems under a single management team.

Chartis described the move as a "critical component" of its five-year plan, which include improving customer service, capitalizing on the shared strategic initiatives of the two teams and improving Chartis’ loss ratio.

Last May, the company outlined a plan to provide a double-digit return on equity and a combined ratio in the low 90's by year-end 2015, Peter D. Hancock, Chartis chief executive officer, said in a statement. The plan requires successful initiatives in four key strategic areas: business mix shift, loss ratio improvement, expense discipline and risk selection. Unifying the company's claims and O&S will "help us achieve our goals," Hancock said.

Operations and systems are essentially the company's information technology operations, Mark Herr, a spokesman for AIG, said.

Eric Martinez will lead the new unit. Martinez, who had previously served as the president and CEO of AIG's mortgage insurance unit, United Guaranty Corp., has been appointed executive vice president of global claims, operations and systems and will report to Hancock.

Martinez succeeds Charles Schader, who assumes the newly created position of senior vice president, applied research, reporting to Charles Shamieh, AIG’s chief actuarial officer. In his new role, Schader will work closely with the AIG and Chartis actuarial, science and risk officers in the practical application of quantitative research to enhance reserving methodologies, claims outcomes and underwriting risk selection. Schader has served as AIG’s and Chartis’ chief claims officer for the past 11 years.

Kim Garland, who was most recently United Guaranty's chief operating officer, will succeed Martinez as president and CEO of United Guaranty. The company is looking for a new COO to succeed Garland at United Guaranty. Before joining AIG, Garland had served as president of Safeco’s Open Seas Solutions group, the company’s innovation team, and prior to that had responsibility for Safeco’s personal auto business.

AIG is the second-largest North American public insurer by 2010 assets, according to BestLink.

In an interview with Best's News Service earlier this month, Hancock, who has been the head of Chartis for about a year, said the company "is very focused on customers, very focused on achieving goals—an action-oriented company. And so it has been the first mover in many segments of insurance in many parts of the world where others were fearful in investing. So we have retained, I think, that entrepreneurial first-mover mindset and customer focus."

However, Hancock said, "on the negative side, the coordination between units was not something that was our strong suit. There was a lot of internal competition and I think that what I found as a positive benefit of the financial crisis is that it pulled everybody together in a way that led to collective problem solving. So I've been very pleased at the way in which people have collaborated across silos and broken down previous barriers to collaboration to solve our customers' needs" (Best's News Service, Feb. 9, 2012).

In January, Chartis realigned its geographic structure to focus on three regions instead of four. Chartis will now be organized under three major geographic areas: the Americas, Asia and Europe, Middle East and Africa (Best's News Service, Jan. 19, 2012).

Last March, Chartis reorganized into two major global groups—commercial and consumer—with the supporting claims, actuarial, and underwriting disciplines integrated into these two major business operations (Best's News Service, March 31, 2011).

Chartis U.S. Insurance Group currently has a Best's Financial Strength Rating of A (Excellent).

Shares of AIG (NYSE: AIG) were trading at $27.51 a share midday on Feb. 22, up 0.66% from the previous close.

(By Meg Green, senior associate editor, BestWeek: Meg.Green@ambest.com)