AIG has started a consultation process which will see the carrier reduce its UK workforce by up to 120 employees, The Insurance Insider understands.
Sources said the move was part of a wider group initiative at AIG to reduce its expense base, which is dragging on its returns.
AIG currently employs around 2,000 people in the UK, with up to a maximum of 6 percent of that total set to go as part of the efficiency programme.
It is understood that the UK redundancies will be more focused on back office functions than client-facing roles, but all levels of management will be looked at.
It is also thought that no AIG UK employee has yet been made redundant under the scheme, and the consultation is still ongoing.
While the firm does not segment its result for the UK, net operating expenses at AIG Europe accounted for 39.1 percent of net earned premium for the year ended 30 November. When adjusting for foreign exchange, reinsurance commissions and other fee income, this number falls to 32.1 percent.
At a group level, AIG’s general insurance expense ratio was 36.6 percent in Q1, of which 14.9 percentage points accounted for general operating expenses.
The international general insurance business, of which the UK is a part, ran at a higher expense ratio of 39.5 percent in Q1, of which 16.0 percentage points were operating costs.
In a Q1 conference call, AIG CEO Brian Duperreault highlighted the importance of reducing expenses in order to improve returns.
“Expense levels are too high. We want to be top quartile in our expense levels… we're big enough to be taking advantage of our scale. So we should be much, much better in terms of expense levels,” said Duperreault.
In its 2017 annual report, AIG said it had already reduced its group expense base by $3.6bn since 2015 via lower employee-related expenses and professional fee reductions.
AIG joins the likes of MS Amlin and Tokio Marine Kiln in targeting staff reductions to address its cost base.
A number of executives and underwriters have been laid off from MS Amlin, which is targeting a 10 percent reduction in staff costs. Meanwhile Tokio Marine Kiln has put several property and liability underwriters at risk of redundancy and put its construction book into run-off as part of an ongoing restructuring.
Qatar Re also this week announced the closure of its Singapore office, after it opted to suspend underwriting new and renewal business for facultative lines in Dubai earlier in the year, and trimmed some staff from its Zurich office.
AIG declined to comment.
