American International Group, Inc., Hamilton Insurance Group, Ltd., and affiliates of Two Sigma Investments, LP plan to jointly develop and launch a technology-enabled, customer-centric insurance platform for the small commercial enterprise market.

None of three parties in the non-binding memorandum of understanding are disclosing financial terms, and a negotiation of final agreements/regulatory approvals must still be worked out. But the deal, once finalized, will be a complementary one. Each party brings something to the table with a collective goal of grabbing a greater share of the $76 billion North American small to medium-sized enterprise (SME) market.

The joint venture will combine Two Sigma’s proprietary data science and technology platform, Hamilton’s technology and underwriting expertise in the SME market, and AIG’s SME capabilities and global reach. 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 specialized asset allocation solutions for the unique characteristics of insurance investment portfolios.

Hamilton Chairman & CEO Brian Duperreault will serve as Chairman of the Board of the joint venture. Richard Friesenhahn, currently Executive Vice President of U.S. Casualty Lines at AIG, will be CEO.

“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,” Duperreault said in prepared remarks. “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 U.S.”

Mr. Duperreault’s sentiment was echoed by David Siegel, Two Sigma’s co-founder along with John Overdeck.

“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,” said Siegel said in a prepared statement.

AIG President and CEO Peter Hancock said he hopes the venture will revolutionize the SME market using technology “that creates a more tailored and compelling value proposition for clients in this critical segment.”

Completion of the joint venture among Hamilton, Two Sigma and AIG is subject to negotiation of definitive agreements and obtaining required permits and other regulatory approvals.

Source: AIG, Hamilton Insurance Group, Two Sigma