American International Group CEO Peter Zaffino used the insurer’s fourth quarter earnings call to again talk about reinsurance attachments points, throwing in the possibility 2025 could be the year for $200 billion in insured catastrophe losses.
“This could recalibrate the entire industry,” he told analysts on the call.
Zaffino spoke about the topic of reinsurance at the conclusion of the third quarter 2024. He said then that the reinsurance market at Jan. 1 renewals would not reduce attachment points, leading to a continued trend of primary insurers’ absorption of a large majority of natural catastrophe losses.

Related: AIG CEO Zaffino on Approach to Catastrophe Losses in Today’s Reinsurance Market
Zaffino on the most recent call reiterated that higher reinsurance retentions and increased catastrophe losses have led to more risk retained by primary insurers – as much as 90% in 2023 and 2024, he added – in stark contrast to the time before 2023 when the insurer-reinsurer split was about 50/50 on average. Insurance covered 50% of the economic loss from Hurricane Katrina, Zaffino pointed out.
This has made AIG’s “focus on maintaining lower excess-of-loss attachment points, including meaningful aggregate coverage” even more important as eye-popping catastrophe-loss years aren’t what they used to be, Zaffino explained. Fifteen years ago, an outsized catastrophe year was $100 billion. The last eight years have averaged more than $140 billion, he said. And 2025 is not off to a great start.
“In a month with one of the lowest model probabilities of loss, the California wildfires alone would make the first quarter of 2025 the second most costly first quarter for natural catastrophes on record,” Zaffino said.
Assuming insured losses from the wildfires will come in at around $50 billion – the upper end the highest estimate from experts – and adding the average insured loss total of $140 billion over the last eight years to an active wind season, getting to a year of $200 billion in catastrophe losses for 2025 seems possible.
Meanwhile the protection gap is widening, Zaffino said. The economic losses from the January wildfires could be over $250 billion.
“Contrast that to the top 10 largest cat events on record, where insurance has typically covered 40% to 50% of the economic loss,” Zaffino said. The wildfires, he added, show “increased loss from seocndary perils and the magnitude of tail events that are not captured well in modeling.”
AIG had a “very strong” reinsurance renewal season at Jan. 1, the chief executive said.
“For all of our major proportional treaties, we were able to improve or maintain our ceding commission levels, a strong recognition of our underwriting expertise and our position as a market leader across multiple classes,” Zaffino said.
Smart underwriting moves like reducing exposure in California starting a few years back is expected to keep AIG’s losses from the wildfires at about $500 million before reinstatement premiums, he added.
Related: AIG Q4 General Insurance Underwriting Income Down 29% on Catastrophes