Earlier this week Citigroup analyst Todd Bault triggered a number of headlines and healthy amount of debate by suggesting that AIG should be acquired by Google’s parent company Alphabet.
In essence he suggested the beleaguered insurance giant - which recently posted a $2.3bn (£1.61bn) fourth quarter loss could be turned into an insurance FinTech laboratory
The idea has subsequently got a considerable amount of coverage, so is this as dumb as some people have suggested?
Google has had an interest in insurance, but it is a very small part of its overall strategy
When Google acquired UK aggregator Beat that Quote in 2011 the market was all a flutter with comments about how the technology giant could use the acquisition as a stepping stone to insurance domination.
However, a serious push into the aggregator space did not materialise; or at least in the UK. Last year Admiral teamed up with Google to launch Google Compare in California; with plans to roll it out across the personal lines offering across the country.
But when it comes to deploying its capital, it is safe to say, Google is presently more interested in buying firms in hipper and sexier areas such as artificial intelligence and machine learning than insurance; and recruiting the brightest minds rather than underwriters and actuaries.
But AIG has lots of data, which Google could utilise
One of Bault's arguments as to why an AIG-Alphabet deal makes sense is that the insurer has reams and reams of data, but that its legacy systems were holding it back - not least because of the fact each insurer had its own unique technology, meaning automation was difficult.
Citigroup also noted that a green field start-up, while unencumbered by legacy, would struggle to get data as rich as AIG owns, meaning it offers a goldmine of opportunity given its experience in crunching data.
But that is a lot of money to pay for data and a fintech laboratory
It has been mentioned that it makes sense for Alphabet for diversify, but the billions it would take to acquire AIG might be seen as a lot of money to make a serious financial services play.
Also, whilst AIG might have the data, Google also has a lot of information about people, information which - whilst not previously used for underwriting -could be just as rich as that owned by AIG.
Would it not make more sense to start afresh, and attract some of the brightest minds from AIG and other major firms to reboot insurance, rather than try and fix something with undoubted problems, with not just legacy technology, but a culture and people who might not be for turning into the Google way.
I also suspect if Alphabet was to make a serious play for insurance it would rather do it with someone else's capital, leaving questions of solvency and capital adequacy to others, whilst reinventing the customer journey and perception of insurance.
Ultimately Bault should be congratulated for raising the issue that insurance does need to take a long hard look and itself if it is stay relevant; and tacking this onto AIG's ills was a smart way to do this.
However, I suspect AIG and its shareholders will have to look elsewhere for its white knight to ride in and help the company.
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