A.M. Best Affirms Ratings of AES Global Insurance Company
December 05 2014 - 12:51PM
Business Wire
A.M. Best has affirmed the financial strength rating of
B+ (Good) and the issuer credit rating of “bbb-” of AES Global
Insurance Company (AGIC) (Burlington, VT). The outlook for both
ratings is stable.
The ratings reflect AGIC’s adequate risk-adjusted
capitalization, consistently favorable operating performance and
sound risk management capabilities. Also supporting the ratings is
a favorable business plan that is used as a basis for the rating’s
profitability and liquidity metrics.
Partially offsetting these positive rating factors are exposure
to large losses due to the policy limits offered, limited market
scope/business profile, product mix and dependence on third parties
for processing, servicing and administration.
Additionally, the ratings recognize the AGIC’s excellent
business position and relationship with its parent, AES
Corporation (AES Corp.) [NYSE: AES], a global power company
that owns a diverse and growing portfolio of electricity generation
and distribution businesses operating in 20 countries. AGIC insures
the global property and business interruption coverage for AES
Corp., its subsidiaries and affiliates. The program is fronted by
AIG Europe Limited. Somewhat offsetting these positive
rating factors is the company’s sole dependency on the parent
company’s business opportunities for its growth prospects.
AGIC has consistently produced profitable net operating income
resulting from favorable underwriting experience and investment
income in each year of the past decade. Over the past five years,
AGIC has exhibited significant growth in total assets and
policyholders’ surplus despite annual dividend payments to its
parent/sole shareholder that totaled more than $49 million during
the same period. Nonetheless, A.M. Best will closely monitor
performance of AGIC against its stated operating plan.
The ratings further consider the extensive experience and level
of commitment on the part of its parent, whose management
incorporates the captive as a core element in the overall risk
management program of AES Corp. and utilizes the captive as an
integral part in this process. AES Corp. continually evaluates the
use of AGIC for other risk management objectives of the group as
those arise.
The company’s ratings are not expected to be upgraded or its
outlook revised within the near term as its operating performance
and capital position have already been considered in A.M. Best’s
ratings process. Conversely, any material adverse deviations with
regard to management, earnings, capitalization or risk profile
could potentially undermine the stability of the company’s ratings.
In addition, deterioration in the credit profile of AES Corp. could
impact AGIC’s ratings.
A.M. Best remains the leading rating agency of alternative risk
transfer entities, with more than 200 such vehicles rated in the
United States and throughout the world. For current Best’s Credit
Ratings and independent data on the captive and alternative risk
transfer insurance market, please visit www.ambest.com/captive.
The methodology used in determining these ratings is Best’s
Credit Rating Methodology, which provides a comprehensive
explanation of A.M. Best’s rating process and contains the
different rating criteria employed in the rating process. Best’s
Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Alternative Risk Transfer (ART)
- Catastrophe Analysis in A.M. Best
Ratings
- Evaluating Non-Insurance Ultimate
Parents
- Risk Management and the Rating Process
for Insurance Companies
- Understanding BCAR for
Property/Casualty Insurers
This press release relates to rating(s) that have been
published on A.M. Best's website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please visit A.M.
Best’s Ratings & Criteria Center.
A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
A.M. BestAlexander Sarfo, 908-439-2200, ext.
5779Senior Financial
Analystalexander.sarfo@ambest.comorSteven Chirico, CPA,
908-439-2200, ext. 5087Assistant Vice
Presidentsteven.chirico@ambest.comorChristopher Sharkey,
908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
908-439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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