AM Best Revises Issuer Credit Rating Outlook to Positive for American International Group, Inc. and Its Property/Casualty Subsidiaries
December 16 2022 - 3:52PM
Business Wire
AM Best has revised the outlooks to positive from stable
for the Long-Term Issuer Credit Ratings (Long-Term ICRs) and
affirmed the Financial Strength Rating (FSR) of A (Excellent) and
the Long-Term ICRs of “a” (Excellent) of American International
Group, Inc.’s (AIG) property/casualty (P/C) insurance subsidiaries
(collectively referred to as AIG PC). The outlook of the FSR is
stable. At the same time, AM Best has revised the outlook to
positive from stable and affirmed the Long-Term ICR of “bbb” (Good)
of AIG (headquartered in New York, NY) [NYSE: AIG].
Concurrently, AM Best has affirmed the FSR of A (Excellent) and
the Long-Term ICRs of “a” (Excellent) for the members of the AIG
Life & Retirement Group (AIG L&R). The outlook of these
Credit Ratings (ratings) is stable. (Please see below for a
detailed listing of the companies and ratings.)
The ratings of AIG PC reflect the group’s balance sheet
strength, which AM Best assesses as very strong, as well as its
marginal operating performance, favorable business profile and
appropriate enterprise risk management (ERM). AIG PC’s
risk-adjusted capital position remains at the strongest level, as
measured by Best’s Capital Adequacy Ratio (BCAR), benefiting from
improving underwriting performance, including a reduction in net
premiums written and net loss reserves, which declined at a larger
rate than surplus, while also benefiting from strong reinsurance
support from highly rated reinsurers.
AM Best views AIG PC’s operating performance as marginal. The
group’s historical combined and operating ratios have lagged
composite peers materially. However, the positive Long-Term ICR
outlook recognizes that the group’s operating performance has
demonstrated a steady improving trend in more recent years,
attributable to numerous underwriting and risk management
initiatives, as well as continued positive pricing momentum in most
key business lines.
AM Best factored into the rating decision the announcement on
Dec. 14, 2022, whereby the wholly owned subsidiary of AIG, AIG
Financial Products Corp., filed a voluntary petition to reorganize
under Chapter 11 bankruptcy.
The ratings of AIG L&R reflect its balance sheet strength,
which AM Best assesses as adequate, as well as its strong operating
performance, favorable business profile and appropriate ERM. AIG
L&R’s risk-adjusted capital position marginally improved in
2021 to the strong level, as measured by BCAR. This risk-adjusted
capital position benefits from the large modified coinsurance
agreement with Fortitude Reinsurance Company Ltd., which reduces
much of the risk from the longer-term structured settlements book
of business. The new holding company, Corebridge Financial, Inc.,
provides projections for leverage and coverage ratios that are
within AM Best’s methodology guidelines and AIG’s statutory
entities are expected to remain well-capitalized. However, AM Best
notes that as the separation continues there will still be
execution risk, and current projections may not materialize as
planned. Additionally, longer-term reallocation of AIG L&R’s
investment portfolio may have an adverse impact on future
risk-adjusted capital.
AM Best continues to assess AIG L&R segment’s operating
performance as strong. While AM Best acknowledges the headwinds of
strong competition within the segment, AIG L&R maintains a
diversified product portfolio, along with spread and fee income
that is consistent with strong operating peers. AIG L&R’s
individual and group retirement segments continue to produce
consistent returns. While its life segment reported a loss in 2020,
the institutional products segment, consisting of pension risk
transfer, stable value wrap, guarantee investment contracts and
bank-owned/corporate-owned life insurance, has been a growing
portion of the business and is likely to see continued growth.
The FSR of A (Excellent) and the Long-Term ICRs of “a”
(Excellent) have been affirmed, with the outlook for the Long-Term
ICRs revised to positive from stable and the FSR outlook maintained
at stable for the following P/C subsidiaries of AIG, which are
collectively referred to as the AIG PC:
- National Union Fire Insurance Company of Pittsburgh, PA
- American Home Assurance Company
- Lexington Insurance Company
- Commerce and Industry Insurance Company
- AIG Property Casualty Company
- The Insurance Company of the State of Pennsylvania
- New Hampshire Insurance Company
- Illinois National Insurance Company
- AIG Specialty Insurance Company
- AIU Insurance Company
- AIG Assurance Company
- AIG Insurance Company – Puerto Rico
- AIG Insurance Company of Canada
- AIG Insurance Hong Kong Limited
- Granite State Insurance Company
- Tudor Insurance Company
- Stratford Insurance Company
- Western World Insurance Company
- Blackboard Specialty Insurance Company
- Blackboard Insurance Company
- American International Group UK Limited
- American International Reinsurance Company, Ltd.
- AIG Asia Pacific Insurance Pte. Ltd.
- Validus Reinsurance, Ltd.
- Validus Reinsurance (Switzerland) Ltd.
The FSR of A (Excellent) and the Long-Term ICRs of “a”
(Excellent) have been affirmed with stable outlooks for the
following subsidiaries of AIG, which are collectively referred to
as the AIG Life & Retirement Group:
- AGC Life Insurance Company
- American General Life Insurance Company
- United States Life Insurance Company in the City of New
York
- The Variable Annuity Life Insurance Company
This press release relates to Credit Ratings that have been
published on AM 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 see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please
view Guide to Best's Credit Ratings. For information
on the proper use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
Copyright © 2022 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221216005476/en/
Raymond Thomson, CPCU, ARe, ARM Associate Director
+1 908 439 2200, ext. 5621 raymond.thomson@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Erik Miller, CFA Director +1 908 439 2200, ext.
5187 erik.miller@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 439 2200, ext. 5098 al.slavin@ambest.com
American (NYSE:AIG)
Historical Stock Chart
From Apr 2024 to May 2024
American (NYSE:AIG)
Historical Stock Chart
From May 2023 to May 2024