AM Best Affirms Credit Ratings of American International Group, Inc. and Its Subsidiaries
07 Ottobre 2021 - 10:28PM
Business Wire
AM Best has affirmed the Long-Term Issuer Credit Rating
(Long-Term ICR) of “bbb” (Good) of American International Group,
Inc. (AIG) (headquartered in New York, NY) [NYSE: AIG]. AM Best
also has affirmed the Financial Strength Rating (FSR) of A
(Excellent) and the Long-Term ICRs of “a” (Excellent) of AIG’s
property/casualty (P/C) insurance subsidiaries (collectively
referred to as AIG PC). 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.)
AIG’s consolidated risk-adjusted capital level, as measured by
Best’s Capital Adequacy Ratio (BCAR), has been maintained at the
strongest level. AIG’s historical consolidated performance has been
marginal when compared with composite peers due to poor
underwriting results from its P/C segment, albeit showing
significant underlying improvement in recent years. Full-year 2020
consolidated operating results were negatively impacted by
significant catastrophe losses, including the effects from the
COVID-19 pandemic, with net income unfavorably impacted by the
Fortitude Reinsurance Company Ltd. (Fortitude Re) separation.
However, underwriting results in the first half of 2021 have shown
improvement and are more consistent with the risk selection and
reinsurance risk mitigation strategies implemented by AIG in recent
years.
AM Best does not expect AIG’s planned separation of its life and
retirement business to have a near-term impact on its rating. This
is because the loss of life and retirement segment’s profitability
and diversification is offset by an anticipated increase in
available capital and liquidity with a more focused business
profile, and improving operating performance from its core P/C
operations in a hardening market.
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 BCAR, benefiting from 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 materially
lagged composite peers. However, AM Best notes 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.
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 2020, but remains stable at the adequate level, as measured by
BCAR. This risk-adjusted capital position benefits from the large
modified coinsurance agreement with Fortitude Re, which reduces
much of the risk from the longer-term structured settlements book
of business. The new holding company projections for leverage and
coverage ratios are within AM Best’s methodology guidelines and
AIG’s statutory entities are expected to remain well-capitalized;
however, AM Best notes that with this separation comes 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
the lower rate environment and strong competition within the
segment, AIG L&R maintains a diversified product portfolio and
also maintains 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 BOLI/COLI, 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 stable outlooks 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 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 © 2021 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Erik Miller, CFA Associate Director +1 908 439
2200, ext. 5187 erik.miller@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Michael Lagomarsino, CFA, FRM Senior Director
+1 908 439 2200, ext. 5810
michael.lagomarsino@ambest.com
Jim Peavy Director, Communications +1 908 439
2200, ext. 5644 james.peavy@ambest.com
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