Risk Management

A.M. Best affirms AIG ratings

Rob Lenihan

May 23, 2017 Reprints

AIG Financial Results P/C Insurers More + Less -

A.M. Best Co. Inc. said it has removed its negative review and affirmed its long-term credit and financial strength ratings of American International Group Inc. and its insurance subsidiaries.

AIG currently has an “A” financial strength rating from Best.

The Oldwick, New Jersey-based ratings company said it assigned a stable outlook to these ratings, which had been put under review in January after AIG announced that it again had suffered incurred material adverse reserve development, primarily relating to its U.S. property/casualty long-tail business.

The total amount of the group’s gross deficiency reported was $5.6 billion, which exceeded Best’s estimation. The under-review status also considered the potential impact on AIG’s risk-adjusted capitalization, liquidity, franchise value and future earnings capacity from the corrective actions being taken by management to improve profitability and maximize shareholder return of capital, Best said Tuesday in a statement.

Best said it analyzed the most recent financial information of AIG and its rated subsidiaries, particularly the impact of the reserve development, the benefit of the adverse development cover and related loss portfolio transfer and an assessment of the adequacy of the group’s current reserve position.

Best also has discussed with AIG management and reviewed the viability of the planned corrective actions, capital return goals and organizational changes, including the new management framework.

The ratings company said AIG’s announcement naming Brian Duperreault as its new CEO is “a move that brings his significant operating experience as an industry leader to the organization.”

“AIG maintains adequate liquidity and financial flexibility,” Best said, “while its financial leverage and coverage ratios are within A.M. Best’s guidelines for its current rating.”