A.M. Best Revises Outlook to Stable for American International Group, Inc. and Most of Its U.S. Insurance Subsidiaries

Published on Friday, 27 January 2012 15:18 Written by TradersHuddle Staff

OLDWICK, N.J.-( Business Wire )-

A.M. Best Co. has revised the outlook to stable from negative and affirmed the issuer credit rating (ICR) of “bbb” of American International Group, Inc. (AIG) (NYSE: AIG). Concurrently, A.M. Best has revised the outlook to stable from negative and affirmed the financial strength ratings (FSR) of A (Excellent) and ICRs of “a” of Chartis US Insurance Group and its members as well as the Lexington Insurance Pool (headquartered in Boston, MA) and its members. (For further information on the Chartis US Insurance Group and the Lexington Insurance Pool, please refer to the press release dated January 27, 2012 titled, “A.M. Best Revises Outlook to Stable for Most American International Group, Inc. North American Property/Casualty Companies.”) All the above companies are headquartered in New York, NY, unless otherwise specified.

A.M. Best also has revised the outlook to stable from negative and affirmed the FSR of A (Excellent) and ICRs of “a” of the domestic life/health subsidiaries of AIG, collectively referred to as SunAmerica Financial Group (SAFG) (headquartered in Houston, TX). (For further details on these rating actions, including factors that might cause upward or downward changes in these ratings, please refer to the press release dated January 27, 2012 titled, “A.M. Best Revises Outlook to Stable for Ratings of American International Group, Inc.’s Domestic Life/Health Subsidiaries.”)

In addition, A.M. Best Europe – Rating Services Limited has assigned a FSR of A (Excellent) and ICRs of “a” to Chartis Europe Limited (United Kingdom) and Chartis Europe S.A. (France). The outlook assigned to these ratings is stable. (Details on these rating assignments are provided in the press release dated January 27, 2012 titled, “A.M. Best Assigns Ratings to Chartis Europe Limited and Chartis Europe S.A.” issued by A.M. Best Europe – Rating Services Limited.)

Additionally, A.M. Best has upgraded the FSR to A- (Excellent) from B++ (Good) and the ICR to “a-” from “bbb+” for The Fuji Fire & Marine Insurance Company, Limited (Fuji) (Japan). These ratings have been removed from under review with positive implications and assigned a stable outlook. (Please refer to the press release dated January 27, 2012 titled, “A.M. Best Upgrades Ratings of The Fuji Fire & Marine Insurance Company, Limited” for further details.)

The revised outlook for AIG reflects A.M. Best’s assessment that the potential for negative effects on the operating insurance companies due to issues at the holding company or in AIG’s non-insurance operations has diminished. The successful recapitalization of AIG, its issuance of public debt and equity in 2010 and 2011, the execution of new credit facilities to provide back-up liquidity and the reduction of risk related to the non-insurance operations have contributed to this assessment. While A.M. Best acknowledges that AIG’s income will continue to show variability from quarter to quarter, A.M. Best does not expect at this time that the variances will substantially impact the company’s capital position or the claims paying ability of its insurance subsidiaries.

A.M. Best does not expect positive movement on AIG’s ratings in the near to mid term. Potential drivers that would downgrade the ratings of AIG and its insurance subsidiaries include a change in the ratings of a major AIG insurance subsidiary; a significant reduction or withdrawal of AIG’s ability to access its lines of credit; recognition of a failure of management to disclose information that is relevant to the rating process; and deterioration in the financial position of AIG, whether driven by its insurance or non-insurance operations.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “A.M. Best’s Ratings & the Treatment of Debt”; “Assessing Country Risk”; Catastrophe Analysis in A.M. Best Ratings”; “Rating Members of Insurance Groups”; “Rating Natural Catastrophe Bonds”; “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Understanding BCAR for Life/Health Insurers”; “Understanding Universal BCAR”; “Equity Credit for Hybrid Securities”; and “The Treatment of Terrorism Risk in the Rating Evaluation.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, 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 © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best Co.Jennifer Marshall, 908-439-2200, ext. 5327Managing Senior Financial Analystjennifer.marshall@ambest.comorDaniel Ryan, 908-439-2200, ext. 5325Vice Presidentdaniel.ryan@ambest.comorRachelle Morrow, 908-439-2200, ext. 5378Senior Manager, Public Relationsrachelle.morrow@ambest.comorJim Peavy, 908-439-2200, ext. 5644Assistant Vice President, Public This e-mail address is being protected from spambots. You need JavaScript enabled to view it.