A.M. Best Affirms Credit Ratings of American International Group, Inc. and Certain Subsidiaries
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AIG's consolidated risk-adjusted capitalization remains at the strongest level and is supported by its favorable liquidity and financial flexibility. AIG's financial leverage measures are within
AIG has incurred sizable investment and underwriting losses over the last decade, as well as significant changes in its operating and capital structure and its senior management. The most current management objectives include profitable growth, capital efficiencies and enhancing the senior management team. This focus on growing the group's general insurance operations and limiting underwriting losses through enhanced reinsurance protection, re-underwriting and expense control, somewhat lessens
The rating affirmations for the members of AIG PC US also reflect the benefit the group receives by being a part of the AIG enterprise, which includes AIG's liquidity and financial flexibility, diversified and dominant business profile and profitable life and retirement lines businesses. AIG's overall support has helped to limit the negative impact of the historical underwriting losses AIG PC US incurred on its long-tail casualty business, and has given the group time to achieve a noticeable benefit from the corrective actions. AIG PC US maintains the strongest risk-adjusted capitalization and a favorable leadership position in the global commercial lines insurance market. Additionally, AIG PC US should benefit from the leadership and experience of its expanding and experienced senior management team. Offsetting rating factors include AIG PC US' underwriting results, which have lagged the commercial casualty composite and the broader property/casualty industry; continued adverse development of prior years' loss reserves; and the execution risks associated with management's stated corrective actions and restructuring measures, given the higher-than-expected underwriting losses in the first quarter of 2018.
The rating affirmations of AIG L&R are due to the group's very strong operating performance that has been achieved through a diversified product offering with all major segments of business, adding to operational profitability. The ratings also reflect its favorable business profile, with significant economies of scale and leadership positions in many lines of business. Despite the robust profile and operating performance, much of the group's strong returns have not been retained but rather have been sent back to the parent company for general corporate purposes, limiting capital and surplus growth. AIG L&R risk-based capital and overall balance sheet assessment is adequate, with strong financial flexibility and liquidity offset by a decline in the quality of capital due to the financing of redundant reserves through reinsurance.
The rating affirmations of AIRCO, a
The rating affirmations of
The ratings also reflect the support the company receives from the parent group. AIG HK's very strong risk-adjusted capitalization is underpinned by its conservative investment strategy and supportive intercompany reinsurance arrangements within the AIG group. The company has delivered positive operating results over the past few years, attributed to a stable stream of interest income from bank deposits, which offsets underwriting losses driven by its higher-than-average, albeit gradually improving, expense ratio. AIG HK ranks as the sixth-largest insurer in
The rating affirmations of AIG API reflect the company's solid risk-adjusted capitalization, strong operating results and established business profile. AIG API continues to maintain its position as the market leader in
The Long-Term ICR of "bbb" of
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