A.M. Best Affirms Ratings of AIG Asia Pacific Insurance Pte. Ltd.
February 27 2015 - 12:30PM
Business Wire
A.M. Best has affirmed the financial strength rating
(FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a”
of AIG Asia Pacific Insurance Pte. Ltd. (AIG API)
(Singapore) and its fully-owned subsidiaries, AIG Australia
Limited (AIG Australia) (Australia) and AIG Insurance Hong
Kong Limited (AIG Hong Kong) (Hong Kong). The outlook for the
FSR of AIG API is stable, while the outlook for the ICR is
positive. The outlook for the FSR and the ICRs of AIG Australia and
AIG Hong Kong are also stable. The ultimate parent company is
American International Group, Inc. (AIG) (New York, USA)
[NYSE: AIG].
AIG API’s ratings primarily reflect the company’s excellent
risk-adjusted capitalization, as measured by Best’s Capital
Adequacy Ratio (BCAR), its good financial performance, its broad
geographic footprint and business profile as AIG’s
property/casualty hub in Asia (excluding Japan). A simplified
intra-group reinsurance arrangement that is gradually being rolled
out among AIG API’s subsidiaries is expected to help reduce the
company’s capital requirements and potential volatility.
Offsetting rating factors include the uncertainty surrounding
the company’s new capital targets. As the new intra-group
reinsurance arrangement is expected to reduce capital requirements
and claims volatility, it is expected that the company will reduce
its capital targets.
AIG Australia's ratings mainly reflect its strong risk-adjusted
capitalization, as measured by BCAR, and very good operating
performance. The ratings also consider the various support provided
by AIG, which includes reinsurance and risk management. A key
offsetting factor is the company's high dividend payout ratio. As a
result of the dividends paid in FY2012 and FY2013, AIG Australia's
risk-based capitalization leverage ratios and liquidity ratios have
come down over the past two years.
AIG Hong Kong's ratings reflect its strong market presence in
selected commercial and personal non-life insurance segments in
Hong Kong, consistently favorable underwriting results in the
accident and health line, as well as its supportive risk-adjusted
capitalization, as measured by BCAR, and the company’s conservative
and liquid investment portfolio. These positive rating factors are
partially offset by the company's relatively volatile year-on-year
underwriting results over past five years, which are evident in
workers' compensation and financial lines businesses, and the
company’s relatively high management expense ratios compared to its
Hong Kong non-life peers.
Positive rating action on AIG API could occur if it maintains
its excellent capitalization and its diversified underwriting
portfolio continues to grow profitably. A material reduction in the
company’s capitalization could result in negative rating
action.
AIG Australia is well positioned at its current rating level.
Negative rating actions could occur if there is a significant
worsening of its operating results and a substantial deterioration
in absolute or risk-based capitalization.
AIG Hong Kong is well positioned at its current rating level.
Negative rating actions for AIG Hong Kong could occur if there is a
significant deterioration of the company's operating results or
risk-adjusted capitalization.
Any unfavorable rating actions on AIG could also put downward
pressure on all three companies’ ratings.
The methodology used in determining these interactive ratings is
Best’s Credit Rating Methodology, which provides a comprehensive
explanation of A.M. Best’s rating process and contains the
different rating criteria employed in the rating process. Best’s
Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Catastrophe Analysis in A.M. Best
Ratings
- Risk Management and the Rating Process
for Insurance Companies
- Understanding Universal BCAR
- Rating Members of Insurance Groups
Ratings are communicated to rated entities prior to publication,
and unless stated otherwise, the ratings were not amended
subsequent to that communication.
This press release relates to rating(s) that have been
published on A.M. 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 visit A.M.
Best’s Ratings & Criteria Center.
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 © 2015 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
A.M. Best CompanyChi Yeung Lok, +(65) 6589
8400, ext. 211Senior Financial
Analystchi-yeung.lok@ambest.comorKen Chow, +(852)
28278 3426, ext. 426Senior Financial
Analystken.chow@ambest.comorChristopher Sharkey, +(1) 908
439 2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy, +(1) 908
439 2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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