Best Revises AIG and Subs Outlook to Stable; Affirms Ratings

January 27, 2012

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.

It has also 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, Mass, and its members. All the above companies are headquartered in New York, NY, unless otherwise specified.

In addition Best 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.

In a related action A.M. Best Europe – Rating Services Limited has assigned a FSR of ‘A’ (Excellent) and ICRs of “a” to UK-based Chartis Europe Limited and Chartis Europe S.A., which is based in France. The outlook assigned to these ratings is stable.

Best said the revised outlook for AIG reflects its 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.”

Best added that while it acknowledges that “AIG’s income will continue to show variability from quarter to quarter,” it doesn’t “expect at this time that the variances will substantially impact the company’s capital position or the claims paying ability of its insurance subsidiaries.”

However, Best also indicated that it doesn’t expect “positive movement on AIG’s ratings in the near to midterm.

“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.”

Source: A.M. Best

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