A.M. Best Revises Outlook of Issuer Credit Rating of AIG Asia Pacific Insurance Pte. Ltd.
HONG KONG--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and issuer credit ratings (ICR) of “a” of AIG Asia Pacific Insurance Pte. Ltd. (AIG APAC) (Singapore) and its fully-owned subsidiaries, AIG Australia Limited (AIG Australia) (Australia) and AIG Insurance Hong Kong Limited (AIG Hong Kong) (Hong Kong). A.M. Best also has revised the outlook to positive from stable for the ICR of AIG APAC. The outlook for the FSR of AIG APAC is stable. The outlook for the ICR and FSR of AIG Australia and AIG Hong Kong is also stable. The ultimate parent company is American International Group, Inc. (AIG) (New York, USA).
AIG APAC’s ratings reflect its solid capitalization, diversified insurance portfolio and leading market position, along with its subsidiaries, in the Asia-Pacific region. AIG APAC’s insurance portfolio is well diversified geographically in the Asia-Pacific region and has a balanced mix of various consumer and commercial lines, which strengthen AIG APAC’s leading regional market position, provide competitive advantages in servicing multinational client accounts and provide benefits of risk diversification.
Offsetting these positive rating factors are impacts from potential major natural catastrophes and potentially high dividends in the coming years.
AIG Australia's ratings reflect its strong reinsurance support from its affiliates, favorable operating results and risk-adjusted capital position, which remained adequate after the company reduced its capital level in 2012.
Offsetting these positive rating factors are the company's exposure to volatile liability lines, reduction in prospective investment income due to the decline in capital size and interest rates, and uncertainty of reserve developments for its liability lines. In addition, a decline in its affiliates’ ratings could materially reduce the company’s risk-adjusted capitalization.
AIG Hong Kong’s ratings reflect its strong market presence in selected commercial and personal non-life insurance segments in Hong Kong, and its improved operating performance over the past few years.
Partially offsetting these positive rating factors are the company’s relatively volatile underwriting results, which are due to its exposure in workers’ compensation and financial lines businesses, and the expected decrease in risk-adjusted capitalization due to an increase in risk retention, which began in 2013. Notwithstanding, the company’s risk-adjusted capitalization level is expected to remain adequate to support its current ratings over the short to medium term.
Future positive rating actions could occur if AIG APAC achieves a consistently favorable underwriting performance in its Asia-Pacific insurance portfolios and it maintains its strong capitalization. Negative rating actions could occur if AIG APAC shows significant worsening in its operating results or the payout of high dividends that trigger substantial deterioration in its risk-adjusted capitalization. While AIG Australia and AIG Hong Kong are well placed at their current rating level, negative rating actions could occur if there is a significant worsening of their operating results and a substantial deterioration in their risk-adjusted capitalization. Any unfavorable rating actions on AIG also could put downward pressure on the 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.
Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.
This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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