OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has commented that the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of American International Group, Inc. (AIG) (headquartered in New York, NY) [NYSE: AIG], as well as the Financial Strength Ratings and the Long-Term ICRs of its operating subsidiaries are unchanged following AIG’s recent announcement that it plans to sell a majority stake in Fortitude Group Holdings, LLC (Fortitude RE). The outlook of these Credit Ratings (ratings) remains stable.
AIG formally announced the majority sale of its legacy run-off specialist company, Fortitude RE, for $1.8 billion to Carlyle Group, and T&D United Capital Co. Ltd. AIG’s ownership was 80.1% after previously selling 19.9% to the Carlyle Group in November of 2018, and it is selling an additional 51.6% to the Carlyle Group and 25% to T&D United Capital Co. Ltd. The balance of 3.5% ownership will remain with AIG as a minority stake. AIG expects to use the majority of the proceeds to contribute capital to its insurance company subsidiaries upon closing, which is expected to take place in mid-2020.
AM Best believes this transaction is incrementally positive for the AIG-rated companies. Fortitude RE held roughly $31 billion and legacy life and retirement reserves, and an additional $4 billion in general insurance/property/casualty reserves. The reserve blocks overall were largely non-core legacy products that tended to be longer-duration higher risk products based on AM Best’s product continuum. AM Best believes the removal of these legacy reserves will improve the holding company’s risk-adjusted capital incrementally and leave it with a more focused reserve profile while still maintaining significant diversification between its existing companies.
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