A.M. Best Affirms the Ratings of AIG Europe Limited
A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating of “a” of AIG Europe Limited (AEL) (United Kingdom). The outlook for both ratings is stable. AEL is a wholly owned subsidiary of American International Group, Inc. (AIG) (New York, NY) [NYSE:AIG].
The ratings of AEL reflect its strong risk-adjusted capitalisation, excellent operating performance and a strong business profile that is supported by excellent distribution capabilities across Europe.
In 2012, AIG completed the restructuring of its European operations, to create a branch network across 26 European countries, with AEL as a U.K. domiciled insurance company at the centre. Key benefits of the restructuring include a simpler and more transparent operating structure, increased capital fungibility, particularly in the context of the pending implementation of Solvency II, operational efficiencies and alignment with the pan-European management structure.
In 2013, the first full year of operation of AEL as the single European company, an excellent operating profit before tax of GBP 558 million was reported, including an underwriting result of GBP 296 million and net investment income of GBP 256 million, which represented a good investment return of 2.8%. For 2014, a strong operating performance is again anticipated, underpinned by a solid underwriting profit.
AEL has a good business profile in the commercial insurance market, with a particularly strong competitive position in the aerospace, marine, energy and financial lines markets. In addition, the company is a significant writer of multinational programmes. Its competitive position is enhanced by excellent distribution capabilities and the ability to offer a broad range of products across a wide geographic area.
Factors that may lead to negative rating actions include a decline in risk-adjusted capitalisation, weaker-than-expected operating performance or deterioration in reserves. Factors affecting other subsidiaries within the wider AIG group could place upward or downward pressure on AEL’s ratings.
The methodology used in determining these 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 utilised:
o Catastrophe Analysis in A.M. Best Ratings
o Rating Members of Insurance Groups
o Risk Management and the Rating Process for Insurance Companies
o Understanding Universal BCAR.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe – Rating Services Limited Supplementary Disclosure.
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.
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