Ratings drop does not apply locally
06 Feb 2017
AIG Australia has reassured the Australian and New Zealand industry that S&P Global’s decision to downgrade its parent’s debt rating to BBB+ from A- will not affect its local ratings.
AIG Property Casualty and AIG Life are unaffected, with their insurer financial strength ratings remaining at A+ with a stable outlook.
“As such, the S&P insurer financial strength rating of A for AIG Australia is unchanged and the business remains strong,” a spokesman told insuranceNEWS.com.au.
S&P downgraded AIG Group’s debt rating after the global insurance giant said its fourth-quarter results, to be announced next week, will include a “material adverse reserve adjustment and capital-supporting reinsurance transaction” for its US commercial business.
This refers to an agreement signed with Berkshire Hathaway subsidiary National Indemnity, under which many of IAG’s long-term risks on previously written commercial policies will be covered.
Despite the downgrade, S&P Global described the deal as “a significant step in the right direction to reduce capital and earnings volatility”.