A.M. Best Affirms Ratings of AIG Europe Limited Business Wire LONDON -- January 25, 2013 A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of A (Excellent) and issuer credit ratings of “a” of AIG Europe Limited (AEL) (United Kingdom), formerly Chartis Europe Limited. The outlook assigned to both ratings is stable. AEL is a wholly owned subsidiary of American International Group, Inc. (AIG) (New York). The ratings reflect AEL’s excellent risk-adjusted capitalisation, good operating performance and good business profile, which is supported by excellent distribution capabilities across Europe. Previous concerns regarding weaker underwriting results in recent years and the impact of the economic downturn on prospective results have been partly mitigated by the actions management has taken to address the underperformance of particular lines of business. On 1 December 2012, AIG completed the restructuring of its European operations by merging Chartis Europe S.A. (France) into AEL. AEL is now a UK-domiciled insurance company operating through a branch network in 26 European countries. Key drivers and benefits of the restructuring include the creation of 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. Following corrective actions taken to address weaker performance in recent years, including the withdrawal from unprofitable lines of business, the introduction of revised underwriting guidelines and the refocus of the professional indemnity account away from recession exposed professions, a modest improvement in combined technical performance was achieved in 2011, with higher catastrophe losses offset by better results for casualty, specialty, financial lines and consumer business. A further improvement is expected to be reported for 2012, reflecting lower catastrophe losses and the benefits of the first stages of the restructuring of the European operations, and is likely to continue into 2013 following the completion of the restructuring. However, with premium rates remaining weak for many of AEL’s core lines of business, prospective performance continues to be subject to considerable uncertainty. The effect on results of a prolonged economic downturn is also of concern, given the relatively high proportion of casualty and financial lines business underwritten. Nevertheless, as the European operations, now centred on one company, become better integrated with those of the wider group, AEL is expected to benefit from group-driven initiatives to improve performance and analytical capabilities. 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 upwards or downwards pressure on the ratings of AEL. 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. Key criteria utilised include: “Rating Members of Insurance Groups”; “Risk Management and the Rating Process for Insurance Companies”; “Catastrophe Analysis in A.M. Best Ratings”; “Understanding BCAR for Property/Casualty Insurers”; and “Understanding Universal BCAR”. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. 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. A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED. Contact: A.M. Best Europe – Rating Services Limited David Drummond Senior Financial Analyst +(44) 20 7397 0327 email@example.com or Catherine Thomas Director, Analytics +(44) 20 7397 0281 firstname.lastname@example.org or Rachelle Morrow Senior Manager, Public Relations +(1) 908 439 2200, ext. 5378 email@example.com or Jim Peavy Assistant Vice President, Public Relations +(1) 908 439 2200, ext. 5644 firstname.lastname@example.org
A.M. Best Affirms Ratings of AIG Europe Limited
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