A.M. Best Affirms Ratings of AIG Europe Limited
LONDON -- February 20, 2014
A.M. Best has affirmed the financial strength rating of A (Excellent) and
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).
The ratings reflect AEL’s strong risk-adjusted capitalisation, excellent
operating performance and strong business profile, which is supported by
excellent distribution capabilities across Europe.
On 1 December 2012, AIG completed the restructuring of its European operations
by merging Chartis Europe S.A. (France) into AEL. AEL is 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
Following corrective actions taken to address weaker performance in recent
years, including the withdrawal from unprofitable lines of business and the
introduction of revised underwriting guidelines, AEL achieved a profit before
tax for 2012 of GBP 338 million on a pro forma combined basis. A further
improvement is expected to be reported for 2013, the first full year of
operation of AEL as the single European company, with strong underwriting
profits and good investment returns.
However, with premium rates remaining weak for many of AEL’s core lines of
business, prospective performance continues to be subject to 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
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
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
In accordance with Regulation (EC) No. 1060/2009, the following is a link to
required disclosures: A.M. Best Europe - Rating Services Limited Supplementary
This rating has been issued by A.M. Best Europe - Rating Services 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.
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
A.M. Best Company
David Drummond, +(44) 20 7397 0327
Senior Financial Analyst
Stefan Holzberger, +(44) 20 7397 0288
Managing Director, Analytics
Rachelle Morrow, +(1) 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, +(1) 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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