A.M. Best Revises Outlook of Issuer Credit Rating of AIG Asia Pacific
Insurance Pte. Ltd.
HONG KONG -- February 20, 2014
A.M. Best has affirmed the financial strength rating of A (Excellent) and
issuer credit ratings (ICR) of “a” of AIG Asia Pacific Insurance Pte. Ltd.
(AIG APAC) (Singapore) and its fully-owned subsidiaries, AIG Australia Limited
(AIG Australia) (Australia) and AIG Insurance Hong Kong Limited (AIG Hong
Kong) (Hong Kong). A.M. Best also has revised the outlook to positive from
stable for the ICR of AIG APAC. The outlook for the FSR of AIG APAC is stable.
The outlook for the ICR and FSR of AIG Australia and AIG Hong Kong is also
stable. The ultimate parent company is American International Group, Inc.
(AIG) (New York, USA).
AIG APAC’s ratings reflect its solid capitalization, diversified insurance
portfolio and leading market position, along with its subsidiaries, in the
Asia-Pacific region. AIG APAC’s insurance portfolio is well diversified
geographically in the Asia-Pacific region and has a balanced mix of various
consumer and commercial lines, which strengthen AIG APAC’s leading regional
market position, provide competitive advantages in servicing multinational
client accounts and provide benefits of risk diversification.
Offsetting these positive rating factors are impacts from potential major
natural catastrophes and potentially high dividends in the coming years.
AIG Australia's ratings reflect its strong reinsurance support from its
affiliates, favorable operating results and risk-adjusted capital position,
which remained adequate after the company reduced its capital level in 2012.
Offsetting these positive rating factors are the company's exposure to
volatile liability lines, reduction in prospective investment income due to
the decline in capital size and interest rates, and uncertainty of reserve
developments for its liability lines. In addition, a decline in its
affiliates’ ratings could materially reduce the company’s risk-adjusted
AIG Hong Kong’s ratings reflect its strong market presence in selected
commercial and personal non-life insurance segments in Hong Kong, and its
improved operating performance over the past few years.
Partially offsetting these positive rating factors are the company’s
relatively volatile underwriting results, which are due to its exposure in
workers’ compensation and financial lines businesses, and the expected
decrease in risk-adjusted capitalization due to an increase in risk retention,
which began in 2013. Notwithstanding, the company’s risk-adjusted
capitalization level is expected to remain adequate to support its current
ratings over the short to medium term.
Future positive rating actions could occur if AIG APAC achieves a consistently
favorable underwriting performance in its Asia-Pacific insurance portfolios
and it maintains its strong capitalization. Negative rating actions could
occur if AIG APAC shows significant worsening in its operating results or the
payout of high dividends that trigger substantial deterioration in its
risk-adjusted capitalization. While AIG Australia and AIG Hong Kong are well
placed at their current rating level, negative rating actions could occur if
there is a significant worsening of their operating results and a substantial
deterioration in their risk-adjusted capitalization. Any unfavorable rating
actions on AIG also could put downward pressure on the companies’ ratings.
The methodology used in determining these interactive 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
Ratings are communicated to rated entities prior to publication, and unless
stated otherwise, the ratings were not amended subsequent to that
This rating announcement has been issued by A.M. Best Asia-Pacific 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, Inc.
Ken Chow, +852-2827-3426
Senior Financial Analyst
Jeff Yeung, +852-2827-3413
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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