American International Group has announced tentative plans to sell most of its 24.2 percent stake in the reinsurance subsidiaries of Bermuda-based IPC Holdings Ltd.

AIG Chief Executive Officer Martin Sullivan called the move a “part of our ongoing management of our business portfolio and strategic redeployment of capital.”

The manner, timing and sale of the 15.4 million IPCRe shares will be at AIG's discretion and may not occur at all, Mr. Sullivan stressed in a statement issued late Wednesday.

AIG's role in providing investment management, administrative and other services for IPCRe should continue after the sale, said IPC Chief Executive Officer Jim Bryce.

Following the announcement, rating agencies affirmed the status of the carrier formed in 1993 in the aftermath of Hurricane Andrew with AIG as the sponsoring shareholder.

“The sale of IPCRe shares by AIG will not affect IPCRe's capital structure and should provide it with the ability to better manage its capital and afford greater financial flexibility and operational flexibility,” A.M. Best Co. said yesterday in reaffirming the carrier's financial strength rating of A along with its stable outlook.

Mr. Bryce said that an example of that financial flexibility would be possible share repurchases following the AIG sale, since currently no such action could take place if it resulted in the New York-based company controlling more than 25 percent of IPC.

Likewise, Standard & Poor's reaffirmed IPCRe financial strength and counterparty credit ratings.

Credit analyst Jieqiu Fan said the company's strong competitive position in the Bermuda reinsurance market as a long-term provider of high-severity, low frequency property-casualty coverage led to its maintenance of the A ratings.

But the carrier's concentrated risk profile and high risk tolerance is reflected in S&P's negative outlook.

“The ratings in ICPRe reflect its stand-alone characteristics, which following AIG's announcement to sell its shares in ICPRe are not expected to change immediately, but could over the long term,” Ms. Fan wrote.

Special Reports /

AIG May Sell IPCRe Stake

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