Fitch Ratings said American International Group Inc. and its subsidiaries will remain on rating watch negative following yesterday's announcement by the company of a $1.64 billion settlement with federal and state authorities and reserve charges.
The ratings agency expressed concern about the operating leverage ratio of the domestic property-casualty subsidiaries most impacted by yesterday's announcement as well as last year's results restatement.
“Fitch views the domestic property-casualty subsidiaries' capital ratios as generally being lower than those required to support existing ratings,” the agency said in a statement today.
Fitch said it will also study carefully the $3.2 billion favorable reserve development action for recent accident-year reserves.
“Given the difficulty in accurately setting longer-tail reserves, Fitch will review carefully the company's current accident-year loss ratios and methodology for setting current accident-year reserves,” the statement said.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.