A.M. Best Revises AIG, Chartis Outlooks to Stable

NU Online News Service, Jan. 30, 12:46 p.m. EST

A.M. Best has revised its outlook to “stable” from “negative” on American International Group, Inc.’s “bbb” issuer credit rating and on Chartis U.S. Insurance Group’s “A” financial strength rating. 

For AIG, Best says the revised outlook reflects the ratings agency’s assessment “that the potential for negative effects on the operating insurance companies due to issues at the holding company or in AIG’s non-insurance operations has diminished. 

Best cites AIG’s recapitalization plan, the issuance of public debt and equity in 2010 and 2011, the execution of new credit facilities and the reduction of risk related to non-insurance operations.

“While A.M. Best acknowledges that AIG’s income will continue to show variability from quarter to quarter, A.M. Best does not expect at this time that the variances will substantially impact the company’s capital position or the claims paying ability of its insurance subsidiaries,” Best says in a statement.

The ratings agency adds that it does not expect positive movement on AIG’s ratings in the near or mid term.

For Chartis, Best says the revision to a stable outlook “reflects Chartis U.S.’ market position; its ability to lead, attract and retain clients by leveraging its significant global capacity, extensive product offerings and innovation; and greater emphasis on technical pricing and predictive modeling.”

Best notes that reserve development “remains a concern,” but adds that it anticipates future reserve development to be within a level “acceptable to A.M. Best.”

Best also says Chartis U.S.’ risk-adjusted capital position remained stable in 2011 and “is well-supportive of the ratings at its current level,” and adds that underwriting performance improved through the first nine months of 2011 compared to 2010, although still slightly worse than the industry average for the year.

A.M. Best has also revised to “stable” from “negative” the “A” financial strength ratings of the Lexington Insurance Pool and its members, noting that premiums have rebounded in 2010 and 2011 after declining in 2009. Best says Lexington’s ratings reflect “its supportive level of risk-adjusted capitalization, historically favorable development of prior-years’ loss reserves, consistent generation of favorable pre-tax operating and net income and its position as the leader in the U.S. excess and surplus-lines market.”