By Michael Loney
June 20 - (The Insurer) - Moody’s Ratings has upgraded the senior unsecured debt rating of American International Group to Baa1 from Baa2, and the insurance financial strength ratings of its major property casualty subsidiaries in the U.S., UK and Europe to A1 from A2.
Moody’s has changed the rating outlook for AIG and its P&C subsidiaries to stable from positive.
“The rating upgrade for AIG and its flagship U.S. P&C operations … reflects the group’s enhanced profitability, simplified organisational structure and reduced financial leverage,” the rating agency said.
“AIG has produced strong and steady underwriting results over the past several years through better risk selection, cumulative rate increases, tighter terms and conditions, shedding noncore units, and strategic use of reinsurance to limit volatility,” it continued.
Moody’s added that the group has also benefited from higher net investment income mainly from its diversified fixed income portfolio.
The rating agency said that since deconsolidating its life and retirement business in mid-2024, AIG has managed its financial leverage within a target range of 15% to 20%, down significantly from the upper 20s and low 30s in prior years.
“The stable rating outlook reflects our view that AIG will remain a leading global P&C insurer with healthy profitability and a sound balance sheet,” it said.
The Moody’s upgrade follows S&P Global Ratings in May raising its financial strength and issuer credit ratings on AIG’s core subsidiaries to AA-minus from A-plus and revising the core subsidiaries' outlook to stable from positive.
The upgrade reflected AIG’s progress and ability to achieve consistent strong underwriting performance, comparable to that of higher-rated competitors, S&P said.
“Despite divesting several businesses, including Corebridge, Validus Re, Crop Risk Services (and) Travel Guard, we continue to consider the company's business risk profile a strength to our ratings,” it said.
“We think AIG’s efforts to reshape its portfolio to minimise volatility, focus on higher-margin businesses, and streamline its expense structure will contribute to sustainable and profitable growth,” S&P continued.
AIG also holds financial strength ratings of A from AM Best and A-plus from Fitch.
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