S&P Global Ratings has affirmed its ‘A+’ insurer financial strength rating and ‘BBB+’ long- and ‘A-2’ short-term issuer credit ratings on American International Group Inc. (AIG), and its ‘A+’ rating on AIG’s core subsidiaries. The rating agency’s outlook for AIG remains negative.
S&P said its negative outlook reflects “pressure on AIG’s delivery on sustainable improvements in its operating fundamentals while retaining its competitive resilience.”
S&P analysts said they believe AIG will likely retain its multiline structure and focus on profitable growth. “AIG’s very strong capital and earnings have benefited from the diversity afforded by its property/casualty and life and retirement businesses. Furthermore, we don’t have concerns regarding AIG’s ability to retain at least ‘AA’ capital adequacy,” the ratings firm said.
S&P said it may lower the rating by one notch over the next 12 months “if AIG does not meaningfully improve its operating results” and a downgrade may also be subject to any potential concerns regarding AIG’s fixing its core operating fundamentals.
On the other hand, the outlook could be raised to stable over the next 12 months “if AIG demonstrates actualization of its remediation efforts by sustainably improving operating margins and the quality of its earnings, with fewer one-time extraordinary charges affecting the group’s operations.”
Earlier this month, AIG reported a 21 percent decline in first-quarter profit due to higher catastrophe and bad weather claims, as well as weaker investment income.
“We do expect to deliver an underwriting profit by the end of this year,” AIG Chief Executive Officer Brian Duperreault told analysts in reporting first quarter results.