AM Best Comments on Credit Ratings of American International Group, Inc. Following Fortitude Group Holdings, LLC Sale Announcement
OLDWICK, N.J.--(BUSINESS WIRE)--Nov 26, 2019--
AM Best has commented that the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of American International Group, Inc. (AIG) (headquartered in New York, NY) [NYSE: AIG], as well as the Financial Strength Ratings and the Long-Term ICRs of its operating subsidiaries are unchanged following AIG’s recent announcement that it plans to sell a majority stake in Fortitude Group Holdings, LLC (Fortitude RE). The outlook of these Credit Ratings (ratings) remains stable.
AIG formally announced the majority sale of its legacy run-off specialist company, Fortitude RE, for $1.8 billion to Carlyle Group, and T&D United Capital Co. Ltd. AIG’s ownership was 80.1% after previously selling 19.9% to the Carlyle Group in November of 2018, and it is selling an additional 51.6% to the Carlyle Group and 25% to T&D United Capital Co. Ltd. The balance of 3.5% ownership will remain with AIG as a minority stake. AIG expects to use the majority of the proceeds to contribute capital to its insurance company subsidiaries upon closing, which is expected to take place in mid-2020.
AM Best believes this transaction is incrementally positive for the AIG-rated companies. Fortitude RE held roughly $31 billion and legacy life and retirement reserves, and an additional $4 billion in general insurance/property/casualty reserves. The reserve blocks overall were largely non-core legacy products that tended to be longer-duration higher risk products based on AM Best’s product continuum. AM Best believes the removal of these legacy reserves will improve the holding company’s risk-adjusted capital incrementally and leave it with a more focused reserve profile while still maintaining significant diversification between its existing companies.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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KEYWORD: NEW JERSEY EUROPE UNITED STATES NORTH AMERICA
INDUSTRY KEYWORD: PROFESSIONAL SERVICES INSURANCE FINANCE
SOURCE: AM Best
Copyright Business Wire 2019.
PUB: 11/26/2019 05:09 PM/DISC: 11/26/2019 05:09 PM