Amended: Fitch Places AIG's Sr Debt on RW-Neg; Affirms ST Rtg and Financial Strength Rtgs.Business Editors NEW YORK--(BUSINESS WIRE)--Feb. 5, 2003 (This is an amended version of the Feb. 3 press release which includes the correct rating for HSBC HSBC Hongkong and Shanghai Banking Corporation HSBC Humane Society of Broward County (Florida) HSBC Humane Society of Bay County (Bay County, Michigan) Capital Trust I and the rating for American General Life Insurance Company of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of ) Fitch Ratings-Chicago-February 03, 2003: Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has placed the 'AAA' senior debt rating and other long term fixed income security ratings Security ratings Commercial rating agencies' assessment of the credit and investment risk of securities. of American International Group
American International Group, Inc. (AIG) (NYSE: AIG; TYO: 8685 ) is a major American insurance corporation based in New York City. , Inc. (AIG AIG addressee indicator group (US DoD) AIG American International Group, Inc AiG Answers in Genesis (religious group in defense of Scripture) AIG Artificial Intelligence Group AIG Australian Industry Group ) on Rating Watch Negative, following AIG's announcement of after-tax reserve charges of $1.8 billion in its U.S. commercial property/casualty operations. The company's short-term and commercial paper ratings are affirmed at 'F1+'. The insurer financial strength (IFS) ratings of AIG's insurance company subsidiaries are affirmed at their current rating levels. The Outlook for the IFS ratings is Stable. Fitch expects to resolve its Rating Watch within the next eight weeks, following further detailed analyses and discussions with management. At the conclusion of the review, the senior debt rating will either be affirmed at 'AAA' or lowered to 'AA+'. Fitch believes that the $1.8 billion charge is easily absorbed from a corporate-wide perspective. The charge represents just 3% of AIG's consolidated GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. as of September 30, 2002 and an estimated 16% of 2002 consolidated operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before (nine month results annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. ). GAAP shareholders' equity is expected to increase at year-end 2002. The charge represents 13% of AIG's domestic property-casualty statutory policyholders' surplus at September 30, 2002 and an estimated 85% of Domestic Brokerage Group's 2002 earnings (nine month results annualized), although Fitch acknowledges that the reserve increase emanates from five distinct accident years. Given current hard market conditions, AIG expects to earn back any lost statutory capital in the near-term. The Rating Watch review is not driven by the charge, per se, but rather Fitch's concern that over the past several years AIG's risk profile may have increased to levels inconsistent with a 'AAA' senior debt holding company-level rating, which warrants that a "fresh look" be taken at AIG's credit fundamentals and ratings. Fitch believes that the risk profile of the U.S. commercial lines property/casualty industry has deteriorated over the past several years and this has been reflected in wide-spread rating downgrades of most of AIG's competitors. Other indications of a possible increase in AIG's risk profile include acquisitions over the past several years of large life insurance organizations that previously did not carry 'AAA' ratings (American General and SunAmerica) and exposure to financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. businesses, including AIG Financial Products, International Lease Finance and consumer finance. Although these operations provide diversification and growth opportunities for AIG, Fitch believes they are of a lower credit quality than AIG's other businesses, and thus potentially dilute consolidated credit quality. Fitch will also focus on AIG's capitalization. Fitch notes that several of AIG's largest US life insurance company subsidiaries maintain NAIC NAIC See National Association of Investors Corporation (NAIC). risk-based capital ratios Risk-based capital ratio Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted asset. that currently fall below Fitch's published 'AAA' standards. In addition, the holding company provides guarantees for some subsidiary debt and contract obligations. Fitch's review will also consider numerous overwhelming strengths exhibited by AIG. These include the company's pre-eminent global insurance organization, with excellent worldwide brands and franchises, strong balance sheet fundamentals and excellent operating results. In addition, the organization has exhibited strong underwriting skills and adept reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. management. Fitch also views very favorably the diversified nature of the organization's products, distribution systems and geographic reach. This diversification, which is unequaled in the insurance industry and among the strongest in the broader financial services industry, has contributed to AIG's ability to generate stable and predictable operating results, as well as develop a broad and deep management team. Fitch notes that it is unusual to maintain a rating on the senior debt of a holding company at the same level as the IFS ratings of the operating subsidiaries. This is because the senior debt is effectively a deeply subordinated obligation given regulatory protections of policyholder interests. Fitch has historically viewed AIG's strong and diverse sources of holding company cash flow (including less regulated non-US sources), as well as lack of any historical earnings surprises, as mitigating factors. Rating Actions: American International Group, Inc. --Long-term rating of 'AAA' placed on Rating Watch - Negative; --Senior debt rating of 'AAA' placed on Rating Watch - Negative; --Short-term rating of 'F1+' affirmed; --Commercial paper rating of 'F1+' affirmed. American General Corporation --Senior debt rating of 'AAA' placed on Rating Watch - Negative. American General Capital I, II, III --Preferred securities rating of 'AA+' placed on Rating Watch - Negative. American General Institutional Capital A, B --Capital securities rating of AA+' placed on Rating Watch - Negative. AIG International Inc. --Long-term rating of 'AAA' placed on Rating Watch - Negative; --Senior debt rating of 'AAA' placed on Rating Watch - Negative; --Short-term rating of 'F1+' affirmed; --Commercial paper rating of 'F1+' affirmed. HSB (Hue Saturation Brightness) A color space that is similar to the way an artist mixes colors by adding black and white to pure pigments. The pigments are the hues (H), measured in a circle from 0 to 359 degrees (0=red, 60=yellow, 120=green, 180=cyan, 240=blue, Capital Trust I --Preferred securities rating of 'AAA' placed on Rating Watch - Negative. Western National Corporation --Senior debt rating of AAA' placed on Rating Watch - Negative. The following insurer financial strength ratings have been affirmed with a Stable Outlook: AIG Hawaii Insurance Company Inc. --Insurer financial strength rating affirmed 'AAA'. AIG Annuity Insurance Company --Insurer financial strength rating affirmed 'AA+'. AIG Life Insurance Company --Insurer financial strength rating affirmed 'AAA'. AIG SunAmerica National Life Assurance Co. --Insurer financial strength rating affirmed 'AAA'. AIU AIU American Intercontinental University AIU Allegheny Intermediate Unit (Homestead, PA) AIU Atlantic International University AIU Association of Indian Universities AIU Association Internationale des Universités Insurance Co. --Insurer financial strength rating affirmed 'AAA'. All American Life Insurance Company --Insurer financial strength rating affirmed 'AA+'; American General Life and Accident Insurance Co. --Insurer financial strength rating affirmed 'AA+'; American General Life Insurance Company --Insurer financial strength rating affirmed 'AA+'; American General Life Insurance Company of New York --Insurer financial strength rating affirmed 'AA+'; American Home For the American mortgage lender, see . The American Home is a center of intercultural exchange located in Vladimir, Russia. The home is designed to model a typical American suburban home and its main focus is the ESL school that provides lessons for Russian students. Assurance Co. --Insurer financial strength rating affirmed 'AAA'; American International Assurance American International Assurance known as AIA (美國友邦保險) is a famous insurance company based in Hong Kong. It has offices in Asia-Pacific region including China, Australia, New Zealand, Japan, India, Malaysia, South Korea, Thailand and Co. (Berm) Ltd. --Insurer financial strength rating affirmed 'AAA'; American International Insurance Co. --Insurer financial strength rating affirmed 'AAA'; American International Insurance Co. of California --Insurer financial strength rating affirmed 'AAA'; American International Insurance Co. of New Jersey --Insurer financial strength rating affirmed 'AAA'; American International Life Assurance Co. of NY --Insurer financial strength rating affirmed 'AAA'; American International Specialty Lines Ins. Co. --Insurer financial strength rating affirmed 'AAA; American International Underwriters Overseas Ltd. --Insurer financial strength rating affirmed 'AAA'; American Life Insurance Company --Insurer financial strength rating affirmed 'AAA'; Birmingham Fire The Birmingham Fire was a professional American football team based in Birmingham, Alabama that played in the World League of American Football in 1991 and 1992. The team played at Legion Field, and it made the playoffs in both seasons. Insurance Company of PA --Insurer financial strength rating affirmed 'AAA'; Commerce & Industry Insurance Co. --Insurer financial strength rating affirmed 'AAA'; Ezer Mortgage Insurance Co. Ltd --Insurer financial strength rating affirmed 'AAA'; Hartford Steam Boiler Inspection & Insurance Co. --Insurer financial strength rating affirmed 'AAA'; Insurance Company of the State of PA --Insurer financial strength rating affirmed 'AAA'; Landmark Insurance Co. Ltd --Insurer financial strength rating affirmed 'AAA'; Lexington Insurance Company --Insurer financial strength rating affirmed 'AAA'; Minnesota Insurance Company --Insurer financial strength rating affirmed 'AAA'; National Union Fire Insurance Co. of Pittsburgh --Insurer financial strength rating affirmed 'AAA'; New Hampshire New Hampshire, one of the New England states of the NE United States. It is bordered by Massachusetts (S), Vermont, with the Connecticut R. forming the boundary (W), the Canadian province of Quebec (NW), and Maine and a short strip of the Atlantic Ocean (E). Indemnity Company --Insurer financial strength rating affirmed 'AAA'; New Hampshire Insurance Co. --Insurer financial strength rating affirmed 'AAA'; SunAmerica Life Insurance Co. --Insurer financial strength rating affirmed 'AAA'; The American Franklin Life Insurance Company --Insurer financial strength rating affirmed 'AA+'; The Franklin Life Insurance Company --Insurer financial strength rating affirmed 'AA+'; The Old Line Life Insurance Company of America --Insurer financial strength rating affirmed 'AA+'; The United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Life Ins. Co in the City of NY --Insurer financial strength rating affirmed 'AA+'; The Variable Annuity Variable Annuity An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. Life Insurance Company --Insurer financial strength rating affirmed 'AA+'; United Guaranty Residential Insurance Co. --Insurer financial strength rating affirmed 'AAA'; |
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