Moody’s places AIG’s debt rating under review; A.M. Best says Erie Insurance Group’s ratings are unchanged after an agreement to sell its P&C businesses, Moody’s downgrades Manulife’s subsidiaries, while Fitch affirms them.
American International Group Inc.
Moody's has placed the Ba2 subordinated debt rating of American International Group Inc. on review for possible upgrade in light of the company's recently completed divestitures of its international life insurance units. The initial public offering (IPO) of AIA Group Limited (AIA Group) and the sale of American Life Insurance Co. (ALICO) are important milestones in AIG's government-backed restructuring effort. Moody's also assigned provisional ratings to AIG's "well-known seasoned issuer" shelf registration (senior unsecured debt at (P)A3, negative outlook).
AIG's core insurance operations generated pretax operating income (before net realized capital gains (losses)) of $2.1 billion for 3Q 2010, which was fairly consistent with the prior two quarters and within rating expectations. The company reported a net loss of $2.4 billion attributable to AIG in 3Q 2010 as compared to a net loss of $2.7 billion in 2Q 2010. In each period the net loss was driven largely by the costs of government funding arrangements as well as non-cash charges within discontinued operations, Moody’s says.
AIG's subordinated debt rating currently sits five notches below the senior debt rating, signaling the risk of a coupon deferral or restructuring of the subordinated debt in the event of another market downturn. Moody's says its rating review will focus on (i) the stabilization of AIG's core insurance businesses over the past several quarters, (ii) the recapitalization plan announced at the end of September and targeted for completion by the end of 1Q 2011, and (iii) AIG's progress in divesting or unwinding non-core businesses, most importantly the divestitures of AIA Group and ALICO.
"We expect to narrow the notching between the senior and subordinated debt ratings as AIG completes its recapitalization and moves toward independence," said Bruce Ballentine, Moody's lead analyst for AIG.
As part of the rating review, Moody's says it will consider the likely extent of government ownership and support beyond the recapitalization and how that might affect creditors. The typical notching for a fully independent insurer is a one-notch differential between senior and subordinated debt ratings, according to the rating agency.
-------------------------------------------------------------------------------------------------------------------------------------------
Follow the link for the rest of the ratings. This website, or this weekly rating feature is fast becoming one of my favourite features I come across online. Sharp analysis on the life insurance companies helps to see where the market is heading, everyone should bookmark it, I know I do.
No comments:
Post a Comment