A.M. Best has affirmed the financial strength rating of “B+” (Good) and the issuer credit rating of “bbb-” of AES Global Insurance Company (AGIC). The outlook for both ratings is stable.
The ratings reflect what A.M. Best has termed AGIC’s: “Adequate risk-adjusted capitalisation, consistently favourable operating performance and sound risk management capabilities”.
Also supporting the ratings is a favourable business plan that is used as a basis for the rating’s profitability and liquidity metrics.
Partially offsetting these positive rating factors are exposure to large losses due to the policy limits offered, limited market scope or business profile, product mix and dependence on third parties for processing, servicing and administration.
Additionally, the ratings recognise AGIC’s excellent business position and relationship with its parent, AES Corporation, a global power company that owns a diverse and growing portfolio of electricity generation and distribution businesses operating in 20 countries.
AGIC insures the global property and business interruption coverage for AES Corporation, its subsidiaries and affiliates. The programme is fronted by AIG Europe.
Somewhat offsetting these positive rating factors is the company’s sole dependency on the parent company’s business opportunities for its growth prospects.
A.M. Best has stated: “AGIC has consistently produced profitable net operating income resulting from favourable underwriting experience and investment income in each year of the past decade.”
“Over the past five years, AGIC has exhibited significant growth in total assets and policyholders’ surplus despite annual dividend payments to its parent/sole shareholder that totaled more than $49 million during the same period.”
The company’s ratings are not expected to be upgraded or its outlook revised within the near term as its operating performance and capital position have already been considered in A.M. Best’s ratings process.
Conversely, any material adverse deviations with regard to management, earnings, capitalisation or risk profile could potentially undermine the stability of the company’s ratings.
In addition, deterioration in the credit profile of AES Corporation could impact AGIC’s ratings.
