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FOR IMMEDIATE RELEASE
OLDWICK - FEBRUARY 23, 2017 02:06 PM (EST)
A.M. Best has affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of AES Global Insurance Company (AGIC) (Burlington, VT). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect AGIC’s adequate risk-adjusted capitalization, favorable performance record, sound risk management capabilities with a focus on sustaining good capitalization and underwriting performance, and conservative balance sheet strategies. The ratings also consider AGIC’s important role as a single-parent captive and the implied support provided by its parent, AES Corporation (AES Corp.) [NYSE: AES], whose management incorporates AGIC as a core element of AES Corp’s overall risk management program and utilizes the captive as an integral part in this process. AES Corp. continually evaluates the use of AGIC for other risk management objectives of the group as those arise.
AGIC is a single-parent or pure captive insurer wholly owned by AES Corp., a global power company that owns a diverse and growing portfolio of electricity generation and distribution businesses operating in 18 countries.
Partially offsetting these positive rating factors are the exposure to large losses due to the policy limits offered, limited market scope and business profile, product mix, and dependence on third parties for processing, servicing and administration. This is tempered partially by the extensive loss control and group-wide safety programs provided by AGIC’s parent, which help mitigate losses arising from its parent’s ordinary course of business. Extensive reinsurance protection, placed with a panel of financially strong reinsurers, also limits AGIC’s net exposure to shock loss events.
AGIC insures the global property and business interruption coverage for AES Corp., its subsidiaries and affiliates in partnership with AIG Europe Limited. Somewhat offsetting these positive rating factors is the company’s sole dependency on the parent company’s business opportunities for its growth prospects.
AGIC consistently has demonstrated profitable net operating income in each of the past 10 years as a result of favorable underwriting experience and investment income. Over the past five years, AGIC has exhibited significant growth in policyholders’ surplus, despite annual dividend payments to its parent/sole shareholder. Nonetheless, A.M. Best will monitor closely AGIC’s performance against its stated operating plan.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
This press release relates to Credit Ratings that have been published on A.M. 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 A.M. 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.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.