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FOR IMMEDIATE RELEASE
OLDWICK - FEBRUARY 10, 2016 04:55 PM (EST)
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) (Burlington, VT). The outlook for both ratings is stable.
The rating affirmations reflect AGIC’s adequate risk-adjusted capitalization, consistently favorable operating performance and sound risk management capabilities. Also supporting the ratings is a favorable 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/business profile, product mix and dependence on third parties for processing, servicing and administration.
Additionally, the ratings recognize the AGIC’s excellent business position and relationship with its parent, AES Corporation (AES Corp.) [NYSE: AES], a global power company that owns a diverse and growing portfolio of electricity generation and distribution businesses operating in 18 countries. AGIC insures the global property and business interruption coverage for AES Corp., its subsidiaries and affiliates in partnership with AIG Europe Limited and Zurich Global 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 has consistently demonstrated profitable net operating income in each of the last 10 years as a result of favorable underwriting experience and investment income. 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. Nonetheless, A.M. Best will closely monitor performance of AGIC against its stated operating plan.
The ratings further consider the extensive experience and level of commitment on the part of its parent, whose management incorporates the captive as a core element in the overall risk management program of AES Corp. 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.
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, capitalization or risk profile could potentially undermine the stability of the company’s ratings. In addition, deterioration in the credit profile of AES Corp. could impact AGIC’s ratings.
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 rating(s) 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.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.