| Login Help
Home header left
Give button


A report about the American International Group, I

A report about the American International Group, Inc. (AIG) was posted on the SSA webpage on April 1, 2005 in response to concern expressed regarding the SSA group insurance program and its relationship with the carrier, AIG Aviation. Included was a reference to the fact that A.M. Best Co., the insurance rating agency, continued to rate AIG as A++ (the highest rating). A.M. Best Co. recently downgraded AIG to A+ which is still classified as Superior. The top classification ratings are A++ and A+ which are both Superior, A & A- which are both Excellent, and B++ and B+ which are Good. The Best Ratings index continues down through B, C, D to E which is Under Regulatory Supervision and F which is in Liquidation.

An article in the Insurance Journal of May 5 stated

"Rating determinations have many components on both a qualitative and quantitative basis. The downgrade is not based on the absolute level of negative financial affect on shareholder's equity, which A.M. Best understands and believes is manageable on a GAAP accounting basis given the still formidable financial strength of AIG. Rather, the action reflects the fact that the failure in internal controls, identified in AIG's internal review, which will result in an adverse opinion by AIG's auditors, is inconsistent with A.M. Best's highest financial strength rating category.

While A.M. Best understands that the new management team is actively addressing the control issues and is instituting a new culture of heeding those controls, absolute faith in financial reporting, particularly on a statutory basis, cannot be assumed at the present time. Further, it may take time to re-establish the confidence of the group's constituents.

The ratings will remain under review with negative implications until the filing of the financial statements occurs and A.M. Best has had an opportunity to more fully review various managerial, reputational, operational and financial issues."

"Despite the downgrade, A.M. Best believes that AIG maintains one of the strongest and most unique insurance franchises in the industry, with a breadth of products, capacity, highly intelligent operational managers and ability to respond to market conditions remain intact."

The SSA leadership continues to watch developments with keen interest, however it has no information regarding AIG other than what is available to the public at large. It continues to take a wait-and-see approach so far as any appropriate action is concerned.

Posted: 5/9/2005 By: General News

General News 

Search Posts

Recent Posts

Legal Notice

The SSA policy on member posting is located here