Sept 6 (The following statement was released by the rating agency)
Fitch Ratings has affirmed AIG Life South Africa Limited's (AIG Life SA) and AIG South
Africa Limited's (AIG SA) National Insurer Financial Strength (IFS) ratings at 'AAA(zaf)'. The
Outlooks are Stable.
KEY RATING DRIVERS
The ratings reflect the link to the parent company, American International
Overseas Limited's (AI Overseas; previously known as Chartis Overseas Limited)
International IFS rating of 'A'. AIG Life SA and AIG SA's ratings reflect strong
formal support agreements provided by AI Overseas, a wholly-owned subsidiary of
American International Group, Inc. (Long-Term Issuer Default Rating
In view of the parental support, both companies receive uplift from their
standalone ratings. From a standalone perspective, AIG Life SA and AIG SA's
ratings benefit from their robust capitalisation, well-established business
positions in their chosen market segments and conservative investment portfolios
with high levels of liquidity.
AIG Life SA's statutory capital adequacy requirement (CAR) cover ratio remained
strong at 7.6x at end-2012 (end-2011: 8.6x), well above the minimum regulatory
requirement of 1x cover, comparing well with peers. AIG SA reported a solvency
ratio (adjusted equity to net written premiums) of 69% at end-2012 (end-2011:
AIG SA and AIG Life SA reported a consolidated profit of ZAR48.6m in 2012 (2011:
ZAR96.7m). While AIG Life SA continues to report strong net income year on year
(2012: ZAR72.4m, 2011: ZAR116.1m), AIG SA's underwriting profitability continues
to decline, reflected in a Fitch-calculated combined ratio of 116.6% in 2012
Given that both companies' ratings reflect strong formal support agreements
provided by AI Overseas, the key rating drivers that could result in a downgrade
of AIG Life SA and AIG SA's ratings include AI Overseas ratings being
downgraded. Furthermore, a sustained deterioration in both companies' business
positions and/or a significant and sustained reduction in capitalisation based
on Fitch's assessment or a sustained drop in AIG Life SA's regulatory CAR cover
ratio and/or AIG SA's regulatory solvency margin could lead to a downgrade.
In addition, withdrawal of the formal support agreements or a change in the
nature of the support could lead to a downgrade.