Credit ratings agency, Moody’s Ratings, has upgraded the insurance financial strength ratings of global insurer AIG’s major property & casualty (P&C) subsidiaries in the US, UK and Europe to A1 from A2, with the outlook revised to stable from positive.
According to Moody’s, the upgrade of AIG and its flagship US P&C operations reflects its enhanced profitability, simplified organisational structure and reduced financial leverage.
The stable outlook reinforces Moody’s view that AIG will maintain a healthy profitability and sound balance sheet.
The ratings agency added, “AIG has produced strong and steady underwriting results over the past several years through better risk selection, cumulative rate increases, tighter terms and conditions, shedding noncore units, and strategic use of reinsurance to limit volatility.”
AIG has also benefited from higher net investment income, mostly from its diversified fixed income portfolio. Since deconsolidating its life and retirement business in mid-2024, the carrier has managed its financial leverage within a target range of 15-20%, down significantly from the upper 20s and low 30s in prior years, explained Moody’s.
AIG is well diversified across three segments: North American Commercial, International Commercial and Global Personal, making it capable of withstanding market fluctuations in specific product lines or geographic areas.
According to Moody’s, AIG’s credit challenges include catastrophe exposure in property lines, claims inflation, potential adverse reserve development in long-tail casualty lines, and the complexity of enterprise risk management across its many product offerings and geographic regions.
However, it continues a multi-year effort to streamline its operations, shift parent company expenses to the operating units, and further reduce its expense ratio.
AIG’s General Insurance (GI) business reported net premiums written of $4.5 billion for Q1’25, flat year on year but up 8% on a comparable basis, reflecting the sale of its travel business in 2024.
The combined ratio was 95.8% in the quarter, up from 89.8% in Q1’24, driven by higher catastrophe losses mainly from California wildfires in early 2025.
Moody’s expects AIG to deliver solid underwriting results through 2025 and beyond based on portfolio enhancements over the past several years, plus further improvement in the expense ratio.
For AIG UK, the ratings reflect its strong market position in UK commercial lines, good product diversification, conservative investments, and implicit and explicit support from AIG parent and AIG PC US. The rating outlook for AIG UK is stable, consistent with the outlook for AIG PC US.
The rating upgrade for Luxembourg-based AIG Europe S.A. (AESA) also reflects its diversified product offerings across several European countries, conservative investment strategy, and implicit and explicit support from AIG parent and AIG PC US, explained Moody’s. The outlook is also stable.
Moody’s continues to monitor the companies to reevaluate the ratings and outlook whenever needed.
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