Moody’s Investors Service today said it would keep its A3 long-term issuer rating on American International Group Inc. after the insurance company reported its first quarterly profit in nearly two years.
New York-based
AIG reported a second-quarter profit of $1.8 billion, or $2.30 a share, compared with a loss of $5.36 billion, or $41.13 a share a year earlier, and a loss of $4.35 billion, or $1.98 per diluted share, in the first quarter.
Although operating income has fallen at
AIG’s General Insurance and Life Insurance & Retirement Services divisions, the two segments showed some signs of stabilization or slight improvement between the first and second quarters, according to a report from a group of Moody’s analysts.
Operating income before net realized capital losses rose to $1 billion for
AIG’s General Insurance segment, from $446 million in the first quarter. Meanwhile, the carrier’s Life Insurance & Retirement Services division’s operating income rose to $1.5 billion before net realized capital gains, from $1.2 billion in the first quarter
The New York-based ratings agency also noted in its report that though losses narrowed at
AIG’s Financial Services and Asset Management units, the two divisions remain a drag on the group and could require more capital support or restructuring.
Before net capital gains, the Financial Services operations booked $103 million in operating losses, an improvement from the $5.8 billion it had in the second quarter of 2008. The Asset Management operations also fell into the red before accounting for capital gains, racking up an operating loss of $300 million, compared with a gain of $150 million a year earlier.
The Moody’s analysts wrote that overall second-quarter results suggested that the insurer, with the help the U.S. government, was preserving value in its major operating units.
The report said that Moody’s A3 senior unsecured debt rating on
AIG reflects Moody’s expectation that
AIG’s business profile will be raised by the performance of Chartis — the rebranded core General Insurance operations, while the financial profile will be determined by the restructuring process itself.
The analysts also predicted that
AIG will make full repayment of its senior secured bailout loan from the Department of the Treasury and that its preferred stock investments will recover, at least partially.
The carrier’s ratings could be reduced if Moody’s perceives an increased risk that asset values will fall below the forecasted range.
