Fitch: AIG Ratings Unaffected By UGC Proposed Sale Announcement

CHICAGO--(BUSINESS WIRE)-- According to Fitch Ratings, all of American International Group, Inc.'s (AIG) ratings, including the 'A-' Long-Term Issuer Default Rating (IDR) with a Stable Rating Outlook and 'BBB+' senior debt ratings, are unaffected by the company's announcement yesterday that an agreement was reached to sell 100% of mortgage insurer United Guaranty Corporation (UGC) to Arch Capital Group (Arch) for $3.4 billion.

The company announced plans earlier in 2016 to sell a minority stake in UGC through an initial public offering of common shares. Sale of the full interest in UGC at a slight premium to book value through this transaction will advance AIG's execution of strategic plans to streamline operations and hone its focus on global property/casualty insurance and U.S. life insurance and retirement businesses. Proceeds from the sale will also likely contribute to AIG's goal of returning $25 billion to shareholders by year-end 2017.

Proceeds from the sale are expected to include $2.2 billion in cash, $250 million of new Arch perpetual preferred stock, and $975 million of new Arch convertible non-voting common equivalent preferred stock. As such, following the close, AIG will have a continued exposure to the mortgage insurance market through the investment in Arch and premiums retained through a quota share reinsurance treaty with UGC for policy years 2014-2016.

Additional information is available on www.fitchratings.com

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Fitch Ratings
Primary Analyst
James B. Auden, CFA, +1-312-368-3146
Managing Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Tana M. Higman, +1-312-368-3122
Director
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Media Relations
Elizabeth Fogerty, New York, +1-212-908-0526
[email protected]

Source: Fitch Ratings

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