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A.M. Best Revises Outlook To Stable For Ratings Of American International Group, Inc.’s Domestic Life/Health Subsidiaries

A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength rating of A (Excellent) and issuer credit ratings (ICR) of “a” of the domestic life/health subsidiaries of American International Group, Inc. (AIG) (New York, NY) [NYSE: AIG]. AIG’s domestic life/health companies are collectively referred to as SunAmerica Financial Group (SAFG). (See below for a detailed listing of the companies and ratings.)

The revised outlook reflects SAFG’s improved surrender rates, strong positive cash flows and the progress made to restore its leading market positions following a significant decline in 2009 due to issues surrounding its ultimate parent, AIG. Over the last 18-24 months, SAFG has been reinstated by all key distribution networks and has expanded marketing through the establishment of new relationships. The group has maintained its long-standing top ranking in bank fixed annuity sales and number three ranking for 403(b) retirement assets under management. In addition, SAFG continues to make progress towards leading positions in other product lines with a top-10 ranking in variable annuity non-captive sales (up from a low point of number 18) and a number five ranking in sales of term life insurance (up from number 12). Moreover, after experiencing elevated surrender rates over the last few years, policy surrenders have stabilized in 2011 and are currently near historical norms. Consequently, net flows have been positive for three consecutive quarters totaling $2.1 billion through September 30, 2011.

The ratings of SAFG recognize its excellent risk-adjusted capitalization, diverse business and earnings profile and robust multi-channel distribution platform. The life/health companies’ solid, consistent statutory earnings over the last few years have facilitated growth in capital, comparing favorably to its peers. SAFG maintains a diverse business profile with established franchises in individual fixed and variable annuities, life insurance, group retirement plans and mutual funds. The group’s market positions are supported by a large and diversified distribution system that is made up of financial institutions, national, regional and independent broker dealers, career financial advisors, independent marketing organizations, insurance agents and a direct-to-consumer platform. Additionally, SAFG’s liability profile is well-balanced between spread, fee and mortality-based products, providing diversified sources of earnings.

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