Chief executive argues the company is healthy after buying back $13bn of shares
AIG is ready to grow faster than its rivals and to obtain a ratings upgrade in the next year or two, according to the company’s chief executive.
Robert Benmosche (pictured) said that, four years after the firm was rescued by the US government, AIG will keep working in all the insurance areas where it operates and will remain a global insurer.
“We feel that AIG is actually in a position for a ratings upgrade,” he said, stressing that the company had shown its financial health by buying back $13bn of shares from the government. AIG is also prepared for further purchases of stock the next time the government sells its shares, Benmosche said. The US Treasury still owns a 16% stake of the company.
The declarations by the chief executive go in the opposite direction of an opinion expressed by ratings agency Standard & Poor’s, which in September noted that the ratings of AIG are more likely to go down than up as the US government gets out of its capital. At the time, the agency kept AIG’s A- rating, but changed its outlook from stable to negative.
But Benmosche insisted that the capital situation of the company today is “significantly strong”, thanks to the restructuring of the business that has been taken place over the past four years.
He pointed out that AIG is making an effort to get out of activities that do not contribute to its strength as a major global insurer. One example is its aircraft-leasing unit, for which, however, the company is struggling to find a buyer.
On the other hand, administrative reforms are under way within the company, as IT and financial services are centralised. He also discarded any possibilities that the group could be broken down in several different companies, according to insurance lines. In his view, a high level of diversification, both in terms of business lines and in countries where AIG operates, helps to guarantee that enough revenues are generated to meet the capital requirements faced by the company.
Benmosche said that AIG is working on the improvement of its loss and expenses ratios, not the least because the days when investment revenues would compensate for poor premium revenues are gone. But he expects that the restructuring of the company will enable AIG to grow faster than its rivals, while it turns itself increasingly into a global insurer, rather than one that has a US and a non-US operation.
“We are not going to be the cheapest, but we are going to be the best,” he said.