Reinsurance News

Validus Re now considered “core” to AIG by S&P

27th May 2021 - Author: Matt Sheehan

S&P Global Ratings has upgraded the issuer credit and financial strength ratings of Validus Re to reflect a revised view of its group status as core to its ultimate parent, AIG.

validus-group-logoSince being acquired in July 2018, Validus has been viewed as “highly strategically important” to AIG, but analysts now consider the unit to be well integrated both operationally and strategically, and to be a key part of AIG’s reinsurance strategy.

As a result, S&P has raised its issuer credit and financial strength ratings on Validus Reinsurance Ltd. and Validus Reinsurance (Switzerland) Ltd. to ‘A+’ from ‘A’.

However, the ratings remain on CreditWatch with negative implications, in alignment with the ratings of AIG and its other core P&C operating companies.

According to S&P, Validus has brought attractive diversification benefits, complementary capabilities, and capital efficiencies to AIG since its acquisition.

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In addition, with the announced divestiture of AIG’s life and retirement operations, it’s believed that AIG’s P&C reinsurance operations will become an important part of the group’s strategy.

Validus is considered to have diversified business operations with a strong presence in the global reinsurance market, and the company benefits further from AIG’s global presence, its long-standing relationships with intermediaries, and its larger balance sheet.

But at the same time, S&P maintains that AIG will continue to benefit from Validus’ research capabilities and its enhanced access to third-party capital markets through the AlphaCat platform.

Going forward, the rating agency said that its ratings on Validus will move in line with the ratings on the other core P&C operating entities of AIG.

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