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A.M. Best Affirms Ratings of The Fuji Fire & Marine Insurance Company, Limited and AIU Insurance Company, Ltd

February 20, 2014



HONG KONG--(BUSINESS WIRE)-- A.M. Besthas affirmed the financial strength rating of A (Excellent) and issuer credit ratings of ďaĒ of The Fuji Fire & Marine Insurance Company, Limited (Fuji Fire) (Japan) and AIU Insurance Company, Ltd. (AIU) (Japan). The ultimate parent company is American International Group, Inc. (AIG) (New York, New York, USA). The outlook for all ratings is stable.

Fuji Fire's ratings reflect its adequate risk-adjusted capitalization and improvement in its profitability. The company reported an improvement in its operating performance in the first half of fiscal year 2013, driven by the recovery in its auto underwriting results.

AIUís ratings reflect its distinctive presence in the Japanese market as a significant provider of accident and health insurance (A&H) and the expected improvement in its profitability. AIUís underwriting results are expected to improve in the midterm, driven by a restructuring in its reinsurance arrangements.

AIUís retention remained at approximately 22% over the past five years ending in 2013, with a significant portion of risk ceded to AIGís affiliates. The small base of net premium income under J-GAPP resulted in weak profitability and high volatility in its operating ratio in that five-year period.

Fuji Fire and AIUís ratings consider the support from their parent company, AIG Japan Holdings KK, ultimately owned by AIG, in the areas of cross-selling opportunities with its group companies, risk management and strategic initiatives for business integration. In the second half of 2015, Fuji Fire is scheduled to merge with AIG, subject to regulatory approval. The companiesí operating performance is expected to improve in the midterm, as they accelerate their integration by sharing infrastructure and implementing group-wide initiatives.

The companies are well positioned at their current rating level. Negative rating actions could occur if there is a significant worsening of their operating results and a substantial deterioration in their risk-adjusted capitalization. Any unfavorable rating actions on AIG could also put downward pressure on the companiesí ratings.

The methodology used in determining these interactive ratings is Bestís Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestís rating process and contains the different rating criteria employed in the rating process. Bestís Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.

This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.





A.M. Best

Seewon Oh

Senior Financial Analyst

+852-2827-3404

seewon.oh@ambest.com

or

Moungmo Lee

General Manager

+852-2827-3402

moungmo.lee@ambest.com

or

Rachelle Morrow

Senior Manager, Public Relations

+(1) 908 439 2200, ext. 5378

rachelle.morrow@ambest.com

or

Jim Peavy

Assistant Vice President, Public Relations

+(1) 908 439 2200, ext. 5644

james.peavy@ambest.com



Source: A.M. Best


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