AIG’s L&R business Corebridge starts life with Moody’s FSR A2; faces well-known market risks

Corebridge Financial will start its life outside the AIG group as a Baa2 credit, according to  Moody’s on account of the new group’s “leading positions in a number of US individual annuity and retirement product markets, their broad distribution network, and solid profitability”.

But the new group, recently hived off from the AIG's P&C operations ahead of a pending market flotation for the life and pension unit, will face a notable load of risks common to life and savings units, Moody’s noted.

“Strengths are mitigated by significant interest rate risk and spread compression/disintermediation risks arising from the group's core fixed indexed annuity (FIA) and fixed annuity businesses; by a significant exposure to equity market and hedging risks from its individual variable annuity (VA) liabilities and FIAs; and by a concentration in structured assets holdings,” Moody’s analysts warned.

In the complete ratings announcement, Corebridge was given a Baa2 long-term issuer rating with stable outlook while insurance financial strength ratings were affirmed at A2 with stable outlook for the full slew of subsidiaries.

Global re/insurance conglomerate American International Group (AIG) is ploughing forward day by day on a vow to put its life and retirement business to an independent market listing. AIG last rebranded the unit's holding company to Corebridge and unveiled a new board of directors for the unit ahead of the pending initial public offering.

AIG called the business “one of the largest providers of retirement solutions and insurance products in the US”. It expects to continue to own more than 50 percent of Corebridge following its IPO.

Preparations have included a deal with Blackstone to manage up to $92.5 billion of the life insurance group's invested assets over the next six years, including the first $50 billion as of year-end 2021. Blackstone is also a 9.9% owner of Corebridge.

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