Sale of UGC will not affect AIG ratings, says Fitch

The recent sale of American International Group’s (AIG) mortgage insurer, United Guaranty Corporation (UGC), to Arch Capital Group will not affect the AIG’s ratings, according to Fitch Ratings.

All of AIG’s ratings, including the A- long-term issuer default rating (IDR) with a stable rating outlook and 'BBB+' senior debt ratings will remain unaffected by the $3.4 billion transaction.

According to Fitch, the sale of the full interest in UGC at a slight premium-to-book value through this transaction will advance AIG’s strategic plan to streamline its operations and focus on its property/casualty insurance and US life insurance and retirement businesses.

Furthermore, Fitch said the proceeds from the sale will likely contributes to AIG’s target of returning $25 billion to shareholders by the end of 2017.

Following the close, AIG will have continued exposure to the mortgage insurance market through the investment in Arch and premiums retained through a quota share reinsurance treaty with UGC for policy years 2014-2016.