AIG Life outlook 'negative' due to COVID-19 fallout

Fitch Ratings has revised the outlook for AIG Life and the holding company to negative from stable due to the disruption to economic activity and the financial markets from the coronavirus pandemic.

The negative outlook reflects Fitch's concern regarding the impact of the economic fallout on AIG Life's balance sheet fundamentals and financial performance over the next one to two years.

Fitch has also revised the rating outlook on the US life insurance industry to negative. Its primary concerns over the near term include the decline in interest rates, equity market declines, increased credit losses, rating migration and elevated mortality. Longer term concerns include the potential for a prolonged, steep macroeconomic downturn, changes in policyholder behavior and low interest rates that persist for multiple years.

Ratings agency said AIG Life's financial performance had been strong and stable over recent years, but is expected to deteriorate given less favorable equity market performance and further pressure on interest margins.