AIG's Bermuda Gambit: Data-Driven Strategy Earns 'Excellent' Rating

HAMILTON, Bermuda – November 25, 2025 – In a move that underscores a deliberate and data-intensive strategic overhaul, American International Group, Inc. (AIG) has secured a top-tier credit rating for its newly formed Bermuda-based subsidiary. The global credit rating agency AM Best assigned an A (Excellent) Financial Strength Rating to American International Reinsurance Global, Ltd. (AIRG), signaling strong confidence in the entity's financial foundation even before it formally begins operations in 2026.

This is far more than a procedural rating for a new corporate entity. The creation of AIRG, and the positive outlook AM Best has attached to its rating, represents a capstone on AIG's multi-year effort to re-architect its approach to global risk. By establishing a dedicated affiliated reinsurer in one of the world's most sophisticated insurance hubs, AIG is doubling down on a strategy of control, capital efficiency, and predictability—a strategy increasingly powered by advanced analytics.

Decoding AIG’s Reinsurance Blueprint

The establishment of AIRG is the latest chapter in a story of profound transformation at AIG. Under the leadership of CEO Peter Zaffino, the insurance giant has pivoted from absorbing high levels of catastrophe risk to a more conservative, reinsurance-heavy model designed to insulate its balance sheet from volatility. This philosophy prioritizes earnings predictability over the potential for outsized, but unpredictable, underwriting gains.

For years, AIG has been one of the largest buyers of reinsurance in the world. This approach has already yielded tangible results, with the company's share of industry-wide catastrophe losses plummeting from over 3% in 2018 to less than 1% in recent years. Zaffino has publicly defended this strategy, noting that as reinsurance costs decline, AIG benefits directly because those costs are already embedded in its product pricing—a margin protection that competitors with higher risk retentions may not enjoy.

AIRG fits perfectly into this blueprint. As an affiliated reinsurer, it will act as an internal, centralized vehicle for assuming risk from AIG's international business lines. This structure offers several key advantages:

• Capital Optimization: It allows AIG to manage its capital more efficiently, holding it within the group under Bermuda's sophisticated, risk-based regulatory framework rather than ceding it entirely to third-party reinsurers.
• Risk Centralization: It provides a focal point for managing and analyzing risk exposures from across AIG's global operations, enabling a more holistic view of its portfolio.
• Strategic Control: It gives AIG greater control over its reinsurance terms and capacity, reducing dependence on the sometimes-volatile commercial reinsurance market.

This move follows other strategic initiatives, such as the 2019 formation of AIG Re to consolidate its assumed reinsurance operations and the recent launch of Syndicate 2478 at Lloyd's, backed by third-party capital from Blackstone. Together, these actions paint a picture of a company meticulously building a diversified, modern, and highly controlled risk management ecosystem.

The Power of a ‘Positive Outlook’

For credit analysts and investors, the specifics of AM Best's rating are telling. Assigning an A (Excellent) Financial Strength Rating and an “a+” (Excellent) Long-Term Issuer Credit Rating from day one is a significant endorsement. These ratings reflect AM Best's assessment of AIRG’s “very strong” balance sheet, “favorable” business profile, and “appropriate” enterprise risk management.

Crucially, AM Best also assigned a positive outlook. In the world of credit ratings, a positive outlook is a powerful signal that an upgrade is possible in the medium term, provided the company executes its strategy as planned. This optimism is explicitly tied to the outlook for the parent company, AIG, highlighting the deep integration between the two.

According to AM Best's rating methodology for affiliated companies, parental support is a central pillar of the analysis. The rating agency noted that AIRG benefits from “reinsurance, liquidity and other explicit and implicit support provided by other AIG entities.” This means AM Best views AIRG not as a speculative standalone venture, but as a core, strategically vital component of the AIG group. For an affiliate to receive such strong support and a rating aligned with its parent, it must be deemed integral to the group’s primary business—a clear indication of AIRG's intended role.

Bermuda’s Unwavering Allure

AIG’s choice of Bermuda as the domicile for AIRG is both strategic and emblematic of a broader industry trend. Despite recent changes to its tax laws—including the introduction of a 15% corporate income tax to align with global standards—Bermuda remains the premier jurisdiction for global reinsurance.

The island's appeal is built on a foundation of regulatory sophistication and market expertise. Key advantages include:

• Regulatory Equivalence: Bermuda holds Solvency II equivalence with the European Union and is recognized as a Qualified and Reciprocal Jurisdiction by the U.S. National Association of Insurance Commissioners (NAIC). This status dramatically reduces regulatory friction and collateral requirements for Bermudian reinsurers operating in the world's largest insurance markets.
• A Hub of Expertise: The island is home to a deep concentration of world-class talent in underwriting, risk modeling, and insurance law, creating an unparalleled ecosystem for complex risk transfer.
• Robust Supervision: The Bermuda Monetary Authority (BMA) is respected globally for its risk-based and pragmatic approach to supervision, providing a stable and predictable environment for giants like AIG and its peers, including RenaissanceRe, Everest, and Arch Capital Group, which all maintain significant operations there.

By planting its flag with AIRG, AIG is tapping into this powerful infrastructure to support its global ambitions. The move demonstrates that for the world’s largest insurers, the benefits of Bermuda's regulatory framework and market maturity continue to outweigh tax considerations.

The Unseen Engine: Analytics Fueling Structural Shifts

Beneath the surface of these corporate structuring decisions lies the quiet engine of innovation: data analytics. The creation of a sophisticated internal reinsurer like AIRG is not merely a financial or legal maneuver; it is a business strategy made possible by the ability to precisely model, price, and manage risk on a global scale.

Modern enterprise risk management (ERM), which AM Best cited as “appropriate” for AIRG, relies on massive datasets and complex computational models to understand correlations between disparate risks, from Japanese typhoons to North American liability claims. The ability to harness this analytical power allows a company like AIG to move beyond simply buying generic reinsurance coverage. Instead, it can build a tailored, internal vehicle that is optimized for its specific risk profile and capital structure.

This is the tangible business impact of advancements in data science. By centralizing risk data within AIRG, AIG can run more sophisticated simulations, identify diversification benefits across its portfolio, and allocate capital with a level of precision that was unimaginable a decade ago. It transforms reinsurance from a simple cost of doing business into a strategic tool for enhancing enterprise value.

As AIRG prepares to begin assuming risk in 2026, the market will be watching closely. Its success will be a testament not only to AIG’s financial discipline but also to the power of using advanced analytics to re-engineer the fundamental structures of a global insurance enterprise.