Brazilian insurer Unibanco AIG, the joint venture between embattled US insurer AIG (NYSE: AIG) and local bank Unibanco (NYSE: UBB), has come out to defend its financial stability.
"The participation of AIG in Unibanco AIG is only of partnership nature. By being an independent business, [Unibanco AIG] does not suffer interference from AIG's results," a statement from Unibanco said.
"Unibanco AIG works under the supervision of Brazil's regulator bodies and its technical reserves, in the same way as its insurance and pensions, are invested in securities negotiated on the national market."
Unibanco is considering increasing its stake in the business and possibly buying out AIG, daily Folha de São Paulo reported.
"It might be a strategic acquisition on the part of Unibanco, and it might be a strategic sale for AIG, but it wouldn't be because of pressure on the company here in Brazil," Milena Zaniboni, head of corporate and government ratings for S&P Brasil, told BNamericas.
"I don't expect Unibanco to be affected by what's going with AIG," she added, mentioning that S&P tends to be cautious in factoring in parent company support to insurance companies, especially joint ventures.
AIG had its ratings downgraded by credit agencies on Monday (September 15), spurred by losses incurred in debt securities and derivatives. Its stock on NYSE has fallen from a 12-month high of US$70.13 in October last year to US$1.85 at the start of trading on Tuesday.
Unibanco AIG, excluding its life and pension business, is Brazil's fourth biggest insurer, in terms of written premiums in the first seven months of the year, with 1.90bn reais and 5.74% of the market, according to the latest figures from insurance regulator Susep.
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