AM Best Affirms Ratings of American European Insurance Group Members Following Capital and Governance Improvements
AM Best has officially removed from under review with negative implications and affirmed the Financial Strength Rating (FSR) of B- (Fair) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “bb-” (Fair) for Rutgers Casualty Insurance Company and American European Insurance Company, collectively referred to as the American European Insurance Group (AEIG). Both companies, domiciled in Cherry Hill, New Jersey, operate under an intercompany reinsurance pooling agreement. The outlook for these ratings, however, remains negative, reflecting continued challenges to the group’s balance sheet strength.
Overview of Rating Actions
The decision by AM Best to affirm AEIG’s ratings while removing them from under review with negative implications underscores cautious optimism about the group’s recent improvements. AM Best’s assessment is rooted in a comprehensive analysis of AEIG’s balance sheet strength, operating performance, business profile, and enterprise risk management (ERM). The agency continues to view AEIG’s balance sheet strength as adequate, while describing its operating performance as marginal, its business profile as limited, and its ERM framework as marginal.
The action follows a period of focused internal restructuring and capital strengthening by AEIG. Over the past two years, the insurer has implemented a series of strategic initiatives aimed at bolstering its financial foundation, improving underwriting outcomes, and enhancing corporate governance practices.
Factors Behind the Affirmed Ratings
AM Best’s affirmation is primarily driven by AEIG’s recent capital-raising efforts, improved underwriting performance, and restructured corporate governance. These steps collectively signal a renewed commitment to operational stability and long-term growth, although certain risks and uncertainties persist.
1. Capital Strengthening Efforts
AEIG has taken significant actions during 2024 and 2025 to reinforce its capital position. The company executed multiple capital-raising initiatives that have improved its Best’s Capital Adequacy Ratio (BCAR)—particularly at the 99.0 confidence level, which measures the insurer’s ability to absorb adverse events. Although this marks progress, AM Best noted that AEIG’s BCAR scores at the 99.5 and 99.6 levels remain pressured due to legacy underwriting losses and exposure to catastrophic events.
In previous years, unprofitable underwriting performance eroded AEIG’s capital base and limited its capacity to absorb volatility. The new capital injections, alongside a more disciplined approach to underwriting, are expected to enhance the group’s financial resilience over time.
2. Underwriting and Risk Management Reforms
AEIG has also initiated rate adjustments and de-risking measures across its portfolio. These steps involve the non-renewal of unprofitable business lines and tighter risk selection criteria designed to stabilize underwriting margins. AM Best acknowledged that such efforts have already led to improved underwriting results in recent quarters.
By pruning non-performing segments and focusing on profitable niches, AEIG is positioning itself to generate more consistent earnings while strengthening its capital adequacy. These actions are expected to yield further benefits over the longer term, supporting both BCAR scores and overall financial stability.
3. Governance Enhancements
A major component of AEIG’s turnaround strategy has been the overhaul of its corporate governance structure. In July 2025, the company appointed a new Chief Financial Officer (CFO) to reinforce financial oversight and accountability. Subsequently, in August 2025, AEIG’s Board of Directors was restructured and expanded to include new members with diverse expertise in insurance, finance, and risk management.
Previously, AEIG operated under a single Audit Committee, which limited the Board’s ability to oversee specialized areas. The new structure introduces three standing committees—Governance & Compensation, Audit & Investment, and Risk Management—ensuring a more comprehensive and engaged governance framework. According to AM Best, these changes represent meaningful progress in improving transparency, oversight, and strategic direction at the board level.
Continued Challenges Reflected in Negative Outlook
Despite these advancements, AM Best maintained a negative outlook on AEIG’s ratings. The continued negative perspective reflects lingering concerns about capital volatility and exposure to catastrophic events. Specifically, AEIG’s historical underwriting losses and geographic exposure to weather-related risks have placed sustained pressure on its balance sheet.
While recent capital infusions have improved solvency metrics at the 99.0 BCAR level, AM Best emphasized that further progress is needed to demonstrate sustainable improvement at the higher confidence levels. Until AEIG can consistently maintain stronger underwriting profitability and reduced catastrophe exposure, its balance sheet strength will remain under scrutiny.
The negative outlook also reflects AM Best’s caution about AEIG’s ability to maintain momentum amid challenging market conditions. As the insurance industry continues to navigate inflationary pressures, climate-related risks, and rising reinsurance costs, AEIG must sustain its strategic discipline to avoid a relapse into prior performance issues.
Path Forward: Strengthening for Long-Term Stability
AEIG’s management has expressed a firm commitment to continuing its transformation journey. The insurer’s capital improvement strategy, combined with enhanced governance and prudent underwriting, sets the stage for a more stable financial trajectory.
The removal from under review status is a significant milestone, suggesting that AM Best recognizes the tangible progress AEIG has made. However, the negative outlook serves as a reminder that sustained improvement—particularly in profitability and risk control—will be crucial for any potential future rating upgrades.
To further strengthen its position, AEIG is expected to:
- Maintain disciplined underwriting standards and continue de-risking its portfolio.
- Pursue strategic pricing and risk diversification to mitigate catastrophe exposure.
- Build upon its governance reforms to ensure proactive risk oversight.
- Continue optimizing its capital structure to preserve solvency across varying stress scenarios.
About the Rating Release
This announcement pertains to Credit Ratings published by AM Best and is part of the company’s ongoing surveillance of insurance entities’ financial strength and creditworthiness. Full details regarding the specific ratings, the office responsible for issuing them, and related disclosures can be found on the AM Best Recent Rating Activity page. Additional context about AM Best’s methodology and rating practices is available in the Guide to Best’s Credit Ratings and the Guide to Proper Use of Best’s Ratings & Assessments.
