Best Lowers Most of AIG’s Ratings to ‘A’ from ‘A+’ – Still ‘Under Review’

September 16, 2008

A.M. Best Co. has made an announcement concerning its financial strength ratings (FSRs) and its issuer credit ratings (ICRs) on American International Group and a number of its subsidiary companies. These actions are summarized as follows:
— AIG’s domestic life and retirement services subsidiaries – FSRs downgraded to ‘A’ (Excellent) from ‘A+’ (Superior); ICRs downgraded to “a” from “aa.”
— AIG’s domestic property/casualty subsidiaries – FSRs downgraded to ‘A’ (Excellent) from ‘A+’ (Superior) and ICRs to “a” from “aa-.”
— AIG’s 60 percent majority owned company, Transatlantic Holdings – FSRs downgraded to ‘A’ (Excellent) from ‘A+’ (Superior); ICRs to “a” from “aa-.”
— American International Group, Inc. – downgraded the ICR to “bbb” from “a+.”
— Connecticut-based Hartford Steam Boiler Group – downgraded the FSR to ‘A’ (Excellent) from ‘A+’ (Superior) and ICRs to “a” from “aa.”
— Personal Lines Pool and operating subsidiaries of 21st Century Insurance Group – downgraded the FSRs to ‘A’ (Excellent) from ‘A+’ (Superior) and ICRs to “a” from “aa-;” also downgraded the ICR to “bbb” from “a-” and debt ratings of 21st Century Insurance Group.

Finally Best said it has placed all of the ratings “under review with negative implications.”

Following yesterday’s financial meltdown, the action isn’t a surprise. Best noted that the “rating actions are based on the rapid deterioration of the already existing fragile condition of AIG’s financial strength and flexibility. Specifically, AIG’s lack of liquidity at the holding company level and management’s need to secure funding options are not representative of financial stability and not reflective of AIG’s current ratings.”

Best said the under review status will be maintained until “AIG executes its plans to stabilize its financial condition.” At that point Best said it would “need to review the $20 billion proposed subsidiary asset internal funding mechanism and its impact on the specific subsidiaries.”

Best also pointed out that “AIG has been without an approved shelf registration since capital was raised in May of this year. Bank facilities have been utilized with the issuance of commercial paper. The rating actions consider the potential for additional liquidity from unanticipated internal and external sources.”

For a complete listing of American International Group’s FSRs, ICRs and debt ratings, go to:

Source: A.M. Best –

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