Ratings agencies lower boom on AIG
The ratings ax has finally fallen on American International Group Inc., as all three major ratings agencies downgraded the company late yesterday.
The ratings ax has finally fallen on American International Group Inc., as all three major ratings agencies downgraded the company late yesterday.
Standard and Poor’s Ratings Services chopped down AIG’s long-term-counterparty rating to A-, from AA-, and its short-term-counterparty credit rating to A-2, from A-1+.
S&P also knocked down the counterparty credit and financial-strength ratings on “most” of AIG’s insurance operating subsidiaries to A+, from AA+, with all ratings to be kept on negative-credit watch.
Moody’s Investors Service has also downgraded AIG’s senior-unsecured-debt rating to A2 from Aa3, citing the deterioration of the housing market and its impact on the company’s liquidity and capital position.
A group of subsidiaries, including the Domestic Life Insurance and Retirement Services businesses, and the American Life Insurance Co. of Washington, have also had their insurance financial-strength ratings downgraded. Those two subsidiaries have been lowered to Aa3, from Aa2.
ALIC is based in Wilmington, Del.
Domestic Life Insurance and Retirement Services encompasses businesses including Houston-based AIG American General, AIG Annuity Insurance Co., also in Houston, AIG Retirement in Houston and AIG SunAmerica Retirement Markets Inc. of Los Angeles.
Los Angeles-based International Lease Finance Corp., AIG’s airplane-leasing company, had its senior unsecured debt rating lowered to A3, from A1, by Moody’s.
Moody’s, S&P and AIG are all based in New York.
Chicago-based Fitch Ratings Ltd. also lowered its issuer default and outstanding-debt ratings on AIG to A, from AA-, saying that the plan to permit AIG to hit up its subsidiaries for a $20 billion loan should ease the holding company’s liquidity problems.
That loan from the subsidiaries was given clearance yesterday by New York Gov. David A. Paterson and the state insurance department.
As AIG had said in its own filings with the Securities and Exchange Commission last month that the downgrades would give its counterparties the right to ask for billions in collateral and to terminate contracts with the company.
The firm, which has posted some $18 billion in losses over three consecutive quarters, is now seeking a loan of up to $75 billion arranged by The Goldman Sachs Group Inc. and JPMorgan Chase & Co., both of New York.
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