Ratings agencies today painted a bleak outlook for
AIG, following news of the insurer’s massive fourth-quarter loss and an additional $30 billion lifeline from the U.S. government.
Standard and Poor’s in New York today removed American International Group Inc.’s ratings from CreditWatch “negative,” but gave the insurer and its subsidiaries a negative outlook.
New York-based
AIG’s counterparty credit ratings have been affirmed at A-/A-1, while the insurance subsidiaries’ counterparty credit and financial strength ratings have also been affirmed at A+.
All of these companies now have a negative outlook.
Additionally, the insurer expects that its planned sale of its life operations will take longer than planned, partly due to the lack of liquidity in the capital markets, according to a report from S&P. That risk, along with the increased pressure on the performance of
AIG’s insurance business, both contributed to the agency’s negative outlook.
Meanwhile, Moody’s Investors Service, also of New York, downgraded
AIG SunAmerica’s subsidiaries’ insurance financial strength to A1 from Aa3. Those companies include
AIG SunAmerica Life Assurance Co. in Los Angeles, First SunAmerica Life Insurance Co. of New York and SunAmerica Life Insurance Co., also in Los Angeles.
Domestic Life Insurance and Retirement Services subsidiaries, including
AIG Annuity Insurance Co.,
AIG Life Insurance Co. and The Variable Annuity Life Insurance Co. — all of Houston — have had their insurance financial strength ratings downgraded to A1 from Aa3.
Fitch Ratings Inc. of New York downgraded
AIG’s hybrid securities, lowering junior subordinated and
trust preferred securities to BB from A-. The AA- insurer financial strength ratings of
AIG Annuity,
AIG Life, SunAmerica and VALIC all remain on “Rating Watch Evolving.”
The news follows on the heels of
AIG’s $61.7 billion, or $22.95 per share, fourth-quarter loss, down from the carrier’s $5.3 billion, or $2.08 per share, loss in the year-ago period.
Though the government’s decision to revise
AIG’s recapitalization plan and provide the carrier an additional $30 billion have staved off concerns that the company’s creditworthiness will continue to rapidly crumble, S&P analyst Kevin Ahern said that there were still worries about
AIG’s ability to hold on to key staff.
If
AIG takes a serious loss due to competitors poaching underwriting personnel and pursuing the carrier’s accounts, a downgrade may be in the cards — though likely by no more than two notches, according to Mr. Ahern’s report.
However, if
AIG’s businesses were to stabilize and government support was to continue, the outlook may be revised to stable.
