Fitch Ratings Tuesday downgraded the long-term issuer rating and unsecured senior debt obligations of American International Group Inc. to AA-plus, from AAA, in the midst of regulators' investigations and the departure under pressure of its chief executive officer, Maurice R. Greenberg.
The company's new CEO, Martin J. Sullivan, who was promoted from co-chief operating officer, said Standard & Poor's had put the insurer's AAA long-term rating, its highest possible grade, on "creditwatch negative." The action means conditions are seen that might prompt a downgrading within three months. A downgrading might raise AIG's borrowing costs.
Fitch affirmed ratings at their current levels for all AIG's insurance company subsidiaries, with a stable outlook.
AIG's new chief financial officer, Steven Bensinger, said in a conference call with investors that the insurer does not believe the ratings actions will have "any significant effect" on the company or its financial position. He also noted that the company's AAA insurer financial strength ratings were affirmed by Fitch.
Fitch said its AAA rating for AIG, which had been on negative outlook since May 2003, was further pressured by the negative circumstances surrounding the state and federal investigations of certain business practices of AIG and members of its management. The company announced Monday night that Mr. Greenberg had stepped down as CEO but said he will become a nonexecutive chairman.
The rating agency said that it is optimistic that Mr. Sullivan and AIG's executive management team will be effective and that the downgrading does not reflect any adverse opinion about the qualifications of Mr. Sullivan.
