Fitch Ratings has placed its ratings of American International Group, Inc. (AIG) and its insurance and financial services subsidiaries on Rating Watch Negative (see list below). Previously, Fitch had a Negative Rating Outlook on AIG and the majority of its insurance-related subsidiaries rated by Fitch, and a Stable Rating Outlook on AIG's financial services subsidiaries, including AIG Capital Corporation (AIGCC), International Lease Finance Corp. (ILFC), and American General Finance Inc. (AGF). Fitch does not rate AIG Financial Products (AIGFP), which has been a significant source of recent quarterly losses reported by AIG on a consolidated basis.
Today's rating action is not based on new information provided to Fitch by AIG, but rather on an updated assessment made by Fitch as part of its ongoing ratings review of AIG, its subsidiaries, and their inter-relationships and dependencies.
The movement to Rating Watch Negative for all rated AIG entities reflects Fitch's uncertainty regarding potential outcomes of AIG's previously announced business unit review, which is expected to be completed in late September. It also reflects ongoing uncertainty associated with the company's potential for additional realized and unrealized losses on its various residential mortgage backed securities-related exposures including its portfolio of credit default swaps collateralized by structured finance collateralized debt obligations (CDOs) and resultant collateral posting and capital needs.
Typically Fitch's Rating Outlooks reflect longer-term operating trends and are intended to be directional indicators of likely rating actions over a 12-18-month period. In contrast, Rating Watches are generally event-driven actions that are expected to be resolved over a relatively short period.
Fitch believes that completion of AIG's review of its various business units will likely provide clarity around some of its rating concerns over the next four to six weeks. On the other hand, clarity around Fitch's concerns related to both AIGFP's and AIG's insurance operations' exposure to credit-market volatility is more likely to emerge over a longer period of time that may extend over the next two quarterly reporting periods.
Although Fitch notes that AIG has publicly acknowledged that ILFC will remain a core holding of AIG, Fitch's decision to place ILFC on Rating Watch Negative reflects a heightened overall level of uncertainty surrounding the AIG organization and the indirect impact this can have on ILFC.
Fitch places the following ratings on Rating Watch Negative:
American International Group, Inc.
--Issuer Default Rating (IDR) 'AA-';
--Senior debt 'AA-';
--Junior subordinated debentures 'A+';
--Short Term IDR 'F1+'.
AIG Funding, Inc.
--Commercial paper 'F1+'.
AIG Capital Corporation
--Long-term IDR 'A';
--Short-term IDR 'F1'.
International Lease Finance Corp.
--Long-Term IDR 'A';
--Senior unsecured debt 'A';
--Preferred stock 'A-';
--Short-term IDR 'F1':
--Commercial Paper 'F1'.
American General Finance, Inc.
--Long-term IDR 'A';
--Short-term IDR 'F1';
--Commercial Paper 'F1'.
American General Finance, Corp.
--Long-term IDR 'A';
--Senior debt 'A';
--Short-term IDR 'F1';
--Commercial Paper 'F1'.
AGFC Capital Trust I
--Preferred stock 'A-'.
AIG Finance (Hong Kong) Ltd.
--Long-term local currency IDR 'A';
--Senior unsecured 'A';
--Short-term local currency IDR 'F1';
--Support rating '1';
--Individual Rating 'C'.
CommoLoCo Inc.
--Short term IDR 'F1';
--Commercial Paper 'F1'.
AIG International, Inc.
--IDR 'AA-';
--Senior debt 'AA-'.
AIG Life Holdings (US), Inc. (formerly American General Corp.)
--IDR 'AA-';
--Senior debt 'AA-'.
American General Capital II
--Preferred securities 'A+'.
American General Institutional Capital A and B
--Capital securities of 'A+'.
HSB Capital Trust I
--Preferred securities 'AA-'.
21st Century Insurance Group
--IDR 'AA-';
--Senior debt 'AA-'.
United Guaranty Corporation
--Long-Term rating 'AA-'.
Ezer Mortgage Insurance Company (ISR)
--Insurer Financial Strength (IFS) rating 'AA'.
In addition, the following 'AA+' insurer financial strength (IFS) ratings have been placed on Rating Watch Negative:
Life Companies:
--AGC Life Insurance Company
--AIG Annuity Insurance Company
--AIG SunAmerica Life Assurance Company
--American General Life and Accident Insurance Company
--American General Life Insurance Company
--American International Assurance Company (Bermuda) Limited
--American International Life Assurance Company of New York
--American Life Insurance Company
--First SunAmerica Life Insurance Company
--SunAmerica Life Insurance Company
--The United States Life Insurance Company in the City of New York
--The Variable Annuity Life Insurance Company
National Union Inter-company Pool Members:
--AIG Casualty Company (formerly Birmingham Fire Ins. Co. of PA)
--American Home Assurance Company
--American International South Insurance Company
--Commerce and Industry Insurance Company
--Granite State Insurance Company
--Illinois National Insurance Co.
--National Union Fire Insurance Company of Pittsburgh, PA
--New Hampshire Insurance Company
--The Insurance Company of the State of Pennsylvania
Lexington Inter-company Pool Members:
--AIG Excess Liability Insurance Company, Ltd. (formerly Starr Excess Liability Ins. Co., Ltd.)
--Landmark Insurance Company
--Lexington Insurance Company
AIG Personal Lines Inter-company Pool Members:
--21st Century Casualty Company
--21st Century Insurance Company
--21st Century Insurance Company of the Southwest
--AIG Advantage Insurance Company (formerly Minnesota Ins. Co.)
--AIG Auto Insurance Company of New Jersey
--AIG Centennial Insurance Company
--AIG Hawaii Insurance Company
--AIG Indemnity Insurance Company
--AIG National Insurance Company, Inc.
--AIG Preferred Insurance Company
--AIG Premier Insurance Company
--American International Insurance Company
--American International Insurance Company of California
--American International Insurance Company of New Jersey
--American International Pacific Insurance Company
--American Pacific Insurance Company
--New Hampshire Indemnity Company, Inc.
Non-Pool Companies:
--AIU Insurance Company
--American International Specialty Lines Insurance Company
--Hartford Steam Boiler Inspection & Insurance Company
--United Guaranty Residential Insurance Company
Foreign Domiciled General Ins. Companies:
--AIG MEMSA Insurance Company Ltd. (UAE)
--AIG (UK) Ltd. (formerly The Landmark Insurance Co. Ltd. (UK)
--American International Underwriters Overseas, Ltd. (Bermuda)
ASIF Program
ASIF II Program
ASIF III Program
ASIF Global Financial Program
--Program rating 'AA+'.
Contact: Mark E. Rouck, CPA, CFA +1-312-368-2085, Julie A. Burke, CPA, CFA, +1-312-368-3158 or (AIG), Chicago; and Davie Rodriguez +1-212-908-0386 or Tom Abruzzo +1-212-908-0793 (UGC), New York, Peter J. Shimkus + 1-312-368-2063, William Artz +1-312-368-3178, Chicago or Christopher D. Wolfe +1-212-908-0771 (AGCC, ILFC, AGF) New York.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.