Moody's affirms AIG

Moody's Investors Service said it affirmed the ratings of American International Group, Inc. (senior unsecured debt rating of Aa2), following the company's announcement of a $5.3 billion net loss for the fourth quarter of 2007.

The agency said that the net result includes significant unrealized market valuation losses on super-senior credit default swaps on multi-sector collateralized debt obligations with subprime mortgage content.

Moody's said that AIG's super-senior CDS have more moderate exposure to recent mortgage vintages than those of many other market participants, such that AIG's ultimate economic losses may be materially smaller than estimated market values would suggest.

Nevertheless, the rating agency said that a material increase in market valuation losses and/or a realization of significant economic losses on this portfolio could lead to a downgrade of AIG's ratings.

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