Moody's cuts AIG, units to Aa1

Moody's Investors Service said it lowered its long-term senior debt ratings on American International Group Inc. to Aa1 from Aaa and placed the ratings on review for possible further downgrade.

The debt and insurance financial strength ratings of supported entities, including the group's supported life insurance and mortgage insurance subsidiaries as well as AIG's Domestic Brokerage insurance subsidiaries, have also been lowered to Aa1 from Aaa and are also on review for further possible downgrade.

The short-term Prime-1 debt ratings of AIG Funding, Inc. and AIG Liquidity Corp. have been confirmed with a stable outlook and the short- and long-term ratings of the company's principal commercial and consumer finance subsidiaries are not affected.

Moody's said this rating action follows the company's announcement that it would delay the filing of its 2004 10-K with the Securities and Exchange Commission in order to complete an extensive financial review.

The announcement also highlighted a number of areas of specific concern, based on internal and external investigations to-date, according to Moody's. Significantly, ongoing regulatory investigations into the company's business and internal reviews at AIG have indicated that several transactions appear to have been put in place primarily to enhance reported financial results.

S&P cuts AIG senior debt to AA+

Standard & Poor's said it lowered its long-term counterparty credit and senior debt ratings on American International Group Inc. to AA+ from AAA. S&P also lowered its preferred stock rating on AIG to AA- from AA.

In addition, S&P lowered its counterparty credit and financial strength ratings on most of AIG's wholly owned subsidiaries to AA+ from AAA.

All of these ratings remain on CreditWatch negative, where they were placed on March 15.

S&P said these rating actions follow AIG's announcement that the filing of its 10-K will be delayed further.

In addition, the newly appointed chief executive officer Martin Sullivan and chief financial officer Steven Bensinger have uncovered a number of questionable transactions that span more than five years and result in an aggregate decrease to AIG's shareholders' equity of $1.7 billion.

"The number and scope of inappropriate financial transactions - some characteristic of aggressive financial management - have diminished our assessment of management and its internal controls, corporate governance and aggressive culture," said S&P credit analyst Grace Osborne.

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