S&P: AIG remains on watch

Standard & Poor's said that it is keeping its ratings on American International Group Inc. (AA+/Watch negative/A-1+) and AIG's subsidiaries on CreditWatch with negative implications, where they were placed on March 15.

Recently, there has been increased market speculation about larger charges to GAAP shareholders' equity, which resulted from AIG's internal probe into questionable financial transactions and widening spreads in the credit derivative swap market.

Most AIG ratings were lowered to AA+ from AAA on March 30 following AIG's announcement that the newly appointed executive team uncovered a number of questionable transactions that needed to be investigated further and established expectations that the filing of the 10-K would likely be made by April 30, 2005. The preliminary impact of the findings was estimated to be $1.7 billion after taxes (about 2% of shareholders' equity).

Barring any material restatement of its consolidated financial statements or additional material governance issues, S&P indicated that the counterparty credit, financial strength and senior debt ratings were not likely to fall further, especially in light of the strong, diversified operational cash flows.

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