S&P downgrades AIG

Standard & Poor's said it lowered its long-term counterparty credit and senior debt ratings on American International Group Inc. to AA from AA+ and removed them from CreditWatch with negative implications.

At the same time, S&P lowered its preferred stock rating on AIG to A+ from AA- and removed it from CreditWatch negative. In addition, S&P lowered its financial strength ratings on the three insurance subsidiaries that are ultimately guaranteed by AIG (AIG Life Insurance Co. of Canada, AIG Life Insurance Co. of PR, and American International Assurance Co. Ltd.) to AA and removed them from CreditWatch negative.

S&P said the downgrade on the holding company reflects both the size and scope of the accounting adjustments in its recently released 10-K filing. Although AIG's overall earnings are considered strong, its property/casualty earnings, as restated, indicate greater volatility as well as less robust profitability than was previously reported, as demonstrated by both the ROR and combined ratio.

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