American International Group Inc., New York, has lost its AAA long-term counterparty credit and senior debt ratings from Standard & Poor’s Ratings Services.[@@]
The New York office of the rating agency says it has lowered AIG’s long-term credit and senior debt ratings to AA plus.
The rating agency also says it has lowered its rating on AIG’s preferred stock to AA minus, from AA.
In addition, S&P says it has lowered its counterparty credit and financial strength ratings on most of AIG’s wholly owned subsidiaries to AA plus, from AAA.
“All of these ratings remain on CreditWatch with negative implications, where they were placed on March 15,” S&P says in its announcement of the rating changes.
The firm’s A-1 plus short-term ratings on the AIG group are unaffected, S&P says.
“Standard & Poor’s believes AIG’s global, well-diversified financial services group will generate very strong earnings and profits,” S&P says.
As long as AIG does not need to release material restatements of its consolidated financial statements, the company’s counterparty credit, financial strength and senior debt ratings should hold steady, according to Grace Osborne, an S&P credit analyst.
But reports of the discovery of a number of potentially questionable transactions that could reduce AIG shareholders’ equity by about 2%, or $1.7 billion, have diminished S&P’s views of AIG’s “management and its internal controls, corporate governance, and aggressive culture,” Osborne says in a statement published along with the rate change announcement.
“The potential breadth of management involvement in these transactions raises broader enterprise risk-management concerns,” Osborne says.