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September 16, 2008 at 05:33 AM
Four rating agencies have cut the ratings they have assigned to American International Group Inc.
- Standard & Poor’s Ratings Services, New York, cut its long-term counterparty rating on AIG, New York, to A minus, from AA minus.
- Moody’s Investors Service, New York, cut its senior unsecured debt rating on AIG to A2, from Aa3.
- Fitch Ratings, New York, cut its long-term issuer default rating on AIG to A, from AA minus.
- A.M. Best Company, Oldwick, N.J., cut its financial strength rating on AIG to A, from A plus, and its issuer credit ratings for AIG’s domestic life and retirement services subsidiaries to A, from AA.
AIG is seeking a loan fund that it could use to provide collateral for derivatives counterparties if the trading partners demand collateral, according to financial industry officials.
Units of Goldman Sachs Group Inc., New York, and J.P. Morgan Chase & Company, New York, are working to line up the financing.
Some news organizations are reporting that the Federal Reserve Bank is willing to back up the financing.
Experts note that AIG is suffering because of turmoil in its credit default swaps business, which has guaranteed many mortgage-backed securities, and not because of problems in its principal global insurance and leasing units.
New York state insurance regulators Monday agreed to let AIG use $20 billion in insurance company capital as collateral for the financing that the holding company needs to meet demands for cash.
