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AIG, Pru LLC Deal Evaluated By Rating Agencies

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Reacting to the agreement of American International Group, New York, to sell its Asian life unit to Prudential, LLC, Newark, N.J. for $35.5 billion, Moody’s Investors Service affirmed ratings of two entities and Standard & Poor’s placed one on ratings watch.

S&P placed financial strength ratings of “A-plus” for American International Assurance, the AIG company sold to Prudential LLC, on CreditWatch with developing implications. The rating agency said it has concerns over integration of the two companies.

The ratings of the AIG, primary property and casualty company, were unaffected by the deal.

S&P placed British-based Prudential plc on CreditWatch yesterday with negative implications saying the deal for the AIG unit, American International Assurance, would weaken the company’s key credit metric and that it carries significant execution risk.

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S&P said it placed Prudential and subsidiaries on CreditWatch negative “because of the size and weaker credit profile of AIA relative to Prudential.”

Moody’s affirmed the ratings for AIA (Bermuda), which is 40% of AIA Group’s assets and Prudential plc.

While affirming the rating, Moody’s noted that there is a negative outlook reflecting the executive risk over the transaction.