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Fitch: Gov't Stock Sale, Deleveraging Rejuvenates AIG



  Fitch: Gov't Stock Sale, Deleveraging Rejuvenates AIG

Business Wire

NEW YORK -- September 13, 2012

Fitch Ratings indicated this week that its financial ratings for American
International Group, Inc.'s (AIG) no longer incorporate federal government
support, as the U.S. Treasury Department reduced its stake in AIG's common
stock to 15.9% from 53.0% through an announced sale of $18.0 billion in stock
plus the exercise of a $2.7 billion overallotment.

On Tuesday, we took several ratings actions on AIG to reflect the end of
government ownership and reflect AIG's significant progress in restructuring
and deleveraging over the past four years. These actions included an upgrade
of AIG's issuer default rating to 'BBB+' from 'BBB' and an affirmation of
insurer financial strength ratings of property/casualty and life insurance
subsidiaries at 'A', and senior debt at 'BBB'. A complete list of AIG ratings
can be found at www.fitchratings.com.

The U.S. Treasury Department's latest stock sale was its largest of AIG shares
and fifth overall, which combined have reduced government equity ownership
from 92% at year-end 2010. AIG has eliminated all other government support
provided to the firm through repayment of government entity-held debt and
preferred stock obligations, sales of noncore subsidiaries, and assets held in
the various special-purpose vehicles.

AIG significantly reduced its overall financial leverage and financial market
exposure through reduced reliance on debt by sharply decreasing the credit
default swap contracts exposure of AIG Financial Products Corp. Future
material improvements in leverage would most likely arise from the execution
of an initial public offering or sale of AIG's aircraft leasing operation.

We believe the insurer and its subsidiaries continue to demonstrate strong
competitive positions in property/casualty and life insurance markets. A
demonstrated ability to generate stronger and more consistent insurance
segment profitability that simultaneously boosts debt servicing capabilities
are key to future positive ratings movement. Conversely, future returns to
higher leverage or a failure of recent operating initiatives to boost
operating performance would enhance negative ratings pressure.

With the government's transition to a minority shareholder, AIG will become
regulated by the Federal Reserve as a result of its ownership of a bank. While
this will likely add to compliance costs and efforts, we believe that AIG will
be able to meet compliance and Federal Reserve capital requirements.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit
market commentary page. The original article, which may include hyperlinks to
companies and current ratings, can be accessed at www.fitchratings.com. All
opinions expressed are those of Fitch Ratings.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Contact:

Fitch Ratings
Brian Bertsch, +1-212-908-0549
Media Relations, New York
brian.bertsch@fitchratings.com
or
Kellie Geressy-Nilsen, +1-212-908-9123
Senior Director
Fitch Wire
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
James Auden, +1-312-368-3146
Managing Director
Corporate Finance, Insurance
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