Credit rating agencies Standard & Poor's and Fitch Ratings already
downgraded debt ratings on the world's largest insurer, American International Group Inc. Now, fellow credit agency Moody's Investor Service joined the downgrade bandwagon, lowering its senior unsecured debt rating on AIG to Aa3 from Aa2 Thursday, based partly on the company's recent announcement of a $7.81 billion first-quarter loss.
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The downgrade follows AIG's announcement that it was able to raise $20
billion last week to shore up its reserves from the first-quarter loss. The company said it would also
selectively sell some noncore assets in more high-growth businesses for additional money, which AIG CEO Martin Sullivan points to as
"foreign life and retirement and its aircraft leasing business." Sullivan wanted to boost confidence in its aircraft leasing business, International Lease Finance, which made rumblings of wanting to be sold following S&P's and Fitch's downgrades. With Moody's now downgrading AIG, the question arises whether International Lease will continue the push for a possible divestment from its parent.
Despite AIG's restructuring plan, it was still not enough to please Moody's, and it maintain its Aa3 rating. Moody's placed
the company on notice May 9 that it could possibly downgrade its rating
after a review. And the Moody's downgrade generally concluded what S&P and Fitch already predicted. "Reflecting the company's
exposure to further volatility in the U.S. mortgage market as well as
uncertainty surrounding the strategic direction for AIG Financial
Products Corp.," Moody's said. - Gerald Magpily
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