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Related Issuers
AIA International Limited
AIG Life Holdings, Inc.
AIG Management France S.A.
AIG Matched Funding Corp.
AIG Property Casualty Company
AIG Specialty Insurance Company
AIG SunAmerica Global Financing II
AIG SunAmerica Global Financing III
AIG SunAmerica Global Financing IV
AIG SunAmerica Global Financing IX
AIG SunAmerica Global Financing V
AIG SunAmerica Global Financing VI
AIG SunAmerica Global Financing VII
AIG SunAmerica Global Financing VIII
AIG SunAmerica Global Financing XI
AIG SunAmerica Global Financing XII
AIG SunAmerica Global Financing XIII
AIG SunAmerica Global Financing XIV
AIG-FP Matched Funding Corp.
AIU Insurance Company
American General Capital I
American General Capital II
American General Capital III
American General Institutional Capital A
American General Institutional Capital B
American General Life Ins. Co of Delaware
American Home Assurance Company
American International Group, Inc.
American Intl. Life Assurance Co. of N.Y.
American Life Insurance Company
ASIF Global Financing XIX
ASIF Global Financing XV
ASIF Global Financing XVI
ASIF Global Financing XVII
ASIF Global Financing XVIII
ASIF Global Financing XX
ASIF Global Financing XXI
ASIF Global Financing XXII
ASIF Global Financing XXIII
ASIF Global Financing XXVI
ASIF I
ASIF II
ASIF III (Jersey) Limited
Commerce and Industry Insurance Company
CommoLoCo, Inc.
First SunAmerica Life Insurance Company
Insurance Co. of the State of Pennsylvania
National Union Fire Ins Co of Pittsburgh, Pa.
New Hampshire Insurance Company
SAFG Retirement Services, Inc.
SunAmerica Annuity and Life Assurance Company
SunAmerica Life Insurance Company
United Guaranty Mortgage Indemnity Company
United Guaranty Residential Ins. Co of NC
United Guaranty Residential Insurance Co.
Rating Action:

MOODY'S AFFIRMS Aaa SENIOR DEBT RATING OF AMERICAN INTERNATIONAL GROUP, INC.; REVISES OUTLOOK TO STABLE FROM NEGATIVE

19 May 2004
MOODY'S AFFIRMS Aaa SENIOR DEBT RATING OF AMERICAN INTERNATIONAL GROUP, INC.; REVISES OUTLOOK TO STABLE FROM NEGATIVE

New York, May 19, 2004 -- Moody's Investors Service has affirmed the Aaa senior unsecured debt rating of American International Group, Inc. (AIG), and has revised the outlook for the rating to stable from negative. At the same time, Moody's also revised the rating outlooks for various AIG supported operating subsidiaries (see below) to stable from negative.

AIG's rating outlook was changed to negative in February 2003, following a significant reserve charge taken at AIG's general insurance operations in the fourth quarter of 2002. The change also reflected Moody's concerns about the holding company's elevated leverage and weakened fixed charge coverage profile following the acquisition of American General Corporation in mid-2001, heightened sensitivity to liquidity-related issues at International Lease Finance Corporation (ILFC), increased operational leverage at AIG's SunAmerica and Financial Products subsidiary operations, and increased volatility of AIG's commercial general insurance operations.

In affirming AIG's Aaa senior unsecured debt rating, Moody's noted that AIG continues to distinguish itself as the leading global insurance enterprise, in terms of business breadth, consolidated revenues and earnings, and market capitalization. The rating agency noted that the group maintains excellent market positions and franchise strength in each of its major business segments: US and international general insurance, life insurance and retirement services. Moody's also noted AIG's strong and stable earnings capacity -- in total and by business segment -- as well as its robust internal capital generation and its exceptional financial and business profile relative to other Aaa-rated financial and non-financial institutions. Moody's added that AIG's financial flexibility is supported by its substantial market capitalization, modest holding company leverage, very high fixed-charge coverage and favorable liquidity profile. The rating agency also noted that despite somewhat heightened earnings volatility in recent years, AIG's earnings have remained strong relative to peers, reflecting the group's substantial diversification of earnings. Moody's also noted that AIG has benefited to some degree from the dislocation of some of its insurance industry competitors as a result of a flight to quality among insurance buyers and intermediaries.

In restoring the stable outlook to AIG's ratings, Moody's noted the company's success in moderating its risk profile in a number of areas previously cited as concerns. These include the following:

1) restoration of holding company debt leverage and coverage measures to historical norms, and a strengthening of the holding company's alternative liquidity program to fund contingencies and possible stress-related short-term funding needs;

2) reduction of ILFC's liquidity risk through a reduction in short-term funding and improvement in the size and diversity of alternative funding sources to minimize reliance on parental support;

3) moderation in the growth rate of institutional funding business, primarily at SunAmerica, and associated liquidity risks; and

4) controlled growth and continued risk management discipline at AIG Financial Products.

Moody's noted that the rating affirmations and restoration of stable outlooks are based not only on the group's recent overall financial and business profile and progress on key metrics to date, but also on Moody's expectation that certain favorable trends currently underway will continue through 2004 and into 2005. Specifically, Moody's noted that the following expectations underlie the stable outlook:

1) continued modest holding company leverage profile and robust liquidity and coverage position, consistent with current levels (e.g. corporate debt to total capitalization of 10%-12%, fixed charge coverage in excess of 20x, and access to bank and inter-company liquidity facilities at a level greater than or equal to the holding company's and AIG Funding Inc.'s rolling 12-month short-term obligations).

2) improvement in risk-adjusted capital-adequacy measures at AIG's principal operating subsidiaries. Moody's believes that the risk-adjusted capitalization and liquidity position of AIG's general and life insurance operations improved significantly in 2003 over year-end 2002 levels. The rating agency further expects that these levels will continue to improve in 2004, remaining thereafter at a level consistent with or better than its Aa-rated insurance peers.

3) consistency in strategic focus and management of AIG's financial products operations, with a strong component of predictable, accrual-based earnings, risk management discipline and long-term incentive compensation structure to support stability in earnings and internal growth. The rating agency expects that AIG Financial Products will maintain a capitalization and liquidity profile consistent with its recent past.

4) a continued strategic emphasis on the group's global general and life insurance franchises, and management of growth at financial services operations to limit these over time to a contribution of no more than 20% of total enterprise-wide earnings and risk-based capital allocation.

Ratings affirmed with stable outlooks are as follows:

American International Group, Inc. - senior unsecured debt at Aaa;

Members of the Domestic Brokerage Group:

National Union Fire Insurance Company of Pittsburgh, PA. - insurance financial strength at Aaa;

American Home Assurance Company - insurance financial strength at Aaa;

Birmingham Fire Insurance Company of Pennsylvania - insurance financial strength at Aaa;

Commerce & Industry Insurance Company - insurance financial strength at Aaa;

AIU Insurance Company - insurance financial strength at Aaa;

New Hampshire Insurance Company - insurance financial strength at Aaa;

Insurance Company of the State of Pennsylvania - insurance financial strength at Aaa;

American International Specialty Lines Insurance Company - insurance financial strength at Aaa;

Transatlantic Reinsurance Company - insurance financial strength rating at Aa1;

Members of the United Guaranty Mortgage Insurance Group:

United Guaranty Residential Insurance Company - supported insurance financial strength at Aaa;

United Guaranty Residential Insurance Company of North Carolina - supported insurance financial strength at Aaa;

United Guaranty Mortgage Indemnity Company - insurance financial strength at Aaa;

American General Corporation - guaranteed senior unsecured debt at Aaa; rating for commercial paper at Prime-1;

American General Capital I, II, III - guaranteed trust preferred securities at Aa1;

American General Institutional Capital A and B - guaranteed trust preferred stock at Aa1;

AIG Funding, Inc. - rating for commercial paper at Prime-1;

AIG Liquidity Corp. - rating for commercial paper at Prime-1;

AIG Financial Products Corp. - guaranteed senior unsecured debt at Aaa;

AIG Financial Products (Japan) Ltd - guaranteed senior unsecured debt at Aaa;

AIG Matched Funding Corp. - guaranteed senior unsecured debt at Aaa; rating for commercial paper at Prime-1;

AIG-FP Matched Funding Corp. - guaranteed senior unsecured debt at Aaa;

Banque AIG SA - guaranteed senior unsecured debt at Aaa;

AIG Life Insurance Company - supported insurance financial strength rating at Aaa;

American International Life Assurance Company of New York - supported insurance financial strength rating at Aaa;

SunAmerica Inc. - supported senior unsecured debt at Aaa; supported preferred stock at Aa2; supported multiple seniority shelf at (P)Aaa (senior unsecured), (P)Aa1 (subordinated), (P)Aa2 (preferred);

SunAmerica Life Insurance Company - supported insurance financial strength rating at Aaa;

First SunAmerica Life Insurance Company - supported insurance financial strength rating at Aaa;

AIG SunAmerica Life Assurance Company - supported insurance financial strength rating at Aaa;

American Life Insurance Company - insurance financial strength rating at Aaa;

American International Assurance Company (Bermuda) Ltd. - supported insurance financial strength rating at Aaa;

AIG Edison Life Insurance Company - insurance financial strength rating at Aa1;

American General Life & Accident Insurance Company - insurance financial strength rating at Aa1;

American General Life Insurance Company - insurance financial strength rating at Aa1;

AIG Annuity Insurance Company - insurance financial strength rating at Aa1;

United States Life Insurance Company in The City of New York - insurance financial strength rating at Aa1;

Variable Annuity Life Insurance Company - insurance financial strength rating at Aa1.

International Lease Finance Corporation - senior unsecured debt at A1, rating for commercial paper at Prime-1;

American General Finance Corporation - senior unsecured debt at A1, rating for commercial paper at Prime-1;

American General Finance, Inc. - rating for commercial paper at Prime-1;

Commo Loco, Inc. - rating for commercial paper at Prime-1.

Moody's also affirmed, with stable outlook, its ratings on funding agreement-backed debt associated with the following:

AIG SunAmerica Institutional Funding - backed senior debt at Aaa;

AIG SunAmerica Global Financing - backed senior debt at Aaa.

American International Group, Inc. (NYSE: AIG), based in New York City, is the leading international insurance and financial services organization, with operations in more than 130 countries and jurisdictions. The company is engaged through its subsidiaries in international property and casualty insurance, life insurance, retirement services, asset management and financial services. As of December 31, 2003, AIG reported total assets of $678 billion and shareholders' equity of $71.3 billion, and net income for the full year 2003 of $9.3 billion.

New York
Alan Murray
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Ted Collins
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
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