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Rating Action:

Moody’s rates AIG’s senior notes Baa1

13 March 2019


Company issuing $600 million of 10-year senior unsecured notes

New York , March 13, 2019 – Moody's Investors Service has assigned a Baa1 rating to $600 million of 10-year senior unsecured notes being issued by American International Group, Inc. (NYSE: AIG). AIG is issuing these securities off its multi-purpose shelf registration, and intends to use the net proceeds for general corporate purposes, which may include repayment of a portion of a debt issuance scheduled to mature in July 2019. The rating outlook for AIG is stable.

RATINGS RATIONALE

AIG's ratings reflect its strong market presence in its global General Insurance segment and US-focused Life and Retirement segment, its good diversification across products and geographies, and its steady performance in Life and Retirement. Tempering these strengths are the weaker and more volatile results in General Insurance, AIG's elevated financial leverage following the July 2018 acquisition of Validus Holdings, Ltd. (Validus), and the complexity of risk management across the group's many businesses and countries/regions.

AIG reported a breakeven net result for 2018, reflecting good performance in Life and Retirement, offset by elevated catastrophe losses, weak alternative investment returns and a high adjusted loss ratio in General Insurance. Moody's expects AIG to improve its General Insurance performance through better underwriting (including higher attachment points and lower limits on commercial policies), greater use of reinsurance to limit severe and catastrophic losses, and pushing more accountability to individual business units. If the General Insurance results do not improve in 2019, AIG's ratings could be downgraded.

AIG's financial leverage and fixed charge coverage metrics are weak for its rating category, particularly following the Validus acquisition. At year-end 2018, the company's financial and total leverage were in the mid-to-high 30s (based on Moody's calculations, which include all reported debt), and its normalized interest coverage was in the low single digits. Moody's expects these metrics to improve as AIG strengthens its General Insurance results. AIG parent maintains good liquidity ($3.8 billion of cash and liquid fixed maturity securities at year-end 2018) to cover its own expenses and support its subsidiaries as needed.

Moody's cited the following factors that could lead to a rating upgrade for AIG: (i) improvement in the standalone credit profiles of its major operating units, (ii) consolidated return on capital in the high single digits, and (iii) improvement in financial flexibility (e.g., total leverage below 25%, pretax interest coverage in the high single digits).

The following factors could lead to a rating downgrade for AIG: (i) deterioration in the standalone credit profiles of its major operating units, (ii) material decline in AIG parent liquidity pool available to support subsidiaries, or (iii) decline in financial flexibility (e.g., total leverage remaining above 35%, pretax interest coverage remaining below five times).

The methodologies used in this rating were Property and Casualty Insurers published in May 2018, and Life Insurers published in May 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

AIG, based in New York City, is a leading international insurance organization serving customers in more than 80 countries and jurisdictions. AIG reported total revenues of $47.4 billion and a net loss attributable to AIG of $6 million for 2018. AIG shareholders' equity was $56.4 billion as of December 31, 2018.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Bruce Ballentine
VP-Sr Credit Officer
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

Marc R. Pinto, CFA
MD-Financial Institutions
Financial Institutions Group
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

Releasing Office :
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

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