S&P LOWERS AIG CREDIT RATINGS OWING TO RESERVE CHARGE

Standard & Poor’s has cut AIG’s long-term counterparty credit and senior unsecured debt ratings to BBB+ from A- in part owing to the “material reserve deficiency charge” that the New York-based group expects to report in its fourth-quarter results. With the charge, “AIG will fall short of a 7x to 8x fixed-charge coverage ratio for 2016-2017, which was our threshold for maintaining a nonstandard notching between AIG’s operating subsidiaries and its holding company,” said S&P Global Ratings analysts Tracy Dolin. “AIG’s global diversity of income streams has not contributed enough to overall profitability to offset operational challenges at its predominant US operations.” S&P said the lower ratings apply only to AIG’s primary holding, not its subsidiaries, which are still given a stable outlook. AM Best and Fitch have also downgraded ratings for AIG, citing the reserve charge.