S&P, Fitch cut AIG's ratings following big 1Q loss
NEW YORK—Standard & Poor's Ratings Services and Fitch Ratings each cut their debt ratings for American International Group Inc. late Thursday, shortly after the world's biggest insurer swung to a large first-quarter loss.
S&P lowered its counterparty credit ratings on AIG and several subsidiaries to 'AA-/A-1+' from 'AA/A-1+', and on AIG's indirect subsidiary, International Lease Finance Corp., to 'A+/A-1' from 'AA-/A-1+'.
S&P put the affected ratings and the 'AA+' counterparty credit and financial strength ratings of AIG's core insurance divisions on a negative watch list, suggesting further rate cuts are possible.
Meanwhile, Fitch downgraded AIG's issuer default rating and senior debt ratings to 'AA-' from 'AA', and said all the ratings remain on a negative watch list.
All the ratings remain investment grade.
The downgrades come after AIG reported that it swung to a bigger-than-expected first-quarter loss of $7.81 billion because of losses tied to credit swaps and mortgage-related operations. The insurer also announced plans to raise $12.5 billion through offerings of stock and other securities to fatten its capital base.
"Although we expected that AIG would have some losses in the first quarter, the level of the additional losses exceeds these expectations," S&P credit analyst Rodney Clark said in a statement.
AIG shares tumbled $3.33, or 7.5 percent, to $40.82 in after-hours trading. The stock fell 93 cents, or 2.1 percent, to close at $44.15, before the company reported earnings.
