Two ratings agencies offered positive assessments of AmericanInternational Group after the U.S. Treasury's sell-down to aminority stake in the company, with Moody's Investor's Servicecalling the development "another credit-positive milestone" andFitch Ratings stating that recent actions have rejuvenated AIG.

In its Weekly Credit Outlook, Moody's says of the Treasury'soffering that reduced its ownership stake in AIG to around 16percent from 53 percent, "The ongoing repayment and termination ofgovernment support is credit positive for AIG because it enhancesthe company's brand and its ability to find itself in the capitalmarkets. 

Demonstrating the strengthening of the brand through thereduction of government support and gradual improvement in coreoperations, Moody's pointed to AIG's decision to rebrand itsproperty and casualty arm, Chartis, as AIG, and its life insurer,SunAmerica Financial Group, as AIG Life.

For its part, Fitch upgraded AIG's issuer default rating to BBB+from BBB and affirmed AIG's insurer financial strength rating of Abased on Treasury's actions and also on the company reducing itsoverall financial leverage "through reduced reliance on debt bysharply decreasing the credit-default swap contracts exposure ofAIG Financial Products Corp.

"We believe the insurer and its subsidiaries continue todemonstrate strong competitive positions in [P&C] and lifeinsurance markets," Fitch says.

Moody's points out some potential negatives for AIG. For one,the ratings agency mentions the company's drawdown of cash andshort-term investments to help fund its $5 billion sharerepurchase. "To the extent that AIG draws from its parentalliquidity pool to fund share buybacks or similar parent actions, itis credit negative," says the Moody's analysis, written by BruceBallentine, vice president and senior credit officer at Moody's."The parent company maintains cash and short-term investments, pluscontingent liquidity facilities, to address the potential needs ofits operating units under stress scenarios."

Both Fitch and Moody's also note that with the Treasury'sownership stake dropping below 50 percent, the company will likelybe regulated by the Federal Reserve. 

Moody's says this is credit positive due to AIG's "broad arrayof businesses and global reach." 

Fitch says, "While this will likely add to compliance costs andefforts, we believe that AIG will be able to meet compliance andFederal Reserve capital requirements."