Fitch Ratings has removed American International Group from a negative watch, asserting most of the company's legal difficulties have been resolved.
The agency said the action reflects its belief that the “majority of the uncertainties surrounding AIG over the last 12-to-14 months have been resolved and that the company's financial profile and competitive positioning remain supportive of its current ratings.”
Fitch noted that despite management upheaval, catastrophe losses, financial restatements and reserve charges the company still earned more than $10 billion in 2005 and posted a return on equity of 12.3 percent.
The agency also said it was increasingly comfortable with AIG's domestic commercial lines p-c operation's reserve adequacy and run-rate underwriting profitability.
In February, AIG announced it had entered into a $1.6 billion settlement with state and federal authorities over their probes into the company's accounting practices and other issues. At the same time, the company said it would take a fourth-quarter pretax reserve increase $1.7 billion.
Fitch has assigned an “AA-plus” financial strength rating to most of the AIG companies.
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