NU Online News Service, July 12 3:45 p.m. EDT
Fitch Ratings has revised American International Group Inc.'s Rating Outlook to Stable from Evolving, stating that AIG's re-structuring plan has "solidified meaningfully, and capital market conditions have improved significantly" since May 2009, when Fitch assigned the Evolving outlook.
Fitch also removed the A-plus insurer financial strength (IFS) ratings of AIG's domestic property and casualty subsidiaries from Rating Watch Negative and assigned a Stable rating outlook.
Fitch said the Stable outlook for AIG also reflects the belief that AIG's ratings are unlikely to change over the next 12 to 24 months.
The Chicago-based rating agency said, "Fitch's ratings on AIG and Stable outlook on the company are underpinned by the agency's belief that the U.S. Treasury's approximate 80 percent equity ownership interest in AIG, and presumed desire, within reason, to maximize the value of that equity ownership, is large enough to discourage the Treasury from monetizing its investment in AIG prior to the company possessing a capital structure and business model supportive of the company's current ratings."
Fitch said AIG's ultimate transition from a majority government owned and supported entity to an independent entity "could result in future ratings migration that is not reflected in Fitch's current near-term Stable outlook."
Regarding AIG's domestic p&c subsidiaries, Fitch said the removal from Rating Watch Negative "reflects the agency's belief that AIG follows a sensible reserving process and that the company's accident-year loss ratios in key business lines reflect reasonable levels of conservatism."
Fitch said the companies have been able to maintain their strong competitive positions "despite the effect of negative publicity surrounding AIG since the company received its initial financial assistance from the U.S. Government in September 2008."
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