Litigation

I think that AIG would be happy to have an AAA rating at the beginning of the day on September 15, 2008. Unfoprtanately this was an A an A and an A-.

AM Best reduced the ratings of the life/health  and property/casualty subsidiaries of American International Group (AIG) from A+(Superior) to A (Excellent). AIG's subsidiary American General Life Insurance Company, one of two structured settlmeent annuity issuers under the AIG umbrella has had an A or better A.M. Best rating for the last 50 years.

Fitch also announced a reduction in AIG's ratings from AA- to A.

S&P announced a reduction to A- at about 830pm EDT.

Prior to the "1 notch reduction" announcements, which were made after the bell in the stock market's worst day since just afer 9-11 , rumors were circulating of a drop of 1-3 notches.

CNBC reports that a Fed spokesman said that work on the AIG situtaion will continue through the night. It was reported that AIG is trying to raise $75B in capital.

How the ratings hit will affect AIG structured settlment annuity sales remains to be seen.  A single "A "(Excellent) from AM Best will affect the ability to attract certain tyoes of structured annuity business where a minimum A+ (Superior) or better is required by a judge, statute, or client guideline.  It is important however to point out that AIG is not the first company to be downgraded to A and may not be the last. Some, like Prudential Insurance Company of America, were downgraded and later regained their A+ rating. Others like Liberty Life and Symetra Life Insurance Company (downgraded under forner name SAFECO Life Insurance Company) have yet to regain their A+ rating.