Fitch Expects to Rate AIG's New Sr. Unsecured Notes 'BBB+(Exp)'

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings expects to assign a rating of 'BBB+' to American International Group, Inc.'s (AIG) $1.5 billion issuance of 3.9% senior notes due April 1, 2026. Proceeds from this new issue will be used for general corporate purposes.

KEY RATING DRIVERS

This new issue is rated equivalent to the ratings of AIG's existing senior debt. Financial leverage as measured by the ratio of financial debt and preferred securities to total capital (excluding operating debt and the impact of FAS 115) was approximately 18.4% at year-end 2015, up from 16.5% at year-end 2014. This issuance combined with other 1st quarter 2016 financing activity will move pro forma financial leverage closer to management's target leverage ratio of 20% - 25%.

Fitch affirmed AIG's and its insurance operating subsidiaries ratings on March 9, 2016. The Rating Outlook is Stable. The Rating Action Commentary is available on www.fitchratings.com.

RATING SENSITIVITIES

Key triggers that could lead to an upgrade include:--Successful completion of pending strategic actions and greater certainty that the corporate and operating structure is in place for the longer term, and further meaningful restructuring actions are unlikely;--A shift to sustainable property/casualty segment underwriting profitability, with demonstration of greater loss reserve stability or reserve redundancies;--Improvement in GAAP earnings to a level consistent with interest coverage at 10x or above;--While achieving the above, maintenance of financial leverage and risk-based capital at the company's insurance subsidiaries remaining within newly revised targeted levels.

Key triggers that could lead to a downgrade include:--Increase in financial leverage to above 25%, or an increase in the TFC ratio to above 0.7x from 0.5x currently;--Significant reductions in debt servicing capacity from holding company assets and available dividends from subsidiaries to a level below 4.5x annual interest on financial debt;--Large underwriting losses and/or further material reserve volatility of the company's non-life insurance subsidiaries;--Sharp deterioration in the company's domestic life subsidiaries' profitability trends;--Material declines in risk-based capital ratios at either the domestic life insurance or the non-life insurance subsidiaries.

FULL LIST OF RATING ACTIONS

Fitch expects to assign:

American International Group, Inc.--USD1.5 billion 3.9% senior unsecured notes due April 1, 2026 'BBB+(Exp)'.

Fitch currently rates AIG and its subsidiaries with a Stable Rating Outlook as follows:

American International Group, Inc.--Long-term IDR 'A-';--Various senior unsecured note issues 'BBB+';--EUR42.24 million of 6.797% senior unsecured notes due Nov. 15, 2017 'BBB+';--GBP100.2 million of 6.765% senior unsecured notes due Nov. 15, 2017 'BBB+';--USD1 billion of 2.3% senior unsecured notes due July 16, 2019 'BBB+';--USD638.4 million of 3.375% senior unsecured notes due Aug. 15, 2020 'BBB+';--USD708 million of 6.4% senior unsecured notes due Dec. 15, 2020 'BBB+';--USD1.5 billion of 3.3% senior unsecured notes due Mar. 1, 2021 'BBB+';--USD1.5 billion of 4.875% senior unsecured notes due June 1, 2022 'BBB+';--USD1 billion of 4.125% senior unsecured notes due Feb. 15, 2024 'BBB+';--USD1.25 billion of 3.75% senior unsecured notes due July 10, 2025 'BBB+';--USD1.2 billion of 3.875% senior unsecured notes due Jan. 15, 2035 'BBB+';--USD500 million of 4.7% senior unsecured notes due July 10, 2035 'BBB+';--USD1 billion of 6.25% senior unsecured notes due May 1, 2036 'BBB+';--USD243.43 million of 6.820% senior unsecured notes due Nov. 15, 2037 'BBB+';--USD 2.25 billion of 4.5% senior unsecured notes due July 16, 2044 'BBB+';--USD350 million of 4.35% senior unsecured notes due March 20, 2045 'BBB+';--USD750 million of 4.8% senior unsecured notes due July 10, 2045 'BBB+';--USD290 million of 4.9% senior unsecured notes due July 17, 2045 'BBB+';--USD800 million of 4.375% senior unsecured notes due Jan. 15, 2055 'BBB+';--USD20.3 million of 5.60% senior unsecured notes due July 31, 2097 'BBB+';--EUR12.85 million of 8.00% series A-7 junior subordinated debentures due May 22, 2038 'BBB-';--USD607.17 million of 8.175% series A-6 junior subordinated debentures due May 15, 2058 'BBB-';--GBP88.2 million of 5.75% series A-2 junior subordinated debentures due March 15, 2067 'BBB-';--EUR162.6 million of 4.875% series A-3 junior subordinated debentures due March 15, 2067 'BBB-';--GBP5.6 million of 8.625% series A-8 junior subordinated debentures due May 22, 2068 'BBB-';--USD403.18 million of 6.25% series A-1 junior subordinated debentures due March 15, 2087 'BBB-'.

AIG International, Inc.--Long-term IDR 'A-'.

AIG Life Holdings, Inc.--Long-term IDR at 'A-';--USD135.5 million of 7.50% senior unsecured notes due July 15, 2025 'BBB+';--USD150 million of 6.625% senior unsecured notes due Feb. 15, 2029 'BBB+';--USD116.4 million of 8.50% junior subordinated debentures due July 1, 2030 'BBB-';--USD78.9 million of 7.57% junior subordinated debentures due Dec. 1, 2045 'BBB-';--USD227.3 million of 8.125% junior subordinated debentures due March 15, 2046 'BBB-'.

AGC Life Insurance CompanyAmerican General Life Insurance CompanyThe Variable Annuity Life Insurance CompanyUnited States Life Insurance Company in the City of New York--IFS rating 'A+'.

AIU Insurance CompanyAmerican Home Assurance CompanyAIG Assurance CompanyAIG Europe LimitedAmerican International Overseas LimitedAIG Property Casualty CompanyAIG Specialty Insurance CompanyCommerce & Industry Insurance CompanyGranite State Insurance CompanyIllinois National Insurance CompanyInsurance Company of the State of PennsylvaniaLexington Insurance CompanyNational Union Fire Insurance Company of Pittsburgh, PANew Hampshire Insurance Company--IFS rating 'A'.

ASIF Global Financing--USD750 million of 6.9% senior secured notes due March 15, 2032 'A+'.

ASIF II--GBP200 million of 6.375% senior secured notes due Oct. 5, 2020 'A+';--USD82 million of 0% senior secured notes due Jan. 2, 2032 'A+'.

ASIF III Program--GBP350 million of 5.375% senior secured notes due Oct. 14, 2016 'A+';--GBP250 million of 5% senior secured notes due Dec. 18, 2018 'A+';--EUR200 million of 1.66% senior secured notes due Dec. 20, 2024 'A+'.

Recent relevant committee date: March 8, 2016.

Additional information is available on www.fitchratings.com

Applicable CriteriaInsurance Rating Methodology (pub. 16 Sep 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=871172

Additional DisclosuresSolicitation Statushttps://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1001120Endorsement Policyhttps://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160317006300/en/

Fitch Ratings
Primary Analyst
James B. Auden, CFA
Managing Director
+1-312-368-3146
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Tana M. Higman
Director
+1-312-368-3122
or
Committee Chairperson
Keith M. Buckley
Managing Director
+1-312-368-3211
or
Media Relations
Sandro Scenga, New York, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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