Fitch Expects to Rate AIG's Equity Units 'A+'; Outlook Negative

Fitch Ratings expects to assign an 'A+' rating to American International Group, Inc.'s (NYSE:AIG) equity units listed below. The Rating Outlook is expected to be Negative.

--Equity Units, Convertible on February 15, May 1 and August 1 of 2011 'A+'.

The equity units are made up of a stock purchase contract and junior subordinated debentures. The stock purchase contract obligates the holder to purchase common stock on each of February 15, May 1 and August 1 of 2011. The junior subordinated debentures secure the obligation to purchase common stock and mature on February 15, May 1 and August 1 of 2041. These securities are callable on February 15, May 1 and August 2013. The company has the right to defer contract adjustment payments in respect to the equity units at any time through the conversion date. The junior subordinated debentures are pari passu with previously issued junior subordinated debentures in Series A-1 through A-5.

Based on Fitch's hybrid rating criteria, Fitch has assigned a Class E designation to the equity units that result in the issuance of common stock on February 15 and May 1, 2011 and will allocate 100% of the principal to adjusted equity in evaluating the financial leverage of AIG. The securities providing for common stock purchase on August 1, 2011 receive Class D designation initially that will allocate 75% of the principal to adjusted equity and 25% to adjusted debt in evaluating the financial leverage of AIG. Once the conversion date moves to within three years, these securities will receive Class E treatment. Key features supporting the equity credit class of the equity units include the stock purchase contracts, the pre-conversion junior subordinated status and the deferability of fixed payments.

The proceeds of these issuances combined with an announced common stock offering will be held at the holding company and used for general corporate purposes.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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.

SOURCE: Fitch Ratings

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