Fitch Ratings Downgrades AIG; Remains on Rating Watch Negative

Business Wire, May 2, 2005

CHICAGO -- Fitch Ratings has downgraded the long-term issuer rating and unsecured senior debt obligations of American International Group, Inc. (AIG) to 'AA' from 'AA '. Additionally, Fitch has downgraded to 'AA ' from 'AAA' all of AIG's 'AAA' insurance company ratings. Fitch has also downgraded the long term rating of International Lease Finance Corporation (ILFC) to 'A ' from 'AA-', and the short term rating to 'F1' from 'F1 '. All long-term ratings also remain on Rating Watch Negative by Fitch, including those of American General Finance Company (AGF). Fitch has concurrently affirmed AIG's 'F1 ' commercial paper rating. Approximately $51 billion of AIG, ILFC and AGF debt is affected by this action. (See below for a complete list of ratings.)

Fitch's rating actions follow AIG's announcement that it will not meet its self-imposed April 30, 2005 10K filing deadline and disclosure that its review to date will result in $2.7 billion of accounting restatements. Fitch believes that the uncertainty surrounding AIG's financial condition and future financial performance has grown to levels beyond the expectations embedded in Fitch previous rating levels. This band of uncertainty includes the potential adverse impact of recent events on the company's competitive position, expense ratio advantage, earnings levels and volatility, business mix, capital levels and strategic plans.

Fitch has viewed AIG's strong franchise as translating into unique advantages in pricing, risk selection, and reinsurance purchasing despite very competitive conditions in the industry. Fitch believes that these advantages will narrow somewhat going forward as insureds, reinsurers, and competitors increasingly pressure AIG's ability to act in ways that allow it to maintain these unique advantages at levels previously attained. Even with the potential for reduced competitive advantages, AIG remains among the strongest and highest rated financial services organizations in the world.

Fitch's Negative Rating Watch reflects uncertainties surrounding AIG as the company completes its internal accounting review and as regulatory investigations continue. Additionally, Fitch recognizes that AIG will likely be subject to fines, penalties and/or settlement costs as a result of the various investigations, as well as shareholder lawsuits that could be recognized in future periods.

AIG's ratings reflect the company's pre-eminent global insurance organization, with excellent worldwide brands and franchises, and strong operating results. Fitch also views very favorably the diversified nature of the organization's products, distribution systems, and geographic reach. This diversification has contributed to AIG's ability to generate stable and predictable historical operating results.

The ILFC ratings action reflects the relative 'quality' of support provided to ILFC has declined with the downgrade of AIG's holding company ratings. While AIG does not guarantee ILFC's debt, the relationship between the two companies was crystallized during the most recent downturn in the aircraft leasing sector. AIG assisted ILFC in sourcing committed bank credit. Additionally, its American General Life Insurance unit was the primary investor in ILFC's two $1 billion asset securitization transactions. Fitch also believes that ILFC is tied to AIG due to the $2.83 billion of deferred income taxes carried on ILFC's balance sheet at Dec. 31, 2004. If AIG were to sell or spin-off ILFC, a substantial amount of its deferred income taxes would become payable by virtue of the ordinary recapture of the accelerated tax depreciation on the aircraft.

The ratings for American General Finance (AGF) continue to reflect its sound stand-alone financial profile. To date, AGF has not had its operating or financial profile compromised as a result of the difficulties facing its parent. The placement of AGF's ratings on Rating Watch Negative reflect the narrowing in the ratings between AGF and its parent and the uncertainty surrounding the timing and nature of how the parent will establish a stable credit profile.

AIG is the holding company for one of the world's largest insurance and financial services groups. At Dec. 31, 2004, AIG had total assets of approximately $800 billion and stated shareholders' equity of $83 billion. In 2004, the company had total revenues of approximately $98.6 billion and net income of $11.1 billion.

The following ratings have been downgraded and remain on Rating Watch Negative by Fitch:

American International Group, Inc.

-- Long-term issuer to 'AA' from 'AA '.

American General Corporation

-- Long-term issuer to 'AA' from 'AA '.

American General Capital II, III

-- Preferred securities to 'AA-' from 'AA'.

American General Institutional Capital A, B

-- Capital securities to 'AA-' from 'AA'.

AIG International Inc.

-- Long-term issuer to 'AA' from 'AA '.

HSB Capital Trust I

-- Preferred securities to 'AA' from 'AA '.

International Lease Finance Corp.

-- Long-term issuer to 'A ' from 'AA-';

-- Preferred stock to 'A' from 'A '.