Fitch Affirms AIG Ratings; Outlook Negative

Business Wire,  May 22, 2008  

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CHICAGO -- Fitch Ratings has affirmed American International Group, Inc.'s (NYSE: AIG) Issuer Default Rating (IDR) and senior debt ratings of 'AA-', as well as its other holding company and subsidiary debt ratings, including those of AIG Capital Corp., International Lease Finance Corp. (ILFC) and American General Finance (AGF) as well as AIG's insurer financial strength (IFS) ratings. The ratings are removed from Rating Watch Negative.

In addition, Fitch has assigned ratings to the newly issued equity units and junior subordinated debentures. A Negative Rating Outlook has been assigned to most of the AIG-related ratings. A list of rating actions is detailed below. For more information, please refer to the separate release issued today by Fitch that further describes the AIG Capital Corp., ILFC and AGF rating actions.

The rating actions follow the successful completion of AIG's capital raising initiatives. In total, the company raised $20 billion of equity and hybrid securities. The capital raising was made up of approximately $7.5 billion of common equity, $5.9 billion of equity units that convert to common equity and $6.9 billion of junior subordinated debentures. The majority of the proceeds from the issuances are expected to reside at the holding company to provide maximum financial flexibility.

The capital raising initiative follows release of first-quarter 2008 results that were adversely affected by AIG's relatively large exposure to the current U.S. residential mortgage crisis. The new capital replenishes much of the capital decline from market value losses related to AIG Financial Products Corp. (AIGFP) credit default swaps on collateralized debt obligations backed by structured finance (SF CDOs) collateral, as well as realized and unrealized capital losses in AIG's investment portfolio. With the capital raising completed, Fitch estimates adjusted financial leverage at March 31, 2008 fell from 17.8% to 16.6% on a pro forma basis.

The Negative Outlook reflects the continued downside risk in AIG's credit derivative portfolio and investment portfolio, and the potential for additional collateral calls if the broad credit markets as well as the U.S. residential mortgage market continue to deteriorate beyond March 31, 2008 levels. If markets stabilize and uncertainty is lessened, Fitch would envision moving to a Stable Outlook.

Fitch assigns the following ratings:

American International Group, Inc.

--$5.9 billion Equity Units at 'A+';

--$4 billion 8.175% Series A-6 junior subordinated debentures due May 15, 2068 at 'A+';

--EUR750 million 8.000% Series A-7 junior subordinated debentures due May 22, 2068 at 'A+';

--GBP900 million 8.625% Series A-8 junior subordinated debentures due May 22, 2068 at 'A+'.

Fitch has affirmed the following ratings and simultaneously removed them from Rating Watch Negative; The Outlook is now Negative:

American International Group, Inc.

--IDR at 'AA-';

--Senior debt at 'AA-';

--Junior subordinated debentures at 'A+'.

AIG International, Inc.

--IDR at 'AA-';

--Senior debt at 'AA-'.

AIG Life Holdings (US), Inc. (formerly American General Corp.)

--IDR at 'AA-';

--Senior debt at 'AA-'.

American General Capital II

--Preferred securities at 'A+'.

American General Institutional Capital A and B

--Capital securities at 'A+'.

HSB Capital Trust I

--Preferred securities at 'AA-'.

21st Century Insurance Group

--IDR at 'AA-';

--Senior debt at 'AA-'.

United Guaranty Corporation

--Long Term Rating at 'AA-'.

Ezer Mortgage Insurance Company (ISR)

--Insurer Financial Strength (IFS) at 'AA'.

Nan Shan Life Insurance Company, Ltd.

--National IFS at 'AAA(twn)'.

Fitch has affirmed the following IFS ratings at 'AA+' and simultaneously removed them from Rating Watch Negative; The Outlook is now Negative:

Life Companies

--AGC Life Insurance Company

--AIG Annuity Insurance Company

--AIG Life Insurance Company

--AIG SunAmerica Life Assurance Company

--American General Life and Accident Insurance Company

--American General Life Insurance Company

--American International Assurance Company (Bermuda) Limited

--American International Life Assurance Company of New York

--American Life Insurance Company

--First SunAmerica Life Insurance Company

--SunAmerica Life Insurance Company

--The United States Life Insurance Company in the City of New York

--The Variable Annuity Life Insurance Company

National Union Inter-company Pool Members:

--AIG Casualty Company (formerly Birmingham Fire Ins. Co. of PA)

--American Home Assurance Company

--American International South Insurance Company

--Commerce and Industry Insurance Company

--Granite State Insurance Company

--Illinois National Insurance Co.

--National Union Fire Insurance Company of Pittsburgh, PA

--New Hampshire Insurance Company

--The Insurance Company of the State of Pennsylvania

Lexington Inter-company Pool Members:

--AIG Excess Liability Insurance Company, Ltd. (formerly Starr Excess Liability Ins. Co., Ltd.)