A.M. Best Co. has placed the financial strength ratings of member companies of American International Group, Inc. under review with negative implications following their announcement that the chairman and CEO, Maurice Greenberg, will retire as CEO, although he remains non-executive chairman.
Greenberg will be succeeded by Martin J. Sullivan, who had been AIG’s vice chairman and co-chief operating officer.
The company additionally announced that the CFO, Howard Smith, has taken leave and that the filing of AIG’s 2004 annual 10-K has been delayed. Howard Smith will be succeeded by Steven J. Bensinger.
The retirement of Greenberg follows concern over an increasing number of regulatory inquiries as well as queries from the New York Attorney General and the Securities and Exchanger Commission.
The vast majority of AIG’s major insurance subsidiaries have held financial strength ratings of A++, A.M. Best’s highest rating, for many years. However, A.M. Best said there remain a number of unresolved issues with the potential for continued uncertainty. The ratings have been placed under review due to the delay in the filing, the premature retirement of two top senior executives, and the numerous regulatory inquiries.
A.M. Best said it believes that the operating fundamentals within AIG are sound, there is significant management bench-strength among the leaders of the business segments, and barring any additional negative reports, the ability to generate historical earnings should continue.
The ratings will remain under review pending A.M. Best’s review of the filed 10-K as well as any further company developments.
In other ratings action on AIG, Standard & Poor’s a placed AIG’s AAA long-term credit rating on credit watch with negative implications, pending release of the company’s annual report.
Fitch Ratings lowered AIG’s long-term issuer rating and unsecured senior debt obligations to AA-plus from AAA.
Moody’s Investors Service lowered its outlook on AIG’s long-term debt rating, currently at the highest “Aaa” rating, to “negative” from “stable.”
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