S&P Global Ratings has downgraded the long-term counterparty credit and senior unsecured debt ratings on American International Group Inc. to BBB+ from A- because it expects the insurer to fall short of a 7x to 8x fixed-charge coverage ratio for 2016 to 2017.
The ratio was S&P's threshold for maintaining a nonstandard notching between AIG's operating subsidiaries and its holding company. The downgrade does not impact the ratings on AIG's operating companies.
The outlook on AIG is stable and it reflects the rating agency's view that AIG will produce fixed-charge coverage ratio near 5x to 6x and adequate liquidity at the holding company in 2017 and 2018.
S&P is not likely to raise AIG's ratings in the next 24 months as the company is dealing with challenges in improving the operating performance of its property and casualty business, has aggressive capital return plans and the fact that earnings from life insurance operations are likely to decline modestly.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.