Fitch Eyes AIG Ratings

The issuer default rating, holding company ratings, and subsidiary debt ratings of American International Group Inc. have been placed on Rating Watch Negative by Fitch Ratings, partly as a result of what it calls AIG's "relatively large exposure" to turmoil in the U.S. mortgage market. Fitch said the actions followed an acknowledgement by New York-based AIG in a Feb. 11 filing with the Securities and Exchange Commission that its independent auditor believes the company had "a material weakness in internal controls" as of Dec. 31 related to the valuation of AIG Financial Products Corp.'s super-senior credit derivative portfolio. "Fitch believes the area of AIG most exposed to further deterioration in this market is the credit derivative portfolio within AIG FP, with its large net notional exposure of $505 billion at Sept. 30, 2007," the rating agency said. "Included in this total is $62.4 billion of collateralized debt obligations backed by structured finance collateral, mainly subprime U.S. residential mortgage-backed securities." Fitch can be found online at http://www.fitchratings.com.