OREANDA-NEWS. Fitch Ratings assigns a rating of 'BBB+' to American International Group, Inc.'s (AIG) new issuance of approximately \$350 million 4.35% senior notes due 2045.

KEY RATING DRIVERS

This new issue is rated equivalent to the ratings of AIG's existing senior debt and was sold in the Taiwan market. Proceeds from the issue will be used for general corporate purposes, which may include the retirement of existing debt.

AIG's financial leverage ratio continued to decline to 16.5% at yearend 2014 from 18.2% at yearend 2013. The company's consolidated outstanding debt fell significantly in 2014 due to the retirement of hybrid debt, significant reductions in operating debt and the elimination of debt related to the completed sale of the International Lease Finance Corporation (ILFC) aircraft leasing operations in May 2014.

Lower interest costs on recently issued debt and recent stable earnings for AIG's property/casualty and life & retirement operations have fostered an improvement in interest coverage levels. AIG's interest coverage ratio improved to 9.0x in 2014 from 6.7x in 2013.

This new debt issuance follows \$2 billion of new debt issued in January 2015 by AIG. Financial leverage is not anticipated to rise materially in 2015 from this new issuance as AIG has approximately \$2.1 billion of financial and operating debt maturing in 2015.

Fitch affirmed the ratings of AIG and its insurance operating subsidiaries with a Positive Outlook on March 2, 2015.

RATING SENSITIVITIES

Key triggers that could lead to an upgrade include:
--Improvement in GAAP earnings-based interest coverage to 10x or above;
--No material changes in AIG's capital structure including maintenance of financial leverage and total financing and commitments (TFC) ratio at current levels as well as risk-based capital at the company's insurance subsidiaries;
--Stable to improving overall operating earnings.

Key triggers that could lead to an upgrade in the ratings of AIG's property/casualty subsidiaries include:

--A shift to sustainable underwriting profitability, with greater loss reserve stability or reserve redundancies.

Key triggers that could lead to a return to a Stable Outlook include:

--Increase in financial leverage to above 20%, or an increase in the TFC ratio to above 0.7x;
--Significant reductions in debt servicing capacity from holding company assets and available dividends from subsidiaries to a level below 6x annual interest on financial debt;
--Large underwriting losses and/or heightened reserve volatility of the company's non-life insurance subsidiaries;
--Deterioration in the company's domestic life subsidiaries' profitability trends;
--Material declines in risk-based capital ratios at either the domestic life insurance or the non-life insurance subsidiaries.

Fitch assigns the following rating:

--USD350 million of 4.35% senior unsecured notes due 2045 'BBB+'.

Fitch currently rates the AIG entities as follows:

American International Group, Inc.
--Long-term IDR 'A-';
--Various senior unsecured note issues 'BBB+';
--USD250 million of 2.375% subordinated notes due Aug. 24, 2015 'BBB';
--EUR61.8 million of 6.797% senior unsecured notes due Nov. 15, 2017 'BBB+';
--GBP537 million of 6.765% senior unsecured notes due Nov. 15, 2017 'BBB+';
--USD1 billion of 2.3% senior unsecured notes due July 16, 2019 'BBB+';
--USD1 billion of 3.375% senior unsecured notes due Aug. 15, 2020 'BBB+';
--USD1.286 billion of 6.4% senior unsecured notes due Dec. 15, 2020 'BBB+';
--USD1.5 billion of 4.875% senior unsecured notes due June 2022 'BBB+';
--USD1 billion of 4.125% senior unsecured notes due Feb. 15, 2024 'BBB+';
--USD256.161 million of 6.820% senior unsecured notes due Nov. 15, 2037 'BBB+';
--EUR56.6 million of 8.00% series A-7 junior subordinated debentures due May 22, 2038 'BBB-';
--USD 2.25 billion of 4.5% senior unsecured notes due July 16, 2044 'BBB+';
--USD2,832.3 billion of 8.175% series A-6 junior subordinated debentures due May 15, 2058 'BBB-';
--GBP172.6 million of 5.75% series A-2 junior subordinated debentures due March 15, 2067 'BBB-';
--EUR356.2 million of 4.875% series A-3 junior subordinated debentures due March 15, 2067 'BBB-';
--GBP84.1 million of 8.625% series A-8 junior subordinated debentures due May 22, 2068 'BBB-';
--USD496.2 million of 6.25% series A-1 junior subordinated debentures due March 15, 2087 'BBB-';
--USD113.2 million of 5.60% senior unsecured notes due July 31, 2097 'BBB+'.

AIG International, Inc.
--Long-term IDR 'A-'.

AIG Life Holdings, Inc.
--Long-term IDR 'A-';
--USD135.5 million of 7.50% senior unsecured notes due July 15, 2025 'BBB+';
--USD150 million of 6.625% senior unsecured notes due Feb. 15, 2029 'BBB+';
--USD251 million of 8.50% junior subordinated debentures due July 1, 2030 'BBB-';
--USD201 million of 7.57% junior subordinated debentures due Dec. 1, 2045 'BBB-';
--USD405.9 million of 8.125% junior subordinated debentures due March 15, 2046 'BBB-'.

AGC Life Insurance Company
American General Life Insurance Company
The Variable Annuity Life Insurance Company
United States Life Insurance Company in the City of New York
--IFS rating 'A+'.

AIU Insurance Company
American Home Assurance Company
AIG Assurance Company
AIG Europe Limited
American International Overseas Limited
AIG Property Casualty Company
AIG Specialty Insurance Company
Commerce & Industry Insurance Company
Granite State Insurance Company
Illinois National Insurance Company
Insurance Company of the State of Pennsylvania
Lexington Insurance Company
National Union Fire Insurance Company of Pittsburgh, PA
New Hampshire Insurance Company
--IFS rating 'A'.

ASIF Global Financing
--USD750 million of 6.9% senior secured notes due March 15, 2032 'A+'.

ASIF II Program
--GBP200 million of 6.375% senior secured notes due Oct. 5, 2020 'A+';
--USD82 million of 0% senior secured notes due Jan. 2, 2032 'A+'.

ASIF III Program
--CHF150 million of 3% senior secured notes due Dec. 29, 2015 'A+';
--GBP350 million of 5.375% senior secured notes due Oct. 14, 2016 'A+';
--GBP250 million of 5% senior secured notes due Dec. 18, 2018 'A+';
--EUR200 million of 1.66% senior secured notes due Dec. 20, 2024 'A+'.