
American International Group Inc. Perpetual Preferred Shares Series A Rated 'BBB-'
View Analyst Contact Information
NEW YORK (S&P Global Ratings) March 6, 2019--S&P Global Ratings said today 
that it has assigned its 'BBB-' debt rating to American International Group 
Inc.'s (NYSE:AIG) proposed issuance of fixed-rate noncumulative perpetual 
preferred shares, Series A. This preferred share rating is two notches below 
our 'BBB+' long-term issuer credit rating on AIG. The two-notch differential 
represents the subordination of the issue and the optional dividend 
deferability of the preferred shares.
We expect the company to use the proceeds from these shares for general 
corporate purposes, which may include the retirement of its $1 billion debt 
that matures in July 2019.
We view these Series A preferred shares as having intermediate equity content 
for the purpose of our capital-adequacy calculations. Other than a rating 
agency or regulatory capital event, AIG has the option of redeeming these 
preferred shares on or after March 15, 2024. The regulatory capital event is 
triggered if there are developments in any regulatory group capital standard 
that would disqualify eligibility of capital treatment, such as National 
Association of Insurance Commissioners group capital standards or capital 
rules proposed by the International Association of Insurance Supervisors. 
Likewise, at a minimum, capital instruments need to qualify as "eligible" 
regulatory capital for us to consider inclusion in our total adjusted capital 
measure. The regulatory capital event does not include a solvency ratio 
trigger.
Although hybrids are currently a modest contributor to AIG's capital 
structure, our intermediate equity content classification is an important 
distinction in light of the company's rising financial leverage (to 29% as of 
year-end 2018 and 2017 from 24% as of Dec. 31, 2016) and its recently 
announced $2 billion board-authorized share-repurchasing program. We expect 
financial leverage to remain below 30% in 2019. We believe management is 
committed to maintaining 'AA' capital adequacy according to our model. AIG has 
also made limited progress toward turning around its operating fundamentals.