FINANCIAL INSTITUTIONSISSUER COMMENT 2 February 2016RATINGSAMERICAN INTERNATIONAL GROUP (AIG) Moodys SR Unsecured Rating Baa1Moodys Outlook STABond-Implied Rating Baa2CDS-Implied Rating A3EDF-Implied Rating Baa1As of 1/29/2016ContactsAllerton G. Smith 212-553-4058 Sr Dir-Sr Research Analyst allerton.smith@moodys.comABOUT CAPITAL MARKETS RESEARCHAnalyses from Moodys Capital Markets Research, Inc. (CMR) focus on explaining signals from the credit and equity markets. The publications address whether market signals, in the opinion of the groups analysts, accurately reflect the risks and investment opportunities associated with issuers and sectors. CMR research thus complements the fundamentally-oriented research offered by Moodys Investors Service (MIS), the rating agency.CMR is part of Moodys Analytics, which is one of the two operating businesses of Moodys Corporation. Moodys Analytics (including CMR) is legally and organizationally separated from Moodys Investors Service and operates on an arms length basis from the ratings business. CMR does not provide investment advisory services or products.View the CMR FAQ Contact the CMR team Follow us on TwitterMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research,Inc. is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products.For further detail, please see the last page.Market Signals ReviewAmerican International Group: Three Market-Implied Ratings Drop Recently The bond-, CDS- and EDF'-implied ratings for AIG all declined from their high points of the last 12 months. Most recently, following the announcement on January 26 of a $3.6 billion reserve charge and an updated group-wide strategic plan for AIGs property-and-casualty insurance business segment, the bond-implied rating rose by one notch, the CDS-implied rating fell by one notch, and the EDF-implied rating was unchanged. Please see a discussion of AIGs announcement below.FIGURE 1. AIG; MOODYS AND MARKET-IMPLIED RATINGS, LAST YEAR (DAILY OBSERVATIONS)The bond-implied rating for AIG declined to a low of C in 2008. From there, it rose steadily until it matched the Moodys senior rating of Baa1 for AIG in the fourth quarter of 2012. It was at this level one year ago and has been most of the time since then, with the exception of a few dates when it was observed at A3. However, on January 21, 2016, it weakened to Baa2, which is its current level (Figure 1).AIGs CDS-implied rating progressed from a low of B1 in November of 2011 to the A3 level a year ago. In 2015 it fell to Baa2 on multiple dates and then reached an apex of A1 on January 12, 2016. It now has returned to A3 once again.MOODY'S ANALYTICS FINANCIAL INSTITUTIONS2 2 February 2016 Market Signals Review: American International Group: Three Market-Implied Ratings Drop RecentlyAIGs EDF-implied rating reached a low of Ca...
