OREANDA-NEWS. March 21, 2016. Fitch Ratings expects to assign a rating of 'BBB+' to American International Group, Inc.'s (AIG) \\$1.5 billion issuance of 3.9% senior notes due April 1, 2026. Proceeds from this new issue will be used for general corporate purposes.

KEY RATING DRIVERS

This new issue is rated equivalent to the ratings of AIG's existing senior debt. Financial leverage as measured by the ratio of financial debt and preferred securities to total capital (excluding operating debt and the impact of FAS 115) was approximately 18.4% at year-end 2015, up from 16.5% at year-end 2014. This issuance combined with other 1st quarter 2016 financing activity will move pro forma financial leverage closer to management's target leverage ratio of 20% - 25%.

Fitch affirmed AIG's and its insurance operating subsidiaries ratings on March 9, 2016. The Rating Outlook is Stable. The Rating Action Commentary is available on www.fitchratings.com.

RATING SENSITIVITIES

Key triggers that could lead to an upgrade include:
--Successful completion of pending strategic actions and greater certainty that the corporate and operating structure is in place for the longer term, and further meaningful restructuring actions are unlikely;
--A shift to sustainable property/casualty segment underwriting profitability, with demonstration of greater loss reserve stability or reserve redundancies;
--Improvement in GAAP earnings to a level consistent with interest coverage at 10x or above;
--While achieving the above, maintenance of financial leverage and risk-based capital at the company's insurance subsidiaries remaining within newly revised targeted levels.

Key triggers that could lead to a downgrade include:
--Increase in financial leverage to above 25%, or an increase in the TFC ratio to above 0.7x from 0.5x currently;
--Significant reductions in debt servicing capacity from holding company assets and available dividends from subsidiaries to a level below 4.5x annual interest on financial debt;
--Large underwriting losses and/or further material reserve volatility of the company's non-life insurance subsidiaries;
--Sharp 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.

FULL LIST OF RATING ACTIONS

Fitch expects to assign:

American International Group, Inc.
--USD1.5 billion 3.9% senior unsecured notes due April 1, 2026 'BBB+(Exp)'.

Fitch currently rates AIG and its subsidiaries with a Stable Rating Outlook as follows:

American International Group, Inc.
--Long-term IDR 'A-';
--Various senior unsecured note issues 'BBB+';
--EUR42.24 million of 6.797% senior unsecured notes due Nov. 15, 2017 'BBB+';
--GBP100.2 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+';
--USD638.4 million of 3.375% senior unsecured notes due Aug. 15, 2020 'BBB+';
--USD708 million of 6.4% senior unsecured notes due Dec. 15, 2020 'BBB+';
--USD1.5 billion of 3.3% senior unsecured notes due Mar. 1, 2021 'BBB+';
--USD1.5 billion of 4.875% senior unsecured notes due June 1, 2022 'BBB+';
--USD1 billion of 4.125% senior unsecured notes due Feb. 15, 2024 'BBB+';
--USD1.25 billion of 3.75% senior unsecured notes due July 10, 2025 'BBB+';
--USD1.2 billion of 3.875% senior unsecured notes due Jan. 15, 2035 'BBB+';
--USD500 million of 4.7% senior unsecured notes due July 10, 2035 'BBB+';
--USD1 billion of 6.25% senior unsecured notes due May 1, 2036 'BBB+';
--USD243.43 million of 6.820% senior unsecured notes due Nov. 15, 2037 'BBB+';
--USD 2.25 billion of 4.5% senior unsecured notes due July 16, 2044 'BBB+';
--USD350 million of 4.35% senior unsecured notes due March 20, 2045 'BBB+';
--USD750 million of 4.8% senior unsecured notes due July 10, 2045 'BBB+';
--USD290 million of 4.9% senior unsecured notes due July 17, 2045 'BBB+';
--USD800 million of 4.375% senior unsecured notes due Jan. 15, 2055 'BBB+';
--USD20.3 million of 5.60% senior unsecured notes due July 31, 2097 'BBB+';
--EUR12.85 million of 8.00% series A-7 junior subordinated debentures due May 22, 2038 'BBB-';
--USD607.17 million of 8.175% series A-6 junior subordinated debentures due May 15, 2058 'BBB-';
--GBP88.2 million of 5.75% series A-2 junior subordinated debentures due March 15, 2067 'BBB-';
--EUR162.6 million of 4.875% series A-3 junior subordinated debentures due March 15, 2067 'BBB-';
--GBP5.6 million of 8.625% series A-8 junior subordinated debentures due May 22, 2068 'BBB-';
--USD403.18 million of 6.25% series A-1 junior subordinated debentures due March 15, 2087 'BBB-'.

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

AIG Life Holdings, Inc.
--Long-term IDR at '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+';
--USD116.4 million of 8.50% junior subordinated debentures due July 1, 2030 'BBB-';
--USD78.9 million of 7.57% junior subordinated debentures due Dec. 1, 2045 'BBB-';
--USD227.3 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
--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
--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+'.