AIG Restatements Trigger Rating Cuts

AIG is still one of the biggest, strongest insurance companies in the world, and the domestic life operations are even stronger than those of the parent company, Moody's says.

But Moody's says announcements that AIG will be postponing the release of its 2004 Form 10-K annual report with the U.S. Securities and Exchange Commission and that the company will be restating financial statements for all full years since 2000 and for the first 3 quarters of 2004 "indicate that the number of transactions that appear to have been undertaken primarily to enhance reported financial results, and the range of categories and operating units involved in potential financial misstatements have increased."

Although the total of the effect of the misstatements seems to have been small, "the breadth of these problems confirm that aggressive accounting practices were greater and more widespread than Moody's had anticipated," Moody's says. "The extent of these problems leads Moody's to take a more conservative perspective on the company's financial statements and indicative financial metrics, even after considering adjustments identified by the company's internal investigations."

Nevertheless, even after all of the adjustments, AIG's financial profile is strong for the company's current rating category, Moody's says.

Representatives from AIG were not immediately available to comment.