Moody's: AIG Unaffected By $10M Penalty
NU Online News Service, Sept. 16, 2:40 p.m. EDT?Moody's Investors Service said it sees "no evident ratings impact" for American International Group from its settlement to pay a $10 million civil penalty to settle fraud charges brought by the Securities and Exchange Commission.
The fraud charges against the New York-based AIG, according to the SEC statement released last Thursday, stemmed from the insurer's alleged role in fashioning and selling what the securities regulators referred to as a "purported insurance product" that Plainfield, Ind.-based phone distributor Brightpoint Inc. used to report false and misleading financial information. But in agreeing to pay $10 million, AIG neither admitted nor denied regulators' findings.
Moody's also noted that the SEC has ordered AIG to retain an independent consultant to make "binding recommendations" concerning the insurer's internal controls. This is to make sure AIG's insurance products won't be used in the future to violate securities laws.
As for the $10 million civil penalty, "the amount of the fine is non-material from a financial perspective," the ratings agency said. Moody's added, however, that it is maintaining a negative outlook on the "Aaa" senior unsecured debt ratings for AIG and its guaranteed subsidiaries.
Currently, there is an ongoing review for possible downgrade of the "Aaa" insurance financial strength ratings on members of AIG's U.S. commercial insurance group, the ratings firm said.
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