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Moody’s warns of 'negative' impact in proposed AIG breakup

Carrier is being pressured to separate into pieces, but the ratings agency offers its own perspective.

By Rosalie L. Donlon | Updated on November 03, 2015
Among the pros and cons of a breakup of AIG is the effect on its credit rating, which Moody's says would have a negative effect.

American International Group, Inc. (AIG) executives are being pressured by well-known activist investor Carl Icahn to break the company up into three parts: one for Property and Casualty (P&C) insurance, one for Life insurance and the third backing mortgages. Icahn argues that the breakup would improve AIG’s financial position by theoretically removing the company’s systemically important financial institution (SIFI) designation (along with related capital requirements and regulations), as well as reducing costs and expense ratios.

However, Moody”s Investors Service warns that such a move would have unintended consequences of the credit-impairing kind, and has released an official comment on the proposed breakup.

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