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JUNE 17, 2008 12:00 AM (EDT)

A.M. Best Downgrades Ratings of American International Group, Inc. and Life Subsidiaries


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Joyce Sharaf—P/C
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Marc Steinberg—L/H
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FOR IMMEDIATE RELEASE

OLDWICK, N.J. - JUNE 17, 2008 12:00 AM (EDT)
A.M. Best Co. has downgraded the financial strength ratings (FSR) to A+ (Superior) from A++ (Superior) and issuer credit ratings (ICR) to "aa" from "aa+" for the domestic life and retirement services subsidiaries of American International Group, Inc. (AIG) (New York, NY) [NYSE: AIG]. Concurrently, A.M. Best has downgraded the ICR to "a+" from "aa-" of AIG. The outlook for these ratings is negative.

In addition, A.M. Best has downgraded the FSR to A+ (Superior) from A++ (Superior) and ICRs to "aa" from "aa+" of Hartford Steam Boiler Group. The outlook for the FSR is stable, and the outlook for the ICRs has been revised to negative from stable.

The ratings and outlooks of AIG's remaining subsidiaries are unchanged. (See link below for a detailed list of the companies and ratings.)

The downgrades follow AIG's announcement that its Board of Directors has named Chairman Robert Willumstad to the position of chief executive officer, replacing Martin Sullivan.

The downgrades are based on A.M. Best's belief that AIG's sudden reversal decision to institute a change in management and the future uncertainty of the outcome of such a change highlight a deeper level of systemic challenges facing AIG, surpassing A.M. Best's expectations. A.M. Best believes that AIG's need to embark on a company-wide strategic and operational review of all of its businesses is not representative of A.M. Best's highest rating categories. The

uncertainty caused by such a review, coupled with the decision to upgrade management talent may have a negative affect on AIG's franchises.

Regardless of the management change, the Board of Directors was in a corporate governance and oversight position during a crucial time with the responsibility to review AIG's risk appetite, exposure accumulations and capital management. AIG is at a critical juncture now and will require future economic and business vision to allow a return of confidence from the company's numerous constituents. Furthermore, the potential sale of non-core businesses would reduce the historical benefits of diversification.

A.M. Best's expectations for noticeable improvements under new leadership are significant. A quick economic turnaround, absent capital market improvements, is not expected. The sale of mortgage-related securities may not be imminent due to AIG's ability to wait for market reversals. Given the size of AIG's life and retirement services and property/casualty businesses, results from potential re-engineering will be long term.

A.M. Best believes that AIG's life and retirement services and property/casualty franchises continue to maintain enviable franchise value and sustainable competitive advantages, and have the ability to generate significant earnings, product proliferation, overall diversification and considerable intellectual capital.

For a complete listing of American International Group, Inc.'s FSRs, ICRs and debt ratings, please visit AIG.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

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