Fitch Affirms AIG and Insurance Subs; Outlook Stable

CHICAGO--(Business Wire)--Fitch Ratings has affirmed American International Group, Inc.'s
(NYSE:AIG) Issuer Default Rating (IDR) at 'AA' and affirmed all of
AIG's insurance subsidiaries. The Rating Outlook is Stable. A list of
ratings is detailed below.

The affirmations reflect AIG's pre-eminent global insurance
organization, with excellent worldwide brands and franchises and
strong operating results. Fitch also views very favorably the
diversified nature of the organization's products, distribution
systems and geographic reach. This diversification has contributed to
AIG's ability to generate stable and predictable historical operating
results.

Weighed against these positives is AIG's relatively large exposure
to the current U.S. residential mortgage crisis. Fitch believes AIG
will not be immune to potential losses from this exposure, although at
the present time the agency believes these losses should be absorbed
by the existing capital base and future earnings stream. If the
residential mortgage market were to decline beyond current
expectations and/or if weakness were to spread to other asset classes,
then Fitch would revisit the current ratings and outlook.

Fitch believes the area of AIG most exposed to further
deterioration is the credit derivative portfolio within AIG Financial
Products Corp. (AIG FP), with its large net notional exposure to
credit derivatives of $505 billion at Sep. 30, 2007. Included in this
total is $62.4 billion of collateralized debt obligations backed by
structured finance (SF CDOs) collateral, mainly subprime U.S.
residential mortgage-backed securities (RMBS). While Fitch notes that
this asset class has been under considerable credit deterioration in
the past few months, Fitch is currently comforted by the fact that AIG
FP's SF CDO portfolio was almost entirely underwritten before 2006.
While under considerable stress, collateral from pre-2006 U.S. RMBS
vintages is generally expected to perform better than 2006-2007
vintages.

AIG's domestic life, retirement services and general insurance
subsidiaries are strongly capitalized on an aggregated basis as
measured by Prism, Fitch's new economic capital model. As of year-end
2006, the company's aggregated domestic insurance capital score was
'AA' as available capital exceeded 'AA' required capital by 6%. AIG's
aggregated score was driven by very strong capitalization at the
domestic life and retirement services companies ('AAA' Prism Score),
adequate capitalization at the domestic general insurance companies
('A-' Prism Score) and diversification benefits of a multi-line
company.

Fitch maintains unusually narrow notching between AIG's insurer
financial strength (IFS) ratings and holding company ratings,
reflecting the organization's very strong financial flexibility,
modest financial leverage and significant cash flow from diverse
regulated and non-regulated subsidiaries.

Fitch expects AIG's holding company financial leverage to stay
below 15% on an equity-credit adjusted basis. This percentage is an
important benchmark in maintaining Fitch's narrow notching. At Sep.
30, 2007, AIG's adjusted leverage (adjusted for equity credit related
to hybrid securities and excluding debt issued to support finance
operations) was 12%.

AIG is the holding company for one of the world's largest
insurance and financial services groups. At Sep. 30, 2007, AIG had
total assets of approximately $1,072 billion, stated shareholders'
equity of $104 billion and market capitalization of $173 billion. In
2006, the company had total revenues of approximately $113.2 billion
and net income of $14.0 billion. First nine months 2007 operating
results were strong with net income of $11.5 billion and annualized
return on stated shareholders equity of 14.9%.

Fitch affirms the following with a Stable Rating Outlook:

AIG

--IDR 'AA';

--Senior debt 'AA';

--Junior Subordinated debentures 'AA-';

--Short Term IDR 'F1+'.

AIG Funding, Inc.

--Commercial paper 'F1+'.

AIG International, Inc.

--IDR 'AA';

--Senior debt 'AA';

AIG Life Holdings (US), Inc. (formerly American General Corp.)

--IDR 'AA';

--Senior debt 'AA'.

American General Capital II

--Preferred securities 'AA-'.

American General Institutional Capital A and B

--Capital securities 'AA-'.

HSB Capital Trust I

--Preferred securities 'AA'.

21st Century Insurance Group

--IDR 'AA';

--Senior debt 'AA'.

United Guaranty Corporation

--Long Term Rating 'AA'.

ASIF Program

ASIF II Program

ASIF III Program

ASIF Global Financial Program

--Program rating 'AA+'.

Fitch affirms the following IFS ratings at 'AA+' with a Stable
Rating Outlook:

Life Companies

--AGC Life Insurance Company

--AIG Annuity Insurance Company

--AIG Life Insurance Company

--AIG SunAmerica Life Assurance Company

--American General Life and Accident Insurance Company

--American General Life Insurance Company

--American International Assurance Company (Bermuda) Limited

--American International Life Assurance Company of New York

--American Life Insurance Company

--First SunAmerica Life Insurance Company

--SunAmerica Life Insurance Company

--The United States Life Insurance Company in the City of New York

--The Variable Annuity Life Insurance Company

National Union Inter-company Pool Members:

--AIG Casualty Company (formerly Birmingham Fire Ins. Co. of PA)

--AIU Insurance Company

--American Home Assurance Company

--American International South Insurance Company

--Commerce and Industry Insurance Company

--Granite State Insurance Company

--Illinois National Insurance Co.

--National Union Fire Insurance Company of Pittsburgh, PA

--New Hampshire Insurance Company

--The Insurance Company of the State of Pennsylvania

Lexington Inter-company Pool Members:

--AIG Excess Liability Insurance Company, Ltd. (formerly Starr
Excess Liability Ins. Co., Ltd.)

--Landmark Insurance Company

--Lexington Insurance Company

AIG Personal Lines Inter-company Pool Members:

--AIG Advantage Insurance Company (formerly Minnesota Ins. Co.)

--AIG Auto Insurance Company of New Jersey

--AIG Centennial Insurance Company

--AIG Hawaii Insurance Company

--AIG Indemnity Insurance Company

--AIG National Insurance Company, Inc.

--AIG Preferred Insurance Company

--AIG Premier Insurance Company

--American International Insurance Company

--American International Insurance Company of California

--American International Insurance Company of New Jersey

--American International Pacific Insurance Company

--American Pacific Insurance Company

--New Hampshire Indemnity Company, Inc.

Non Pool Companies

--21st Century Casualty Company

--21st Century Insurance Company

--21st Century Insurance Company of the Southwest

--American International Specialty Lines Insurance Company

--Hartford Steam Boiler Inspection & Insurance Company

--United Guaranty Residential Insurance Company

Foreign Domiciled General Ins. Companies

--AIG MEMSA Insurance Company Ltd. (UAE)

--AIG (UK) Ltd. (formerly The Landmark Insurance Co. Ltd. (UK)

--American International Underwriters Overseas, Ltd. (Bermuda)

--Ezer Mortgage Insurance Company (ISR)

Fitch's rating definitions and the terms of use of such ratings
are available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality,
conflicts of interest, affiliate firewall, compliance and other
relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Julie A. Burke, CPA, CFA, +1-312-368-3158
Mark E. Rouck, CPA, CFA +1-312-368-2085 (AIG)(Chicago)
Media Relations:
Kenneth Reed, +1-212-908-0540 (New York)

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