A.M. Best Places Ratings of AIG's Property/Casualty and Life Subsidiaries Under Review With Negative Implications.

OLDWICK, N.J. -- A.M. Best Co. has placed the financial strength rating (FSR) of A++ (Superior) and issuer credit ratings (ICR) of "aa+" of the domestic life and retirement services subsidiaries of American International Group (AIG) (New York) [NYSE: AIG] under review with negative implications. In addition, A.M. Best has placed the FSRs of A+ (Superior) and ICRs of "aa-"of most of AIG's domestic property/casualty subsidiaries and AIG's 60% majority owned company, Transatlantic Holdings, Inc. (New York), under review with negative implications. The FSRs and ICRs of these rating groups incorporate implicit support from AIG. Concurrently, A.M. Best has placed the ICR of "aa" under review with negative implications for American International Group, Inc. A.M. Best also has placed all the debt ratings of Transatlantic Holdings, Inc. and 21st Century Insurance Group under review with negative implications.

The FSR of A++ (Superior) and ICR of "aa+" of the Hartford Steam Boiler Group (Connecticut) remain unaffected as the group has met the criteria for A.M. Best's highest rating category on a stand-alone basis.

These rating actions follow AIG's February 11, 2008, SEC Form 8-K filing clarifying its methodology in determining the fair value of the super senior credit default swap portfolio with respect to the multi-sector collateralized debt obligations (CDOs) of AIG Financial Products Corp. (AIGFP). The disclosures revealed that further refinements of data used in its internal models resulted in a significantly higher decline in valuation through November 30, 2007. It was further disclosed that due to current difficult market conditions, the material benefit of spread differentials incorporated through November 2007 are not quantifiable and will not benefit portfolio valuation at December 31, 2007. Therefore, AIG will reflect a sizable fair vale decline.

The fair value losses associated with declines in valuations of this particular swap portfolio do not necessarily reflect permanent economic losses but a change in the fair value assessments of the underlying collateral, which includes a mix of approximately 50% subprime mortgages as well as asset backed auto loans, credit cards and other collateral. Given management's due diligence in providing its protections, it is likely that true economic losses will not reach the level of fair value accounting adjustments.

Additionally, model development over the past several months and refinement of data inputs and sources has caused revisions of fair value determination. The necessity of the model improvements, which continued into 2008, contributed to its independent auditors conclusion that at December 31, 2007, AIG had a material weakness in its internal control and oversight relating to the fair valuation of AIGFP's super senior credit default swap portfolio. A.M. Best understands that the fair value valuation is exceptionally difficult given market conditions; however, the decline in valuation, negative earnings implications and accounting conclusions are representative of the risk inherent in this business.

The implied support incorporated into the operating subsidiary ratings will need to be re-evaluated in light of the financial volatility caused by AIG's derivatives business. In addition, uncertainty remains in AIG's investment portfolio valuations, and to a lesser extent, results of its mortgage insurance and consumer finance businesses. Given the uncertainty in market conditions and continued potential re-estimation of the value of the swap portfolio in the near term, additional time is required for A.M. Best to re-evaluate implied support. This support also relies on AIG's financial flexibility, which A.M. Best continues to believe is significant. However, that flexibility has been modestly compromised by a decline in stock value, higher financial leverage and tightened credit markets.

A.M. Best's concerns are tempered by the strong franchise value and sustainable competitive advantages of AIG's property/casualty and life and retirement services operating segments, ability to generate significant earnings, overall diversification and considerable intellectual capital.

Following a detailed review of year-end 2007 results and further discussion with AIG management, A.M. Best will re-evaluate the company's under review status.

For a complete listing of American International Group's FSRs, ICRs and debt ratings, please visit www.ambest.com/press/021406aig.pdf.

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.