After much turmoil since the onset of the financial meltdown, Moody's Investors Service believes there may finally be a light at the end of the tunnel for the beleaguered American International Group (AIG). According to a statement issued yesterday, Moody's said the insurer has made tangible progress on its restructuring plan, and will likely be able to repay the government's loan and much of its preferred equity stake.
Moody's said AIG's restructuring plan still heavily relies on government support, but if its operations and global financial markets continue to stabilize, the insurer likely can generate enough value to repay the government.
AIG posted its second straight quarterly profit last week, helped by a recovery in the value of its investments, though its underlying business remained weak, Reuters reported. These results, Moody's said, "show continued stabilization of the core insurance operations despite challenging market conditions."
Moody's added that since the government is now likely to recoup its investment, it has incentive to continue supporting AIG and its various creditors. As a result, the agency affirmed AIG's long-term rating of A3, the seventh-highest investment grade, though with a negative outlook.
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