By IEVA M. AUGSTUMS and STEPHEN BERNARD, AP Business Writers 13 minutes ago

American International Group Inc., the world's largest insurer, was hit
by a wave of downgrades by credit-rating agencies worried that the
deteriorating housing market is further undermining the company's
battered finances.

All three major agencies — Standard & Poor's, Moody's Investors Services
and Fitch Ratings — dropped AIG's ratings at least two notches late
Monday. While the new ratings are all still considered investment grade,
the downgrades add to the pressure on AIG as it seeks billions of
dollars to strengthen its balance sheet.

AIG spokesmen did not return calls seeking comment on the impact of the
downgrades. But last month, the company estimated in a regulatory filing
that a one-notch downgrade of its long-term senior debt ratings by both
S&P and Moody's would force it to post $13.3 billion in extra collateral.

The need for that extra capital would put a constraint on AIG's
day-to-day liquidity position, which is why the company has been seeking
new financing or capital investments.

AIG is in a precarious position, in part, because of concerns about its
credit ratings and how that would affect its portfolio of financial
instruments known as credit default swaps. The swaps are essentially
insurance coverage to protect investors against defaulting bonds or debt.

Moody's said it downgraded AIG "in light of the continuing deterioration
in the U.S. housing market and the consequent impact on the group's
liquidity and capital position due to its related investment and
derivative exposures."

AIG has been battered over the past year by billions of dollars of
losses tied to deterioration in the mortgage and credit markets. On
Monday its shares fell $7.38, or 60.8 percent, to close at $4.76.

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Sad for the employees who eventually will be laid off, but otherwise,
I'm glad to see another overstuffed conglomerate on the ropes. I wonder
when Bank of America will continue its slide into the dumpster.