The Best review comes on the heels of AIG’s Feb. 11 Securities & Exchange Commission EC Form 8-K filing “clarifying its methodology in determining the fair value of the super senior credit default swap portfolio with respect to the multisector collateralized debt obligations of AIG Financial Products Corp. The disclosures revealed that further refinements of data used in its internal models resulted in a significantly higher decline in valuation through Nov. 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 Dec. 31, 2007. Therefore, AIG will reflect a sizable fair value decline,” said Best.
Best, however, added that its 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.”