Fitch Ratings has downgraded American International Group Inc. on news that AIG will not meet its self-imposed April 30 financial filing deadline and disclosure that its review to date will result in $2.7 billion of accounting restatements.

Fitch says it believes that the uncertainty surrounding AIG’s financial condition and future financial performance has grown to levels beyond the expectations embedded in Fitch previous rating levels. „This band of uncertainty includes the potential adverse impact of recent events on the company’s competitive position, expense ratio advantage, earnings levels and volatility, business mix, capital levels and strategic plans,‰ it says.

The rating agency says that it has viewed AIG’s strong franchise as translating into unique advantages in pricing, risk selection, and reinsurance purchasing despite very competitive conditions in the industry. But it now believes that these advantages will narrow somewhat as insureds, reinsurers, and competitors increasingly pressure AIG’s ability to act in ways that allow it to maintain these unique advantages at levels previously attained. That said, even with the potential for reduced competitive advantages, AIG remains among the strongest and highest rated financial services organizations in the world, it notes.

The firm also remains on Negative Rating Watch, reflecting uncertainties surrounding AIG as the company completes its internal accounting review and as regulatory investigations continue. „Additionally, Fitch recognizes that AIG will likely be subject to fines, penalties and/or settlement costs as a result of the various investigations, as well as shareholder lawsuits that could be recognized in future periods,‰ it says.

„AIG’s ratings reflect the company’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,‰ it says.