Standard & Poor’s Ratings Services has downgraded its ratings on troubled insurance giant American International Group Inc. to ‘AA+’ from ‘AAA.’

The downgrade Wednesday follows AIG’s announcement that the filing of its financials in the U.S. will be delayed further. “In addition, the newly appointed CEO, Martin Sullivan, and CFO, Steven Bensinger, have uncovered a number of questionable transactions that span more than five years and result in an aggregate decrease to AIG’s GAAP shareholders’ equity of about US$1.7 billion (about 2% of shareholders’ equity),” S&P said.

“The number and scope of inappropriate financial transactions – some characteristic of aggressive financial management – have diminished our assessment of management and its internal controls, corporate governance, and aggressive culture,” said S&P credit analyst Grace Osborne. “In addition, the potential breadth of management involvement in these transactions raises broader enterprise risk-management concerns.”

The rating agency also warned that AIG’s business position and practices could be weakened as regulators respond to continuing findings from ongoing internal and external probes. “Similarly, with the sharp drop in market capitalization, Standard & Poor’s is concerned that management’s attention will be diverted from rebuilding its financial services franchise to dealing with legal and regulatory issues,” it said.

Despite the preliminary findings, S&P said it believes AIG’s global, well-diversified financial services group will generate strong earnings and profits. In addition, AIG’s newly appointed CEO and CFO have initiated a rigorous internal review and are remediating internal-control issues. That said, its ratings remain on CreditWatch with negative implications, where they were placed on March 15.

“We plan to resolve the CreditWatch status of the ratings following AIG’s 10-K filing, which management believes will be by April 30, 2005,” Osborne added. “Barring any material restatement of its consolidated financial statements and in light of the strong diversified operational cash flows, the counterparty credit, financial strength, and senior debt ratings are not expected to fall further.”