Standard & Poor's Ratings Services on Friday said it revised its outlook on American International Group Inc. to "stable" from "negative." The revision also applies to AIG's core insurance subsidiaries, S&P said.

The announcement came a day after New York-based AIG, one of the world's largest insurance companies, reported that its profit more than doubled in the third quarter from a year earlier, thanks to increased sales and an absence of devastating hurricanes. AIG said its net income totaled $4.22 billion, or $1.61 a share, in the July-September period compared with $1.75 billion, or 66 cents a share, a year earlier.

In a conference call with analysts on Friday, AIG's president and chief executive, Martin J. Sullivan, called it "a very good quarter" and credited the "strength of AIG's widely diversified business portfolio."

AIG is a major writer of insurance for directors and officers. Some of that insurance may be tapped if there are penalties imposed in the scandal involving backdating of stock option grants.

Backdating refers to options that are issued retroactively to coincide with low points in a company's share price; this increases the recipient's potential windfall. More than 160 American companies have disclosed that their stock option policies are under internal review or being investigated by the government.

Sullivan said that AIG has received inquiries about D&O policy coverage concerning the backdating of stock options, but gave no specifics. He said, however, that "this appears to be a manageable issue for us."

Sullivan also mentioned the S&P action and said: "We now have stable outlooks from all the major rating agencies."

In Friday's announcement, S&P also said that it affirmed its AA long-term counterparty credit rating on AIG and its AA-plus counterparty credit and financial strength ratings on AIG's core subsidiaries.

"We revised the outlook to stable to reflect the stabilization of AIG's earnings and competitive position following regulatory investigations and other challenges of 2005," said S&P credit analyst Rodney A. Clark.

___

On the Net:

http://www.aig.com