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S&P bumps AIG outlook up to stable from negative

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Standard & Poor’s Corp. has revised its outlook for insurer American International Group Inc. to stable from negative.

The change reflects the New York-based rating agency’s view that AIG will maintain and improve its ability to service debt using earnings.

S&P said that it expects AIG to post pretax operating income of about $10 billion a year from 2013 through 2015, compared with an average of about $5.5 billion over the past three years, and the company should see a combined ratio of between 100% and 102%.

Stronger operating income and declining debt reducing interest expenses will support AIG’s fixed-charge ratio, which is a measure of a firm’s ability to meet its debt obligations using earnings, the S&P report said.

AIG’s liquid asset position remains strong, S&P added.