Moody's Cuts AIG Debt - TheStreet

American International Group's

(AIG) - Get Report

pristine credit was consigned to history Thursday, as Moody's joined Standard & Poor's in lowering the insurer's long-term ratings by one notch.

Moody's dropped AIG to Aa1 from Aaa, mirroring a step carried out Wednesday by its counterpart in the credit ratings industry. Moody's also placed the ratings on review for another possible downgrade.

On Wednesday, AIG admitted that it used faulty accounting on a five-year old deal with a unit of Warren Buffett's

Berkshire Hathaway


, booking the transaction as insurance when it should have been recorded as a loan.

The company, whose shares have lost about a third of their value this year and continued to fall Thursday, also said that several small, offshore companies with which it did ostensibly arm's-length transactions were effectively under its control, casting doubt on other accounting treatments. AIG warned that it might be forced to downwardly restate its shareholder equity by about 2%.

"These findings are suggestive of a culture of financial aggressiveness and of control inadequacies that are inconsistent with disciplines of internal control, risk management, corporate governance, and a commitment to financial conservatism that is typical at the Aaa rating level," Moody's said.

In placing AIG's ratings on review, Moody's cited "continuing uncertainty about the scope of ongoing regulatory investigations, internal reviews and financial restatements and/or adjustments."

AIG shares were recently down $1.20, or 2.1%, to $55.96.