NEW YORK ( TheStreet) -- Standard & Poor's lowered its credit rating on American International Group's ( AIG) Chartis subsidiary on Monday, citing weaker-than-expected operating performance. But it also revised the outlook for AIG and all of its operating companies to stable from negative, believing the firm will become more competitive and build upon operating improvements since its bailout - particularly at its SunAmerica division. S&P downgraded Chartis' ratings one notch, to "A" from "A+." It kept the rest of AIG's ratings stable, including its overall "A-" rating and the "A+" rating on SunAmerica. Chartis, AIG's property & casualty division, reported a $4.1 billion charge last quarter to bolster reserves - a move some investors hadn't expected. In a conference call on Friday, CEO Robert Benmosche and other executives attempted to shore up confidence about Chartis' strength. While Chartis is receiving higher claims than expected, they mostly pertain to legacy issues, they said. Still, S&P said that beyond the reserve boost, Chartis' underwriting results were lower than expected. Steven Ader, the primary credit analyst, noted that Chartis' accident-year combined ratio was 111.3% for the fourth quarter, a "marked deterioration" from the earlier part of 2010. "Although we believe that a combination of underwriting initiatives and a continued shift toward lower-volatility business lines will support future profitability, continued pricing pressure in the U.S and--to a lesser extent--in the International segment will hamper improvement," Ader said. AIG's stock was recently down 1.3% at $38.05. It has dropped sharply from a range of $40 to $43 in the days and weeks leading up to AIG's fourth-quarter report. Ader outlined a more bullish view for AIG's SunAmerica division, which provides life insurance and retirement products. He noted that SunAmerica's operating performance has continued to improve, despite increased competition. It has also been able to expand its distribution network and re-entered agreements with independent distributors that fled AIG due to its enormous government bailout. -- Written by Lauren Tara LaCapra in New York. >To contact the writer of this article, click here: Lauren Tara LaCapra.