It has to do with how AC is calculated. I have some mods so not sure if it works exactly the same with the default game options, but I assume so. So just keep in mind that having low AC is good, it makes you harder to hit. So a ring that improves AC by 1, will lower AC by 1.
It works the same way as in Baldur's Gate (at least on my Torment game).
Edit: To expand on that, here is a good FAQ that explains the basics:
http://www.gamefaqs.com/pc/75251-baldurs-gate/faqs/8566 Armor Class isn't really about armor. It is the composite of Armor and
Dexterity that determines how hard it is for a damaging hit to be made.
The base Armor Class (AC) is 10. Anything lower is better and makes your
character harder to hit. It does NOT reduce the amount of damage taken.