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RESPONSE LETTER

American
International Group, Inc.

70 Pine Street

New York, NY 10270

    Kathleen E. Shannon

Senior Vice President, Secretary

and Deputy General Counsel

    TEL: 212-770-5123
FAX: 212-785-1584

KATHLEEN.SHANNON@AIG.COM

June 12, 2006

Jeffrey Riedler

Assistant Director

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, DC 20549

    Re:

    American International Group, Inc. - -

Form S-1 Registration Statement filed March 17, 2006

(File No. 333-132561)

    Form 10-K for the year ended December 31, 2005 (File No. 1-8787)

Dear Mr. Riedler:

     We are in receipt of your letter dated April 12, 2006 and thank you for your comments
concerning the captioned filings of American International Group, Inc. (“AIG”). We are pleased to
respond to the questions and comments in your letter dated April 12, 2006 (the “Comment Letter”).
In response to the Comment Letter we intend to promptly file an Amendment No. 1 to the
above-referenced Registration Statement on Form S-1 (“Amendment No. 1”) and an amendment to the
above referenced Annual Report on Form 10-K for the year ended December 31, 2005 (“2005 Form
10-K/A”).

     We have repeated your questions below in bold-face type to facilitate your review, followed by
the responses of AIG in regular type. The numbers correspond to the numbers in the Staff’s letter.

AIG, page 1

3. Please expand the discussion to provide more detailed background and identifying information
concerning Starr and SICO and their relationship with AIG.

In response to the Staff’s comment, AIG intends to include an expanded discussion of AIG’s
relationship with Starr and SICO by adding new disclosure in Amendment No. 1 as shown in Annex A
hereto.

The downgrades in AIG’s credit ratings . . . page 2

4. Please expand the discussion to put the respective ratings designations in context, e.g., fourth
highest of twelve ratings. In addition, please define the terms negative ratings outlook and
ratings watch negative or negative watch the first time you use these terms.

In response to the Staff’s comment, AIG intends to expand the ratings discussion in Amendment No. 1
to put the respective ratings designations in context and define the rating agency terms addressed
in the Staff’s comment by including the revised paragraphs as shown in Annex B hereto.

5. We note your reference to actions taken by the major rating agencies from March through June
2005. Please discuss if the company has received any communications from these major rating
agencies related to whether you or your subsidiaries may be downgraded further or placed on a
credit watch for possible downgrading.

In April 2006, Fitch removed AIG and its subsidiaries from Rating Watch Negative and affirmed these
ratings with a stable outlook. AIG intends to update its disclosure to reflect this action, as
also shown in Annex B hereto. AIG has not received any other communication from the major rating
agencies related to a further downgrade of AIG or any of its subsidiaries or placing AIG or any of
its subsidiaries on a credit watch for possible downgrading.

Downgrades in AIG’s debt ratings will adversely affect AIG’s results of operations, page 2

6. Please expand the discussion to quantify how the downgrades have affected and may affect your
results of operations. For example, to the extent practicable, quantify the increase in borrowing
costs as a result of the downgrades.

AIG knows of no verifiable method to quantify how the downgrades have affected or may affect AIG’s
results of operations or to quantify the increase in AIG’s borrowing costs as a result of the
downgrade.

A company’s borrowing cost is composed of two components: 1) the underlying risk-free rate, which
in the U.S. is based on the rate of U.S. Treasury securities of comparable

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duration and 2) the credit spread, which is the additional interest cost for an individual issuer
based on the bond market’s evaluation of the credit characteristics of that issuer. For investment
grade issuers, the risk-free rate generally represents the larger component of borrowing costs.

The credit spread of an individual issuer, such as AIG, varies over time based on the bond market’s
estimation of the credit risk of that issuer. The spread also reflects the market’s overall
appetite for credit risk. While credit ratings influence the market’s evaluation of an issuer’s
creditworthiness thereby affecting its credit spread, all of the information that is publicly
available about an issuer affects its credit spreads. For example, it is not unusual for issuers
with the same ratings to have different credit spreads.

Throughout 2005, AIG’s credit spreads showed great volatility, reflecting the market’s changing
evaluations of AIG’s credit profile as a whole. The credit spreads were volatile both prior to and
following the changes in AIG’s ratings, so it is not possible to determine what, if any, portion of
that volatility in credit spreads was directly attributable to the ratings downgrades. However, on
a long-term basis, AIG believes that the ratings downgrades have increased AIG’s credit spreads
and, as a result, have resulted in an increase in its overall borrowing costs.

7. Please disclose the extent to which your contracts allow clients to terminate if your ratings
are downgraded by one or more rating agencies. The discussion should indicate the rough percentage
of your contracts that include such provisions and the level to which the ratings must fall before
the customer is permitted to cancel the contract.

In response to the Staff’s comment, AIG intends to include disclosure in Amendment No. 1 as shown
in Annex C hereto.

Form 10-K for the year ended December 31, 2005

Business

The Restatements, page 3

8. In your Form 10-K/A for 2004 filed on March 16, 2006 you indicate that your second restatement
consisted of initial adjustments that were reflected in your September 30, 2005 Form 10-Q and
additional adjustments that are reflected in the 2004 Form 10-K/A. It appears from your
disclosures on pages 23 through 33 of your 2004 Form 10-K/A that many of the additional adjustments
are of the same magnitude, if not greater, than your initial adjustments. However, it appears that
you only filed a single Item 4.02 Form 8-K related to the initial adjustments on November 8, 2005.
Please explain to us why you apparently did not file a second Item 4.02 Form 8-K related to your
additional adjustments. In your response, please tell us your consideration of Question 1 in our
Current Report on Form 8-K FAQ dated November 23, 2004.

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In AIG’s Form 8-K filed on November 9, 2005 (the “November Form 8-K”), AIG disclosed that it had
determined that it was required to restate its previously issued financial statements for the years
ended December 31, 2004, 2003 and 2002, along with affected Selected Consolidated Financial Data
for 2001 and 2000 and quarterly financial information for 2004 and the first two quarters of 2005,
and that its prior financial statements for those periods should therefore no longer be relied
upon. As disclosed in the 2004 Form 10-K/A, AIG reached this determination following the
identification of certain errors, the preponderance of which were identified during the remediation
of the material weaknesses in internal controls over financial reporting, principally relating to
internal controls surrounding accounting for derivatives and related assets and liabilities,
reconciliation of certain balance sheet accounts and income tax accounting.

As also disclosed in the 2004 Form 10-K/A, AIG identified certain additional errors during the
ongoing remediation of internal controls over financial reporting, principally relating to one of
the same material weaknesses giving rise to the initial adjustments — reconciliation of certain
balance sheet accounts. At the time of the detection of these additional errors, AIG had not
re-issued the financial statements covered by the November Form 8-K.

Item 4.02 of Form 8-K requires “a brief description of the facts underlying” the conclusion that
the financial statements can no longer be relied upon. Since the additional adjustments related
principally to a material weakness that had previously been disclosed in the November Form 8-K, AIG
concluded that an additional Form 8-K was not required as a result of the additional adjustments.
In reaching this conclusion, AIG relied upon Question 23 to the Current Report on Form 8-K
Frequently Asked Questions, dated November 23, 2004, which indicates that, once an issuer has filed
a Form 8-K under Item 4.02(a), a Form 8-K is not required to report a notice from the issuer’s
auditor that the auditor has also concluded that the financial statement should not be relied upon,
unless the auditor’s conclusion relates to an error or matter different from what triggered the
registrant’s filing. Since the additional adjustments related principally to the remediation of a
material weakness previously disclosed in the November Form 8-K, AIG determined that Question 23
was applicable and that a second Form 8-K filing for the additional adjustments was not required.

Notwithstanding the foregoing, in response to the Staff’s comment, AIG intends to file an amendment
to Item 4.02 of the November Form 8-K. The text of the amendment to Item 4.02 of the November Form
8-K is set forth in Annex D.

Management’s Discussion and Analysis

Overview of Operations and Business Results

General Insurance, page 27

9. Please tell us and revise your disclosure here and on page 31 to clarify how changes in
estimates related to the remediation of your material weakness in control over certain balance
sheet reconciliations negatively impact your operating results

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in 2005. Please tell us and disclose the dollar impact of these estimate changes. In addition,
please explain why these estimates were not apparently corrected in your restatements or whether
you underestimated accruals for remediation efforts undertaken in 2004.

In the course of AIG’s remediation efforts, approximately thirty-five adjustments to unreconciled
general ledger accounts were identified and evaluated through the framework of APB Opinion No. 20,
Accounting Changes, which states that “[e]rrors in financial statements result from mathematical
mistakes, mistakes in the application of accounting principles, or oversight or misuse of facts
that existed at the time the financial statements were prepared. In contrast, a change in
accounting estimate results from new information or subsequent developments and accordingly from
better insight or improved judgment.” A significant majority of the adjustments arose from
mistakes in the application of accounting principles or oversight or misuse of facts that existed
at the time the financial statements were prepared, and thus were deemed to be corrections of
errors, including adjustments to allowances for doubtful accounts, and were treated as such in
AIG’s 2004 Form 10-K/A. With respect to the remaining adjustments, the new information and better
insight gained during the remediation process led management to conclude that the items were
changes in estimates and therefore appropriately recorded in the 2005 operating results, and not
underestimates of accruals for remediation efforts undertaken in 2004.

In response to the Staff’s comment, AIG intends to amend its disclosure in its 2005 Form 10-K/A, as
shown in Annex E, to more clearly identify the $291 million of expenses as changes in estimates
relating to remediation of AIG’s material weaknesses in internal control over certain balance sheet
accounts.

Operating Review

General Insurance Operations, page 30

10. You disclose a non-GAAP measure, underwriting profit (loss), that is not a segment reporting
measure under SFAS 131 as it cannot be used by your chief operating decision maker to allocate
resources across all your segments. In addition, we do not believe that your disclosure of
underwriting profit (loss) complies with Item 10(e) of Regulation S-K. Although you disclose why
you believe this measure is useful to investors, we believe that you did not adequately describe
the benefits this measure provides to the reader that they would be unable to obtain from a
discussion of the corresponding GAAP measure. Additionally, you do not disclose with the same
prominence the most comparable GAAP measure with a reconciliation to that GAAP measure. In
addition, it appears that underwriting profit (loss) eliminates certain recurring items such as
realized gains (losses) which is precluded under Item 10(e)(1)(ii)(B) of Regulation S-K. Please
refer to Questions 8, 9, and 21 of “Frequently Asked Questions Regarding the Use of Non-GAAP
Financial Measures.” Please revise your filing to remove this measure here, in business on page 4
and in your segment financial statement disclosure in

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Note 2(b) on page 91, or tell us in detail how this measure complies with the guidance referred to above.

AIG believes that underwriting profit (loss) provides a reader of AIG’s financial reports with
financial information that is not only meaningful but critically important to understanding the
results of property and casualty insurance operations. Operating income of a property and casualty
insurance company includes three components: underwriting profit (loss), net investment income and
realized capital gains (losses). Without disclosure of underwriting profit (loss), it is impossible
to determine how successful an insurance company is in its core business activity of assessing,
underwriting and pricing risk. Including investment income and realized capital gains (losses) in
operating income without disclosing underwriting profit (loss) can mask underwriting losses. The
amount of net investment income may be driven by changes in interest rates and other factors that
are totally unrelated to underwriting performance. Likewise, including realized capital gains
(losses) may also mask an insurance company’s underwriting performance in that management exercises
judgment regarding the sale of investment securities due to (among other reasons) changing market
conditions, tax strategies, investment portfolio management and liquidity needs. A management
decision to sell securities in a gain position for tax purposes has no relevance to the insurance
company’s underwriting performance.

Underwriting profit (loss) is the most important measurement used by AIG senior management to judge
the performance of its General Insurance operations, and this measurement is required to be
disclosed in statutory financial statements filed with state insurance departments (statutory
underwriting profit (loss)) by property and casualty companies. Thus, AIG believes that
underwriting profit (loss) is not a non-GAAP financial measure pursuant to paragraph (5) of Item
10(e).

As currently presented in the 2005 Form 10-K, underwriting profit (loss) represents the statutory
underwriting profit (loss) adjusted for changes in deferred acquisition costs. This adjustment was
done with the intention of making the measure more consistent with the information provided in the
consolidated financial statements. AIG intends to remove the existing disclosure of underwriting
profit (loss) that includes this adjustment from Item 7 of the Form 10-K and replace it with a
table showing statutory underwriting profit (loss). A full reconciliation of statutory
underwriting profit (loss) to Income Before Income Taxes, Minority Interest, and Cumulative Effect
of Accounting Changes, as shown in Annex F will be included in the segment footnote. The text of
Item 7 will be revised accordingly.

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Consistent with this presentation, AIG will remove the current “underwriting profit (loss)” line
item from the table on page 4 and from Note 2 to the Consolidated Financial Statements. AIG will
add a line item to the table on page 4 showing statut