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CORRESP
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CORRESP

February [ ], 2009

Mr. Jim B. Rosenberg

Senior Assistant Chief Accountant

United States

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Mail Stop 6010

Washington, D. C. 20549

Re: American International Group, Inc.

Form 10-K for Fiscal Year Ended December 31, 2007

Form 10-Q for Fiscal Quarter Ended June 30, 2008

Form 10-Q for Fiscal Quarter Ended September 30, 2008

Form 8-K filed December 2, 2008

File No. 1-8787

Dear Mr. Rosenberg:

We are in receipt of your letter dated December 19, 2008 and thank you for your comments
concerning American International Group, Inc.’s (AIG) captioned filings. This letter sets
forth AIG’s responses to each of the Staff’s comments contained in your letter.

AIG acknowledges that the adequacy and accuracy of the disclosure in AIG’s filings is the
responsibility of AIG, that Staff comments or changes to disclosure in response to Staff
comments do not foreclose the Commission from taking any action with respect to the
filings and that Staff comments may not be asserted by AIG as a defense in any proceeding
initiated by the Commission or any person under the Federal securities laws of the United
States.

We have repeated your questions below to facilitate your review.

General

    1.

    We note that you will reconsider the nature of disclosure necessary to
reasonably inform investors about your multi-sector credit default swaps based on
the terms of and transactions involving your recently negotiated facility with the
Federal Reserve Bank of New York. On the basis of the disclosure in Note 11 and
your subsequently filed Form 8-K, we are not in a position to assess whether the
disclosure you currently provide or that we request below would be unnecessary.
Given the apparent significance of the transaction, we encourage you to provide to
us the disclosure you will provide to reasonably inform investors about this
transaction, its accounting, and its effects as well as any additional analysis
necessary to understand your accounting treatment prior to filing your Form 10-K.

    AIG Response:

    In response to the Staff’s comment, we have attached a draft of the disclosure to be
included in AIG’s Form 10-K for Fiscal Year Ended December 31, 2008 (2008 Form 10-K)
with respect to the accounting treatment and the valuation including sensitivity
analysis for the Maiden Lane III transaction in Appendices 1 and 2, respectively,
and AIGFP’s super senior credit default swap portfolio as Appendix 3.

Form 10-Q for the Fiscal Quarter Ended September 30. 2008

Note 3 —Fair Value Measurements, page 14

    2.

    In order to help us evaluate your response to prior comment 10, please
revise your disclosure to reconcile amounts in the table on page 20 with the
descriptions and amounts in footnote “a” to that table. Also, revise the
disclosure to

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    explain why the counterparty netting adjustments do not net to zero.

AIG Response:

The counterparty netting adjustments in the table on page 20, “Counterparty Netting”
column, of the September 30, 2008 Form 10-Q were made in accordance with the
provisions of paragraphs 10, 10A and 10B of FIN 39. These include adjustments to
set off fair value amounts recognized with the same counterparty when applying the
netting provisions of paragraph 10 of FIN 39 of $42.8 billion, and amounts
recognized for the cash collateral posted or received by AIG with respect to master
netting agreements of $33.1 billion and $6.5 billion, respectively. These amounts
can be reconciled to the table as follows:

    (in billions)

    Assets

    Liabilities

    Adjustments to set off fair value amounts recognized with the same counterparty

    $
    (42.8
    )

    $
    (42.8
    )

    Amounts recognized for the cash collateral posted and received

    (6.5
    )

    (33.1
    )

    Total Counterparty Netting

    $
    (49.3
    )

    $
    (75.9
    )

In response to the Staff’s comment, AIG will revise the table to include separate
columns for amounts recognized with the same counterparty when applying the netting
provisions of paragraphs 10, 10A and 10B of FIN 39, and amounts recognized for the
cash collateral posted or received by AIG with respect to master netting agreements
in its 2008 Form 10-K as follows:

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents information about assets and liabilities measured at fair value on a
recurring basis and indicates the level of the fair value measurement based on the levels of the
inputs used:

    Total

    Counterparty

    Cash

    December 31,

    (in millions)

    Level 1

    Level 2

    Level 3

    Netting(a)

    Collateral (b)

    2008

    Assets:

    Liabilities:

    a)

    Represents netting of derivative exposures covered by a qualifying master netting
agreement in accordance with FIN 39.

    b)

    Represents cash collateral posted and received by AIG.

Management’s Discussion and Analysis of Financial Condition and Results of
Operations

Critical Accounting Estimates

AIGFP’s Super Senior Credit Default Swap Portfolio page 113

    3.

    We acknowledge your disclosure in response to prior comment 1(C)
related to collateral posting. In order to facilitate an understanding of your
liquidity, please expand this disclosure as follows:

    •

    Separately quantify collateral posted and collateral which you have agreed
to post. (A)

    •

    Provide a breakdown of these amounts for each type of CDS contract shown in
the tables on pages 114 and 115 at each balance sheet date. Link the collateral
posted to amounts recorded on your consolidated balance sheets. (B)

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    •

    Provide a roll forward of collateral posting activity for all periods
presented. (C)

    •

    Explain the difference between “market value” of the relevant underlying CDO
security and `replacement value of the transaction.” (D)

AIG Response:

For the convenience of the Staff, we have labeled the subparts of comment 1 and
respond as follows.

    A.

    The phrase “AIGFP had either agreed to post or posted collateral
based on exposures, calculated in respect of super senior credit default swaps,
in an aggregate amount” was meant to capture all exposure amounts agreed with
counterparties on AIGFP’s super senior credit default swap portfolio that were
the basis for collateral postings made as of that date, irrespective of whether
that collateral was offset against collateral amounts owed to AIGFP for other
transactions under the same master netting arrangements. AIG will revise the
language accordingly in its 2008 Form 10-K. In addition, AIG will further
expand its quantitative disclosures on the amount of collateral posted to
include the following table:

The amount of collateral postings with respect to AIGFP’s super senior credit
default swap portfolio (prior to offsets for other transactions) were as
follows:

    December 31,

    September 30,

    December 31,

    (in millions)

    2007

    March 31, 2008

    June 30, 2008

    2008

    2008

    Regulatory Capital

    [REDACTED]

    [REDACTED]

    Arbitrage –
Multi-Sector CDO

    [REDACTED]

    [REDACTED]

    Arbitrage — Corporate

    [REDACTED]

    [REDACTED]

    Total

    $
    32,800

    [REDACTED]

    As disclosed in Appendix 3, the amount of collateral postings for all periods
prior to December 31, 2007 was insignificant.

    B.

    Please refer to our response in Subpart A of comment 3 above.
AIG linked the fair value amount of the derivative liability on page 114 of
Form 10-Q for the quarterly period ended September 30, 2008 to the derivative
liability recorded on the balance sheet through the table on page 20, footnote
d. AIG will include similar linkage in its 2008 Form 10-K.

    C.

    Collateral arrangements, in the form of both cash and
securities, are integral to a significant portion of AIGFP’s business and these
arrangements with counterparties often extend across multiple products.
Consequently, it is not possible to provide a roll forward for any particular
product or to link collateral agreed to be posted for any one product to the
amounts reported in the balance sheet. Because liquidity issues associated with
collateral requirements are not limited to the super senior CDS portfolio, AIG
will provide a roll forward of its collateral postings on an aggregate AIGFP
basis in its 2008 Form 10-K as follows:

The following table presents a roll forward of the amount of collateral posted
by AIGFP during 2008:

    Collateral Posted

    Collateral

    Collateral Posted

    as of December

    Additional

    Returned by

    Collateral

    as of December

    31, 2007

    Postings

    Counterparties

    Surrendered(a)

    31, 2008

    Collateralized GIAs
and other
borrowings

    $

    $

    $

    $

    Derivatives
(including super
senior credit
default swaps)

    Total

    $

    $

    $

    $

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    (a)

    Represents the surrender of collateral previously posted with
counterparties to effect terminations of AIGFP’s super senior credit default
swaps in connection with the Maiden Lane III Transaction.

    D.

    In response to the Staff’s comment, AIG will include disclosure
to describe the difference between “market value” and “replacement value of the
transaction” as follows:

As of any date, the “market value” of the relevant CDO security is the price at
which a marketplace participant would be willing to purchase such CDO security
in a market transaction on such date, while the “replacement value of the
transaction” is the cost on such date of entering into a credit default swap
transaction with substantially the same terms on the same referenced obligation
(e.g., the CDO security).

    4.

    Please refer to prior comment 1(D). We were unable to locate your
disclosure of incurred payment obligations on pages 101 and 102. Please advise.

    AIG Response:

    AIG disclosed the payment obligations that have been incurred and where these are
recorded on the balance sheet on pages 101 and 102 of its Form 10-Q for the
quarterly period ended September 30, 2008 as follows:

Page 101:

During the third quarter of 2008, AIGFP purchased super senior CDO securities
with a net notional amount of $5.7 billion in connection with 2a-7 Puts. Upon
purchase, $4.1 billion of these securities were included in AIGFP’s trading
securities portfolio and $1.6 billion of the securities were included in the
available for sale portfolio at their fair value. Effective January 1, 2008 and
until August 2008, AIGFP elected to apply the fair value option to all of its
investment securities. In August 2008, AIGFP revised this election and now
evaluates whether to elect the fair value option on a case by case basis for
securities purchased in connection with the existing structured transaction.
Approximately $840 million of the cumulative unrealized market valuation loss
previously recognized on these derivatives was realized as a result of these
purchases.

Page 102:

During the nine month period ended September 30, 2008, AIGFP extinguished its
obligations with respect to a credit default swap by purchasing the protected
CDO security for $103 million, its principal amount outstanding related to this
obligation. Additionally, AIGFP purchased other super senior CDO securities with
a net notional amount of $6.6 billion in connection with 2a-7 Puts. Upon
purchase, $5.0 billion of these securities were included in AIGFP’s trading
portfolio and $1.6 billion in available for sale portfolio at their fair value.
Approximately $907 million of the cumulative unrealized market valuation loss
previously recognized on these derivatives was realized as a result of these
purchases.

In future filings, AIG will modify its language to clarify that the purchases
described above were payment obligations that had been incurred under the CDS
transactions.

    5.

    On page 177, you state that “write-downs ... of a referenced credit”
represent a cash settlement triggering event. Please disclose the specific events that constitute a `write-down.”

    AIG Response:

    In response to the Staff’s comment, AIG will include disclosure to specify events
that constitute a write-down in its 2008 Form 10-K as follows:

A “write-down” with respect to a referenced credit may arise as a result of a
reduction in the outstanding

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principal amount of such referenced credit (other
than as a result of a scheduled or unscheduled payment of principal), whether
caused by a principal deficiency, realized loss or forgiveness of principal. An
implied write-down may also result from the existence of a shortfall between the
referenced credit’s pool principal balance and the aggregate balance of all pari
passu obligations and senior securities backed by the same pool.

    6.

    Part of our objective of prior comment 1E was to elicit quantified
disclosure to facilitate an understanding of the amount of losses that would have
to be absorbed by other classes of CDO securities before the referenced CDO
security incurs a loss. While the subordination disclosed in the table on page 115
appears to be a component of this amount, it is unclear whether, and if so how,
the existence of “cash flow diversion mechanisms of the CDO” and the classes of
CDO securities that rank pari passu with the referenced CDO security impacts this
amount. Please provide clarifying disclosure. Please also revise the disclosure to
quantify the extent to which erosion of transaction cash flows has occurred since
transaction inception. Such disclosure might include, but not necessarily be
limited to, the original and current subordination levels.

    AIG Response:

    In response to the Staff’s comment, AIG will provide clarifying disclosure and the
quantification of the extent to which erosion of transaction cash flows has occurred
since transaction inception in its 2008 Form 10-K as follows:

In addition to subordination, cash flow diversion mechanics may provide further
protection from losses for holders of the super senior CDO securities. Following
the acceleration of a CDO security, all, or a portion of, available cash flows in
a CDO could be diverted from the junior tranches to the most senior tranches. In
a CDO with such a feature, the junior tranches may not receive any cash flows
until all interest on, and principal of, the super senior tranches are paid in
full. Thus, potential losses borne by the holders of the super senior CDO
securities may be mitigated as cash flows that would otherwise be payable to
junior tranches throughout the entire CDO capital structure are instead diverted
directly to the most senior tranches. Cash flow diversion mechanics also may
arise in the context of over-collateralization tests. Upon a failure by the CDO
issuer to comply with certain over-collateralization tests (other than those that
trigger an indenture event of default), cash flows that would otherwise be
payable to certain junior tranches throughout the CDO capital structure may
instead be diverted to more senior tranches. Consequently, the super senior risk
layer is paid down at a faster rate, effectively increasing the relative level of
subordination.

The existence of a tranche of securities ranking pari passu with the super senior
CDO securities does not provide additional subordination that protects holders of
the super senior CDO securities, as holders of such pari passu securities are
entitled to receive payments from available cash flows at the same level of
priority as holders of the super senior securities. Thus, a pari passu tranche
of securities does not affect the amount of losses that have to be absorbed by
classes of CDO securities other than the super senior CDO securities before the
super senior securities incur a loss, although the pari passu tranche will absorb
losses on a pro rata basis after subordinate classes of securities are exhaust