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corresp

April 13, 2010

Mr. Jim B. Rosenberg

Senior Assistant Chief Accountant

United States Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Mail Stop 4720

Washington, D.C. 20549

Re: American International Group, Inc.

Dear Mr. Rosenberg:

We are in receipt of your letter dated March 29, 2010 with respect to American International Group,
Inc.’s (AIG) decisions made in connection with determining the accounting for certain repurchase
agreements, securities lending transactions, and other transactions involving the transfer of
financial assets with an obligation to repurchase the transferred assets. This letter sets forth
AIG’s responses to the Staff’s comments contained in your letter.

To put AIG’s responses to the Staff’s comments in context, AIG believes it will be helpful to
provide background on how the market and AIG-specific matters affected its accounting for
repurchase agreements and securities lending transactions during the preceding three years.

AIG uses repurchase agreements, securities lending and similar transactions as a source of funding
and to execute its business strategy. Historically, AIG has sought to execute these agreements on
terms commonly offered in the marketplace, which resulted in the transfers of the securities being
reported as collateralized financing transactions. For those transfers that were required to be
accounted for as sales, AIG did not structure the transactions to obtain sales treatment. Rather,
in response to the changing market conditions and AIG-specific liquidity events in late 2008,
certain of AIG’s counterparties demanded significantly higher levels of collateral to enter into
the agreements (used as a source of funding), which resulted in sales rather than
collateralized-financing accounting under Accounting Standards Codification 860 for those
transactions. Due to the limited alternative liquidity sources available to AIG since September
2008 (e.g., Federal Reserve Bank of New York credit agreement and the United States Department of
the Treasury), AIG continued to use its existing liquidity sources, which were less expensive than
the government arrangements, despite the less favorable collateral terms.

Because general debt-market conditions have improved since 2008, additional market participants
have offered repurchase agreements to AIG, resulting in an increased volume of these transactions
(particularly during the last two quarters of 2009). However, the counterparties have continued to
demand higher levels of securities in comparison to the amount of cash collateral provided. We
believe counterparties are demanding higher levels of securities because of continuing concerns
over AIG’s credit.

* * * * *

    Mr. Jim B. Rosenberg

    April 13, 2010

    United States Securities and Exchange Commission

    Page 2

We have repeated your requests below to facilitate your review.

    •

    Quantify the amount of repurchase
agreements qualifying for sales
accounting at each quarterly balance
sheet date for each of the past three
years.

    AIG Response:

    Substantially all of AIG’s repurchase agreements qualifying for sales accounting are related to
AIG Financial Products Corp. and AIG Trading Group Inc. and their respective subsidiaries
(“AIGFP”) financing activities. The fair values of securities transferred in connection with
repurchase agreements qualifying for sales accounting at each quarterly balance sheet date for
each of the past three years are as follows ($ in millions):

    Fair Value of

    Fair Value of

    Fair Value of

    Securities

    Securities

    Securities

    Quarter

    Transferred

    Quarter

    Transferred

    Quarter

    Transferred

    Q1 2007

    $
    0

    Q1 2008

    $
    0

    Q1 2009

    $
    684

    Q2 2007

    0

    Q2 2008

    0

    Q2 2009

    708

    Q3 2007

    0

    Q3 2008

    0

    Q3 2009

    1,562

    Q4 2007

    0

    Q4 2008

    958

    Q4 2009

    2,328

The cash held at each quarterly balance sheet date for each of the past three years related to
the securities transferred as presented in the table above is as follows ($ in millions):

    Cash

    Cash

    Cash

    Quarter

    Received

    Quarter

    Received

    Quarter

    Received

    Q1 2007

    $
    0

    Q1 2008

    $
    0

    Q1 2009

    $
    575

    Q2 2007

    0

    Q2 2008

    0

    Q2 2009

    419

    Q3 2007

    0

    Q3 2008

    0

    Q3 2009

    944

    Q4 2007

    0

    Q4 2008

    863

    Q4 2009

    1,529

    •

    Quantify the average quarterly balance of repurchase agreements qualifying for sales
accounting for each of the past three years.

    AIG Response:

    AIG parent, its insurance company subsidiaries, and AIGFP are not required to, and do not,
prepare daily or monthly balance sheets and therefore cannot provide quarterly average balances
for repurchase agreements qualifying for sales accounting treatment for each of the past three
years. However, the repurchase agreements AIG enters into generally mature in one to six months
(rather than overnight) and there are a limited number of transactions associated with this
activity.

    Mr. Jim B. Rosenberg

    April 13, 2010

    United States Securities and Exchange Commission

    Page 3

    •

    Describe all the differences in transaction
terms that result in certain of your
repurchase agreements qualifying as sales
versus collateralized financings.

    AIG Response:

    Among other criteria, to qualify as a collateralized borrowing, ASC 860 requires the transferor
of assets to be able to repurchase or redeem the transferred assets on substantially the agreed
terms, even in the event of default by the transferee. To meet this condition, a transferor must
at all times during the contract term have obtained cash or other collateral sufficient to fund
substantially all of the cost of purchasing replacement assets from others.

    As discussed above, beginning in late 2008 certain AIG repurchase agreement counterparties began
requiring AIG to transfer significantly higher levels of securities (i.e., the counterparties
increased securities margin levels) in exchange for cash collateral. As a result, during the
2008 fourth quarter and throughout 2009 certain repurchase agreement transactions did not meet
the “substantially all” criterion required by ASC 860. Accordingly, AIG was required to account
for such transactions as sales of securities with derivatives to repurchase the securities
(forward purchase commitments) rather than as collateralized financings.

    In general, all other transaction terms were consistent with industry-standard repurchase
agreements that qualified for collateralized-financing accounting (as further described in our
response below). That is, the failure to obtain cash collateral sufficient to fund substantially
all of the cost of repurchasing replacement securities caused the criteria for sales accounting
to be met for the securities transferred.

    •

    Provide a detailed analysis supporting your use of sales accounting for your repurchase
agreements.

    AIG Response:

    Among other criteria, to qualify as a collateralized borrowing, ASC 860 requires the transferor
of assets to be able to repurchase or redeem the transferred assets on substantially the agreed
terms, even in the event of default by the transferee. To meet this condition, a transferor must
at all times during the contract term have obtained cash or other collateral sufficient to fund
substantially all of the cost of purchasing replacement assets from others.

    The guidance in ASC 860 requires sales accounting where the transferor [AIG] surrenders control
over the transferred financial assets. The surrender of control is considered to have occurred
if all of the criteria in ASC 860-10 have been met:

    a)

    Legal isolation

    Under collateralized financing agreements, the transferred assets are presumptively beyond
the reach of AIG and its creditors, even in bankruptcy. Standard collateralized
financing arrangements are generally interpreted to achieve legal isolation of the
transferred securities, in part due to their provisions regarding
default by the transferor and the remedies available to the transferee. AIG executes repurchase agreements using
these standard collateralized financing arrangements.

    Mr. Jim B. Rosenberg

    April 13, 2010

    United States Securities and Exchange Commission

    Page 4

    b)

    Ability to exchange or pledge

    Under standard collateralized financing arrangements, AIG’s counterparties have the ability
to pledge or exchange the securities without constraint. Regardless of whether
counterparties choose to pledge or exchange the securities transferred by AIG, their right
to do so is not limited in collateralized financing agreements.

    c)

    The transferor does not maintain effective control over the assets

    For transactions accounted for as sales, AIG did not have the right to receive, nor did it
receive, sufficient cash collateral to maintain effective control over the securities
transferred to certain collateralized financing counterparties.

The collateralized financing transactions with insufficient collateral must be accounted for as
sales, not financings, because all of the ASC 860 requirements for sales accounting are met.

    •

    Describe the business reasons for structuring the repurchase agreements as sales
transactions versus collateralized financings. To the extent the amounts accounted for as
sales transactions have varied over the past three years, discuss the reasons for quarterly
changes in the amounts qualifying for sales accounting.

    AIG Response:

    AIG uses repurchase agreements as a source of funding. Historically, AIG has sought to execute
its repurchase agreements on terms commonly offered in the marketplace, which resulted in the
transfers of the securities being reported as financing transactions. For those transfers that
were required to be accounted for as sales, AIG did not structure repurchase agreements to
obtain sales treatment. Rather, as discussed above, in late 2008 certain of AIG’s counterparties
demanded significantly higher levels of collateral to enter into repurchase agreements, which
resulted in sales rather than collateralized-financing accounting under ASC 860 for those
transactions. Due to the limited alternative liquidity sources available to AIG since September
2008 (e.g., Federal Reserve Bank of New York credit agreement and the United States Department
of the Treasury), AIG continued to use its existing liquidity sources, which were less expensive
than the government arrangements, despite the less favorable collateral terms.

    As discussed above, because general debt-market conditions have improved since 2008, additional
market participants have offered repurchase agreements to AIG, resulting in an increased volume
of these transactions (particularly during the last two quarters of 2009). However, the
counterparties have continued to demand higher levels of securities in comparison to the amount
of cash collateral provided.

    •

    Describe how your use of sales accounting for certain of your repurchase agreements impacts
any ratios or metrics you use publicly, provide to analysts and credit rating agencies,
disclose in your filings with the SEC, or provide to other regulatory agencies.

    Mr. Jim B. Rosenberg

    April 13, 2010

    United States Securities and Exchange Commission

    Page 5

AIG Response:

AIG does not believe the level of repurchase agreements accounted for as sales materially
affected any ratios or metrics AIG discloses publicly, provides to analysts and credit rating
agencies, discloses in AIG’s filings with the SEC, or provides to other regulatory agencies.

    •

    Tell us whether the repurchase agreements qualifying for sales accounting are concentrated
with certain counterparties and/or concentrated within certain countries. If you have any such
concentrations, please discuss the reasons for them.

    AIG Response:

    During the 2008 fourth and 2009 first quarters, all of AIG’s repurchase agreements that
qualified for sales accounting were with one U.S.-domiciled counterparty. During the 2009 second
and third quarters, this counterparty continued as the counterparty to the majority of AIG’s
repurchase agreements that qualified for sales accounting. In the 2009 fourth quarter, this
single counterparty accounted for approximately $1.0 billion of such repurchase agreements,
measured at the fair value of the securities transferred. This concentration is attributable to
the limited number of counterparties willing to provide secured funding to AIG.

    •

    Tell us whether you have changed your original accounting on any repurchase agreements
during the last three years. If you have, explain specifically how you determined the original
accounting as either a sales transaction or as a collateralized financing transaction noting
the specific facts and circumstances leading to this determination. Describe the factors,
events or changes which resulted in your changing your accounting and describe how the change
impacted your financial statements.

    AIG Response:

    AIG did not change its original accounting on any repurchase agreements during the last three
years. In addition, AIG did not change its accounting policies with respect to accounting for
repurchase agreements. However, while not changing the original accounting on any repurchase
arrangements, AIG adopted FSP 140-3 as disclosed in the notes to the consolidated financial
statements in the 2009 Form 10-K.

          For those repurchase agreements you account for as collateralized financings, please quantify
the average quarterly balance for each of the past three years. In addition, quantify the period
end balance for each of those quarters and the maximum balance at any month-end. Explain the causes
and business reasons for significant variances among these
amounts.

AIG Response:

For the reasons described above, AIG cannot provide quarterly average balances for repurchase
agreements accounted for as collateralized financings for each quarter in the past
three years or provide maximum month-end balances.  The table below

    Mr. Jim B. Rosenberg

United States Securities and Exchange Commission

    April 13, 2010

Page 6

    provides the quarter-end
amounts of securities sold under agreements to repurchase recorded on AIG’s Consolidated Balance
Sheet for each of the past three years ($ in millions):

    Quarter End

    Amount

    Quarter End

    Amount

    Quarter End

    Amount

    Q1 2007

    $
    17,581

    Q1 2008

    $
    9,674

    Q1 2009

    $
    3,413

    Q2 2007

    19,459

    Q2 2008

    9,659

    Q2 2009

    3,191

    Q3 2007

    23,368

    Q3 2008

    8,407

    Q3 2009

    3,285

    Q4 2007

    8,331

    Q4 2008

    5,262

    Q4 2009

    3,505

    The decline in securities sold under agreements to repurchase accounted for as collateralized
financings beginning in the 2008 third quarter and continuing throughout 2009 is attributable to
the liquidity events affecting AIG during that period resulting in a decreased ability to
negotiate terms that would qualify as collateralized financings.

         In addition, please tell us:

    •

    Whether you have any securities lending transactions that you account for as sales pursuant
to the guidance in ASC 860-10. If you do, quantify the amount of these transactions at each
quarterly balance sheet date for each of the past three years. Provide a detailed analysis
supporting your decision to account for these securities lending transactions as sales.

    AIG Response:

    Substantially all of AIG’s securities lending transactions qualifying for sales accounting were
conducted on behalf of AIG’s i