SecProbe.io

CORRESP
1
filename1.htm

corresp

[AIG Letterhead]

July 28, 2010

Mr. Jim B. Rosenberg

Senior Assistant Chief Accountant

United States Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, D.C. 20549

    Re:

    American International Group, Inc.

Form 10-K for the Fiscal Year Ended December 31, 2009

File No. 001-8787

Dear Mr. Rosenberg:

We are in receipt of your letter dated July 20, 2010 with respect to American International Group,
Inc.’s (AIG) Annual Report on Form 10-K for the fiscal year ended December 31, 2009 (Form 10-K) and
our prior response letter dated June 25, 2010 (Prior Letter). This letter sets forth AIG’s
responses to the Staff’s comments contained in your letter.

AIG acknowledges that the adequacy and accuracy of the disclosure in the Form 10-K is the
responsibility of AIG, that Staff comments or changes to disclosure in response to Staff comments
do not foreclose the Securities and Exchange Commission (the Commission) from taking any action
with respect to the Form 10-K 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 comments below.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of
Operations

Capital Resources and Liquidity, page 43

    1.

    Please refer to prior comment one and the revised disclosure in the second paragraph on
page 4. Please quantify the cash provided by your General Insurance operations and life
insurance subsidiaries and the cash used in connection with the AIGFP wind-down.

AIG Response:

    AIG will provide additional disclosures in its discussion of Capital Resources and Liquidity
in AIG’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010 (Second
Quarter Form 10-Q) as follows:

    Insurance companies generally receive most premiums in advance of the payment of claims
or policy benefits, but the ability of general insurance operations to generate positive
cash flow is affected by operating expenses, the frequency and severity of losses under
its insurance policies, as well as by policy retention rates. Cash provided by General
Insurance operations was $XXX million for the first six months of 2010 compared to $XXX
million in the same period in 2009 [as a reduction in claims paid was offset by declines
in premiums collected, arising primarily from a decrease in domestic production].
Catastrophic events and significant casualty losses, the timing and effect of which are
inherently unpredictable, reduce operating cash flow for AIG’s General Insurance
operations. Cash provided by AIG’s life insurance subsidiaries, including entities
presented as discontinued operations, was $XXX million for the first six months of 2010
compared to $XXX million in the same period in 2009 [as growth in international markets
was largely offset by a decrease in cash flows from domestic operations]. Cash flows
provided from insurance operations were partially offset by cash expended by Capital
Markets, net of reductions in collateral posted, of $XXX million and $XXX million for
the six months ended June 30, 2010 and 2009, respectively, primarily due to the
wind-down of AIGFP.

Notes to Consolidated Financial Statements

Note 11. Derivatives and Hedge Accounting, page 273

    2.

    We note the disclosure you propose to add in your Second Quarter 2010 Form 10-Q. As
discussed during our June 15, 2010 telephone call, please expand this disclosure to also
disclose:

    •

    that when the wind-down is substantially complete, you expect the notional value
of the remaining derivative portfolio will be approximately $300-500 billion;

    •

    the notional amount of the $300-500 billion that you expect will relate to
traditional financial risk management programs;

    •

    that you expect the wind-down will be substantially complete by December 31,
2010; and

    •

    that derivatives for traditional financial risk management programs will be
managed outside of AIGFP.

AIG Response:

AIG will provide additional disclosure to its Second Quarter Form 10-Q as follows:

    During the second quarter, AIG continued to make progress winding down AIGFP’s derivatives
portfolio. At _________, 2010,
the portfolio was $XXX
billion, of which $XXX billion were
[credit default swaps] [credit derivative instruments]. AIG expects to continue to reduce
the size of AIGFP’s derivatives portfolio through the remainder of the year. If the
wind-down continues as anticipated, AIG expects late in 2010 or early 2011 that the
remaining AIGFP derivatives portfolio will consist of transactions that AIG

-2-

    believes will be of low complexity or of low risk or not economically feasible to unwind
based on a cost versus benefit analysis. During the latter stages of the wind-down, AIG
expects to assume direct management of the investments and debt obligations of AIGFP, at
which time the performance of those assets and liabilities will no longer be reported as
part of Capital Markets. However, AIG anticipates that the remaining derivatives business
will continue to be reported as Capital Markets.

* * * * *

If you have any questions or require any additional information, please do not hesitate to contact
me at (212) 770-5123.

    Very truly yours,

    /s/ Kathleen E. Shannon

    Kathleen E. Shannon

    Senior Vice President, Secretary & Deputy General Counsel

-3-