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corresp

[AIG Letterhead]

August 6, 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.

Form 10-Q for the Fiscal Quarter Ended March 31, 2010

File No. 001-8787

Dear Mr. Rosenberg:

We are in receipt of your letter dated August 2, 2010 with respect to American International Group,
Inc.’s (AIG) Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2010 (First
Quarter Form 10-Q) and our prior letter dated July 28, 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 First Quarter Form 10-Q 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 First Quarter Form 10-Q 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 to facilitate your review.

Item 1. Financial Statements (Unaudited)

Notes to Consolidated Financial Statements

14. Income Taxes, page 79

    1.

    Please refer to prior comment five. Your proposed disclosure does not appear
to adequately describe and quantify the factors that you considered in allocating the
reduction in the valuation allowance between continuing and discontinued operations.
Please revise to explain the sources of income that allowed for the release in the
valuation allowance, amounting to a $216

-1-

    million reduction to continuing operations and a $665 million reduction to
discontinued operations. Also revise to describe the events in the first quarter of
2010 that led to increases in expected gains from your planned divestitures and
explain how these events led to these increases. In addition, revise to reconcile
the $151 million “tax benefit attributable to continuing operations” referred to in
your response to the $91 million in the table on page 79.

AIG Response:

AIG will provide additional disclosures in the Second Quarter Form 10-Q as attached in Exhibit A.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General Insurance, page 90

    2.

    We note your response to our previous comment six and in particular the last
four sentences of the response. Please include a risk factor discussing the
uncertainty regarding the ultimate amount of claims that may be incurred related to the
BP oil leak. Please explain that due to the unsettled nature of the incident and its
effects, additional insureds may be identified and disclose the types of claims that
such additional insureds could ultimately file related to this incident, as discussed
in your response. Also, to the extent that the company provides property, liability or
other insurance coverage to BP, the type and extent of coverage should be discussed in
the risk factor.

AIG Response:

AIG will provide the following additional disclosure in the Outlook section of the Management’s
Discussion and Analysis of Results of Operations and Financial Condition in AIG’s Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2010 (Second Quarter Form 10-Q):

    On April 20, 2010, an explosion on the Deepwater Horizon offshore drilling rig, operating in the
Gulf of Mexico off the coast of Louisiana, resulted in a fire that led to the sinking of the rig
and subsequent oil spill. AIG’s net exposure to property loss on this event was approximately
$23 million; this has been paid. AIG continues to monitor the casualty exposure to Deepwater
Horizon and believes that carried loss reserves at June 30, 2010 are adequate to cover estimated
losses attributable to this event. However, AIG’s claims estimates may change over time, as the
forensic investigation is incomplete, the cleanup is incomplete, and the litigation has only
just begun.

    There may also be other policyholders involved as the matter evolves. The types of claims may
include cleanup costs, both directly incurred and those for which reimbursement to the
government may be required; natural resource damages, including damages to the various fisheries
impacted by the spill; property damage to private property; business interruption to Gulf Coast
businesses; the bodily injury and wrongful death claims of the workers on the rig;

    claims for the destruction of the rig itself and various class actions brought by Gulf Coast
residents on various theories of liability. In addition, it is uncertain how the $20 billion
cleanup fund established by BP may affect claims under Chartis’ policies, as injured parties may
seek compensation from the fund rather than through their own or others’ insurance policies.

**************************************************

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 & Deputy General Counsel

Exhibit A

14. Income Taxes

Effective Tax Rates and Interim Period Tax Assumptions

     AIG’s actual income tax (benefit) expense differs from the statutory U.S. federal amount
computed by applying the federal income tax rate due to the following:

    Three Months Ended June 30, 2010

    Six Months Ended June 30, 2010

    Percent of

    Percent of

    Pre-Tax

    Pre-tax

    Pre-tax

    Income

    Income

    Pre-Tax

    Income

    (dollars in millions)

    (Loss)

    Amount

    (Loss)

    Income

    Amount

    (Loss)

    U.S. federal income tax at statutory rate

    $
    (1,625
    )

    $
    (569
    )

    35.0
    %

    $
    652

    $
    228

    35.0
    %

    Adjustments:

    Tax exempt interest

    (152
    )

    9.4

    (307
    )

    (47.1
    )

    Investments in subsidiaries,
partnerships
and variable interest entities

    (77
    )

    4.7

    (44
    )

    (6.8
    )

    Effect of foreign operations

    (501
    )

    30.8

    (467
    )

    (71.6
    )

    Bargain purchase gain

    —

    —

    (142
    )

    (21.8
    )

    State income taxes

    (31
    )

    1.9

    (117
    )

    (17.9
    )

    Other

    (159
    )

    9.9

    (196
    )

    (30.0
    )

    Effect of discontinued operations

    248

    (15.3
    )

    392

    60.1

    Effect of discontinued operations -
goodwill

    924

    (56.9
    )

    924

    141.7

    State tax valuation allowance -
continuing
operations

    131

    (8.1
    )

    196

    30.1

    Valuation allowance:

    Continuing operations

    539

    (33.2
    )

    (211
    )

    (32.4
    )

    Discontinued operations

    137

    (8.4
    )

    6

    0.9

    Total income tax expense

    (1,625
    )

    490

    (30.1
    )

    652

    262

    40.2

    Amount included in discontinued
operations

    (3,228
    )

    179

    (5.5
    )

    (2,708
    )

    374

    (13.8
    )

    Tax expense (benefit) from continuing
operations

    $
    1,603

    $
    311

    19.4
    %

    $
    3,360

    $
    (112
    )

    (3.3
    )%

     AIG’s income tax expense (benefit) from continuing operations for the three and six months ended June 30, 2010 and 2009 is comprised of the
following:

    Three Months

    Six Months

    Ended June 30,

    Ended June 30,

    (in millions)

    2010

    2009

    2010

    2009

    Current tax expense (benefit)

    $
    198

    $
    1,045

    $
    1,181

    $
    1,381

    Deferred tax expense (benefit)

    113

    (1,460
    )

    (1,293
    )

    (2,665
    )

    Total tax expense (benefit) attributable to continuing operations

    $
    311

    $
    (415
    )

    $
    (112
    )

    $
    (1,284
    )

     AIG is unable to estimate the annual effective tax rate for 2010 due to the significant
variations in the customary relationship between income tax expense and pre-tax accounting income
or loss; consequently, the actual effective tax rate for the interim periods is being utilized.

For the three- and six-month periods ended June 30, 2010, the effective tax rates on pre-tax income
from continuing operations were 19.4 percent and (3.3) percent, respectively. The effective tax
rate for the three-month period ended June 30, 2010 attributable to continuing operations was
primarily related to an increase in the valuation allowance of $539 million as described below,
partially offset by tax exempt interest of $152 million and the effect of foreign operations of
$501 million. The effective tax rate for the six-month period ended
June 30, 2010 was negative

because AIG recorded a net tax benefit on pre-tax income. The benefit reflected in the effective
tax rate attributable to continuing operations was primarily related to the effects of tax exempt
interest income of $307 million, the effect of foreign operations of $467 million, the excess
amount of the Fuji bargain purchase gain for financial reporting over the tax basis which is
essentially permanent in duration of $142 million, and a reduction of $211 million in the valuation
allowance.

     For the three- and six-month periods ended June 30, 2009, the effective tax rates on pre-tax
income (loss) from continuing operations were (249.1) percent and 20.9 percent, respectively. The
effective tax rate for the three-month period ended June 30, 2009 was negative because AIG recorded
a tax benefit on pre-tax income. The benefit reflected in the effective tax rate attributable to
continuing operations for the three-month period ended June 30, 2009 was primarily related to a
decrease in the valuation allowance of $1.6 billion, partially offset by deferred tax expense of
$760 million mainly attributable to the change in the estimated U.S. tax liability with respect to
the potential sale of subsidiaries and an increase of $382 million in the reserve for uncertain tax
positions. The benefit reflected in the effective tax rate attributable to continuing operations
for the six-month period ended June 30, 2009 was primarily related to tax exempt interest of $366
million, partially offset by changes in the estimated U.S. tax liability with respect to the
potential sale of subsidiaries of $287 million and an increase of $406 million in the reserve for
uncertain tax positions.

     The following table provides a rollforward of the net deferred tax asset from December 31, 2009 to June 30, 2010:

    (in millions)

    Net Deferred

    Tax Asset

    Before

    Valuation

    Valuation

    Net Deferred

    Allowance

    Allowance

    Tax Asset

    Net deferred tax asset at December 31, 2009

    $
    29,589

    $
    (23,705
    )

    $
    5,884

    Benefit (provision) — continuing operations

    1,277

    16

    1,293

    Benefit (provision) — discontinued operations

    (606
    )

    (6
    )

    (612
    )

    Deferred taxes on components of shareholders’ equity

    (2,143
    )

    (439
    )

    (2,582
    )

    Deferred taxes of acquired entities

    525

    (640
    )

    (115
    )

    Deferred taxes of deconsolidated entities

    (131
    )

    —

    (131
    )

    Net deferred tax liabilities reclassified as held for sale

    582

    1,224

    1,806

    Net deferred tax asset at June 30, 2010

    $
    29,093

    $
    (23,550
    )

    $
    5,543

               Assessment of Deferred Tax Assets Valuation Allowances

               AIG evaluates the recoverability of the deferred tax asset and establishes a valuation
allowance, if necessary, to reduce the deferred tax asset to an amount that is more likely than not
to be realized (a likelihood of more than 50 percent). Significant judgment is required to
determine whether a valuation allowance is necessary and the amount of such valuation allowance, if
appropriate.

               When assessing the realization of its deferred tax asset at June 30, 2010, AIG considered all
available evidence, including:

    •

    the nature, frequency, and severity of cumulative financial reporting losses
in recent years;

    •

    certain transactions, including the recognition of the gains on asset sales,
and the planned divestitures of AIA and ALICO;

    •

    the carryforward periods for the net operating and capital loss and foreign
tax credit carryforwards; and

    •

    tax planning strategies that would be implemented, if necessary, to protect
against the loss of the deferred tax asset.

               Estimates of future gains generated from specific transactions and tax planning strategies
discussed below could change in the near term, perhaps materially, which may require AIG to adjust
its valuation allowance. Such adjustment, either positive or negative, could be material to AIG’s
consolidated financial condition or its results of operations for an individual reporting period.

               At June 30, 2010 and December 31, 2009, AIG’s U.S. consolidated income tax group had net
deferred tax assets after valuation allowances of $7.1 billion and $8.6 billion, respectively.
Realization of AIG’s net deferred tax asset depends upon its ability to generate gains on asset
sales and the divestitures of AIA and ALICO, and tax planning strategies that would be implemented,
if necessary, to protect against the loss of the deferred tax asset, but does not depend on
projected future operating income of the U.S. consolidated income tax group. At June 30, 2010 and
December 31, 2009, AIG’s U.S. consolidated income tax group had deferred tax asset valuation
allowances of $20.8 billion and $20.4 billion, respectively.

               For the six months ended June 30, 2010, AIG recorded a reduction in the U.S. consolidated
income tax group deferred tax asset valuation allowance of $211 million primarily attributable to
a reduction in the deferred tax asset valuation allowance of $910 million related to an increase in
the expected gains from the planned divestitures of AIA and ALICO, a reduction in the deferred tax
asset valuation allowance of $707 million related to the total other comprehensive income movement
primarily attributable to unrealized appreciation in the available for sale securities portfolio,
an increase in the deferred tax asset valuation allowance of $855 million related to the estimated
U.S. tax liability with respect to the investment in subsidiaries associated with the
transfer of goodwill to ALICO, and an increase in the deferred tax asset valuation allowance of
$589 million related to a reduction in tax planning strategies.

               When estimating the fair values of the subsidiaries to be divested, AIG considered, among
other information, valuations prepared for various purposes. During the first quarter of 2010, AIG
increased its estimate of the AIA and ALICO expected divestiture proceeds following an updated
assessment of the range of valuation estimates that considered, among other factors, the expected
proceeds from the sales to Prudential plc and MetLife Inc. announced in that quarter, which gave
rise to the $910 million reduction in the valuation allowance discussed above. As discussed in Note
1 herein, on June 2, 2010, AIG and Prudential plc terminated the AIA transaction. Because AIG is
continuing with its plans to divest AIA, this termination did not affect the amount of deferred tax
asset expected to be realized in connection with the planned divestiture of AIA. This determination
was based on an updated assessment of the expected gain and considered a range of possible outcomes
associated with alternative divestiture strategies, including an initial public of