SecProbe.io

CORRESP
1
filename1.htm

corresp

[AIG Letterhead]

November 19, 2010

Mr. Jim P. Rosenberg

Senior Assistant Chief Accountant

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 September 30, 2010

File No. 001-8787

Dear Mr. Rosenberg:

     We are in receipt of your letter dated November 17, 2010 with respect to American
International Group, Inc.’s (AIG) Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 3010 (Form 10-Q). 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-Q 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 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 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General:

    1.

    Please provide proposed draft disclosure that includes the information provided in your
responses to prior comments one and three.

AIG Response:

AIG intends to provide disclosure similar to the following in its Annual Report on Form 10-K for
the year ended December 31, 2010 (Form 10-K):

    AGF Sale

    On August 10, 2010, AIG entered into a definitive agreement to sell an 80 percent economic
interest (84 percent voting interest) of AGF for $125 million. The transaction closed on
[November •, 2010]. Because AIG’s voting ownership interest in AGF was reduced to
approximately 16 percent, and AIG does not otherwise have continuing significant involvement
with or significant continuing cash flows from AGF, AGF has been classified as held for sale
and as a discontinued operation at and for the year ended December 31, 2010. As a result of
this transaction, AIG recorded a pre-tax loss of approximately $• billion in 2010.

    The components of the $• billion charge consisted of the difference between (i) the sum of
the fair value of the agreed consideration and AIG’s retained 20 percent economic interest
and (ii) the net book value of the assets. Prior to the agreed sale, AGF’s business and
underlying assets were subject to periodic impairment assessments under a held-for-use model
and did not meet the criteria for held-for-sale accounting. The large majority of AGF’s
assets are consumer finance and mortgage loans held for investment and thus are not carried
at fair value. AIG was motivated in part to proceed with the disposal
of AGF at the agreed upon purchase price due to the
significant reduction in AIG’s consolidated liabilities that would result from the sale.

Goodwill Impairment:

     AIG refers the Staff to the discussion under the caption “Goodwill Impairment” beginning on
page 176 of the Form 10-Q. AIG will include a discussion similar to the following in place of
the sixth and seventh paragraphs under that caption in its Form 10-K.

     The fair value of ALICO used to test goodwill for impairment at March 31, 2010 was
determined by AIG by considering, among other information, a third-party valuation at March 31,
2010 of the announced proceeds from the sale of ALICO to MetLife. At June 30, 2010, AIG
estimated the fair value of ALICO and determined it to be less than its carrying value.
Accordingly, AIG performed the second step of the goodwill impairment analysis and estimated the
implied fair value of the goodwill allocated to ALICO by measuring the excess of the estimated
fair value of ALICO over the amounts that would be assigned to ALICO’s assets and liabilities in
a hypothetical business combination. Based on the results of the goodwill impairment test, AIG
determined that all of the goodwill allocated to ALICO should be impaired and, accordingly,
recognized a goodwill impairment charge of $3.3 billion in the second quarter of 2010.

     During
the second quarter of 2010, there were no events that warranted an update of the fair value of
AIG Star and AIG Edison at June 30, 2010. As a result of AIG Star and AIG Edison earnings during
the second quarter, the book value of the business increased such that the March 31, 2010 fair
value of AIG Star and AIG Edison exceeded its June 30, 2010 book value by 30 percent.

     On September 30, 2010, AIG announced a definitive agreement to sell AIG Star and AIG Edison
for total consideration of $4.8 billion, less the principal balance of certain outstanding

2

debt owed by these companies as
 of the closing date. See Recapitalization for a description of the expected use of
the cash proceeds from the sale. In connection with the announced sale
and management’s determination
that the AIG Star and AIG Edison reporting unit (Reporting Unit) met the held-for-sale criteria, management tested the $1.3 billion of
goodwill of the Reporting Unit for impairment. At September 30, 2010, AIG estimated the fair
value of the Reporting Unit based on the consideration to be received pursuant to the agreement
with Prudential Financial Inc. and, together with AIG Star and AIG Edison earnings and higher
asset values recognized during the quarter, determined the fair value to be less than its
carrying value. Accordingly, AIG performed the second step of the goodwill impairment analysis
and estimated the implied fair value of the goodwill allocated to the Reporting Unit by
measuring the excess of the estimated fair value of the Reporting Unit over the amounts that
would be assigned to the Reporting Unit’s assets and liabilities in a hypothetical business
combination. Based on the results of the goodwill impairment test, AIG determined that all of
the goodwill allocated to the Reporting Unit should be impaired and, accordingly, recognized a
goodwill impairment charge of $1.3 billion in the third quarter of 2010.

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Recapitalization, page 12

    2.

    You appear to indicate that International Lease Finance Corporation (ILFC) will
be sold prior to Closing of the Recapitalization Plan. In order to show the
significance of any potential sale transaction, please disclose the total assets and
liabilities for ILFC. Also, tell us your basis for not classifying this business as
held for sale at September 30, 2010.

AIG Response:

As discussed with the Staff, notwithstanding the Staff’s interpretation of AIG’s disclosure on page
13 of the Form 10-Q, at September 30, 2010 and at the present time, AIG is not attempting to sell
ILFC, and therefore ILFC was not classified as held-for-sale at September 30, 2010.
AIG’s disclosures in the Form 10-K will reflect the
circumstances at that time.

          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 and Deputy General Counsel

3