SecProbe.io

CORRESP
1
filename1.htm

corresp

[AIG Letterhead]

December 2, 2010

Mr. Jeffrey P. Riedler

Assistant Director

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Mail Stop 4720

Washington, D.C. 20549

    Re:

    American International Group, Inc.

Preliminary Information Statement on Schedule 14C

Filed on November 16, 2010

File No. 001-8787

Dear Mr. Riedler:

We are in receipt of your letter dated November 29, 2010 with respect to American International
Group, Inc.’s (AIG) Preliminary Information Statement on Schedule 14C (Information Statement) filed
with the Securities and Exchange Commission (Commission) on November 16, 2010. This letter sets
forth AIG’s response to the Staff’s comments contained in your letter.

AIG acknowledges that the adequacy and accuracy of the disclosure in the Information Statement 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 Information
Statement 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.

General

    1.

    Section 11 of the Certificate of Designations of the Series C Perpetual,
Convertible, Participating Preferred Stock appears to imply that conversion of the
Series C Preferred Stock into shares of common stock could not occur until the
effective date of a “Charter Amendment” (as that term is defined in the Certificate of
Designations). Please provide us with an analysis supporting your apparent conclusion
that you may proceed with the issuance of shares of common stock in exchange for the
Series C Preferred Stock notwithstanding the fact that the Charter Amendment is not yet
effective. Alternatively, please advise us as to when you will be soliciting common
shareholders, other than the Trust, to obtain approval of the Charter Amendment.

December
2, 2010

AIG Response:

    Section 11 of the Certificate of Designations of AIG’s Series C Perpetual, Convertible,
Participating Preferred Stock, par value $5.00 per share (Series C Preferred Stock), is not
applicable to this proposed transaction. The outstanding shares of the Series C Preferred Stock are
not being converted into shares of AIG common stock, par value $2.50 per share (AIG Common Stock),
in accordance with its Certificate of Designations. Rather, all the outstanding shares of the
Series C Preferred Stock are being exchanged for shares of AIG Common Stock pursuant to a
contractual agreement between the holder of the Series C Preferred Stock and AIG. As a result of
the reverse stock split of AIG Common Stock in June 2009, AIG has a sufficient number of authorized
shares of AIG Common Stock available to conduct the proposed exchange.

    2.

    Please revise your preliminary information statement to provide the information
required by Items 12(b), 12(d) and 12(f) of Schedule 14A. Please note that regarding
the requirements of Item 12(f) of Schedule 14A, among other required disclosure, we
believe that in this instance you should provide both audited historical financial
statements and the pro forma financial statements that you provided in a Form 8-K filed
November 15, 2010.

AIG Response:

    With respect to Item 12(b), we note that as described in the Information Statement,
the shares of AIG Common Stock and Series G Cumulative Mandatory Convertible
Preferred Stock are being issued (the Issuance), as applicable, in exchange for all
of the outstanding shares of the Series C Preferred Stock, AIG’s Series E Fixed Rate
Non-Cumulative Perpetual Preferred Stock, par value $5.00 per share (Series E
Preferred Stock), and AIG’s Series F Fixed Rate Non-Cumulative Perpetual Preferred
Stock, par value $5.00 per share (Series F Preferred Stock, collectively with the
Series C Preferred Stock and the Series E Preferred Stock, the Preferred Stock).
The holders of AIG Common Stock are not exchanging their shares of AIG Common Stock
and their holdings are unaffected by the Issuance. Therefore, the comparison
between the Preferred Stock and AIG Common Stock is not relevant to the holders of
AIG Common Stock for the purpose of the Information Statement, and accordingly AIG
believes such information is not required to be included in the Information
Statement. Further, a description in the Information Statement of the securities to
be issued in the exchange (i.e., the AIG Common Stock) would be redundant as the
recipients of the Information Statement are already holders of AIG Common Stock.

    Item 12(d) of Schedule 14A is not applicable in the current instance because there
have been no arrears in dividends in respect to the Preferred Stock. The Series E
Preferred Stock and the Series F Preferred Stock are non-cumulative and the Series C
Preferred Stock is entitled to dividends only when, as and if declared by the Board
of Directors of AIG (Board).

-2-

December 2, 2010

    The information required by Item 12(f) of Schedule 14A is such information as is
required by Item 13(a) of Schedule 14A. The first sentence of Item 13(a) states
that the information called for by Item 13(a) should be furnished “[i]f action is to
be taken with respect to any matter specified in” Item 12. In this case, no action
is to be taken by the holders of AIG Common Stock, and therefore the information
called for by Item 13(a) need not be furnished to such holders. Furthermore,
Instruction 1 to Item 13 makes clear that any information “not material for the
exercise of prudent judgment in regards to the matter to be acted upon may be
omitted.” None of the information covered by Item 13(a) is material to the holders
of AIG Common Stock for the purpose of the Information Statement because such
holders are not being asked to take any action or exercise judgment in connection
with the Issuance, and none of such information is relevant or necessary to inform
holders of AIG Common Stock of the action taken by the AIG Credit Facility Trust
(Trust) that is the subject of the Information Statement.

The Recapitalization, page 3

Background, page 3

    3.

    Please revise your disclosure to explicitly state that the fairness opinions
rendered by Citigroup and BofA Merrill Lynch do not opine as to the fairness of the
exchange of the Series C Preferred Stock for shares of AIG common stock. Please also
disclose why the Government Repayment Committee did not seek such an opinion.

AIG Response:

    AIG will revise the disclosure in the Information Statement to state explicitly that
the fairness opinions rendered by Citigroup Global Markets Inc. (Citigroup) and
Merrill Lynch, Pierce, Fenner & Smith Incorporated (BofA Merrill Lynch) do not opine
as to the fairness of the exchange of the Series C Preferred Stock for shares of AIG
Common Stock.

    The number of shares of AIG Common Stock received by the Trust in exchange for the
Series C Preferred Stock was determined based upon the number of shares of AIG
Common Stock the Trust would otherwise have been entitled to if it had converted the
Series C Preferred Stock in accordance with its terms. In this situation, because
the consideration to be received was derived from a previously agreed formula, the
Government Repayment Committee did not deem it necessary to receive a fairness
opinion regarding such exchange. The disclosure in the Information Statement will
be revised accordingly.

Effective Date of Issuance, page 6

    4.

    We note your reference to Rule l4c-2 under the Exchange Act. However, please
note that Item I of Schedule l4C provides that Notes A, C, D and E to Schedule 14A
apply to this document. Accordingly, if information is

-3-

December
2, 2010

    incorporated by reference into the Schedule 14C, then Note D to Schedule 14A
requires, among other things, that the information statement be sent to security
holders at least 20 business days prior to the date of the corporate action. To the
extent you incorporate information by reference in response to these comments,
please revise your disclosure to refer to the applicable 20-business-day period.

AIG Response:

    AIG is not incorporating any information by reference into the Information
Statement.

Fairness Opinion by Citigroup

Fairness Opinion by BofA Merrill Lynch

Letter by Rothschild

    5.

    We note the limitation on reliance by shareholders in the two fairness opinions
and the letter by Rothschild (third to last paragraph in the Citigroup opinion and
second to last paragraph in the BofA Merrill Lynch opinion and the Rothschild letter).
Please delete the language limiting reliance by shareholders. Alternatively, disclose
the basis for the belief that shareholders cannot rely upon the opinion to support any
claims against the financial advisors arising under applicable state law (for example,
the inclusion of an express disclaimer in the financial advisors’ engagement letter).
Describe any applicable state-law authority regarding the availability of such a
potential defense. In the absence of applicable state-law authority, disclose that the
availability of such a defense will be resolved by a court of competent jurisdiction.
Also disclose that resolution of the question of the availability of such a defense
will have no effect on the rights and responsibilities of the board of directors under
applicable state law. Further disclose that the availability of such a state-law
defense to the financial advisors would have no effect on the rights and
responsibilities of either the financial advisors or the board of directors under the
federal securities laws.

AIG Response:

    Each of the opinions of BofA Merrill Lynch and Citigroup and the letter of
Rothschild attached to the Information Statement as Appendices C-1, C-2 and D,
respectively, has been revised in response to the Staff’s comment. Attached hereto
as Exhibits C-1, C-2 and D, respectively, are marked versions of the opinions of
BofA Merrill Lynch and Citigroup and the letter of Rothschild to show the opinions
and letter in the revised forms that will be included as Appendices C-1, C-2 and D,
respectively, to the Information Statement.

    6.

    Please disclose that each of Citigroup, BofA Merrill Lynch and Rothschild has
consented to the use of their respective opinions/letter in the information statement.

-4-

December 2, 2010

AIG Response:

    AIG will revise the disclosure in the Information Statement to make clear that each
of Citigroup, BofA Merrill Lynch and Rothschild has consented to the inclusion of
its respective opinion/letter as an exhibit to the Information Statement.

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

-5-

    Exhibit C-1

    Merrill
    Lynch, Pierce, Fenner & Smith Incorporated

    Fairness Opinion

    C-1-1

    [BOFA
    MERRILL LYNCH LETTERHEAD]

    CONFIDENTIAL

    September 29, 2010

    Board of Directors

    American International Group, Inc.

    70 Pine Street

    New York, New York 10270

    Members of the Board of Directors:

    We understand that American International Group, Inc.
    (“AIG”, the “Company” or “you”)
    proposes to enter into a transaction among AIG, the Federal
    Reserve Bank of New York (“FRBNY”), the United States
    Department of the Treasury (“UST”) and the AIG Credit
    Facility Trust (the “Trust”), pursuant to which, among
    other things: (a) AIG will exchange approximately
    924.5 million shares of common stock, par value $2.50 per
    share, of AIG (“AIG Common Stock”) for
    $41.6 billion in aggregate stated amount of AIG’s
    Series E Fixed Rate Non-Cumulative Perpetual Preferred
    Stock, par value $5.00 per share (“Series E Preferred
    Stock”), currently held by UST; (b) AIG will exchange
    approximately 167.6 million shares of AIG Common Stock for
    $7.5 billion in aggregate stated amount of AIG’s
    Series F Fixed Rate Non-Cumulative Perpetual Preferred
    Stock, par value $5.00 per share (“Series F Preferred
    Stock”), currently held by UST; and (c) AIG will issue
    to the holders of AIG Common Stock prior to the Closing, by
    means of a dividend distribution,
    10-year
    warrants to purchase up to 75 million shares of AIG Common
    Stock in the aggregate at an exercise price of $45.00 per share
    (the “Warrants”). We refer to the transactions
    described in clauses (a), (b) and (c) of the
    immediately preceding sentence collectively as the
    “Exchange Transactions”. The terms and conditions of
    the Exchange Transactions are more fully set forth in the term
    sheet agreed by and between AIG, FRBNY, UST and the Trust, which
    is attached hereto as Exhibit A and which the Company has
    informed us will be attached to an agreement in principle by and
    between the same parties to be entered into on
    September 30, 2010 (the “Term Sheet”).

    You have requested our opinion as to the fairness, from a
    financial point of view, to the holders of AIG Common Stock
    (other than UST) of the consideration to be paid by AIG in the
    Exchange Transactions, taken as a whole.

    We further understand that the Exchange Transactions are part of
    a series of integrated transactions collectively referred to as
    the Recapitalization (and as further described in the Term
    Sheet) pursuant to which, among other things, at the Closing (as
    defined in the Term Sheet): (a) AIG will repay in cash (the
    “FRBNY Repayment”) all of the remaining principal,
    accrued and unpaid interest, fees and other amounts owing, and
    terminate all commitments, under the Credit Agreement dated as
    of September 22, 2008 (the “FRBNY Credit
    Facility”) between AIG and the FRBNY, to be funded solely
    from: (i) secured non-recourse loans to AIG from AIA Aurora
    LLC and ALICO Holdings LLC of the net cash proceeds from the
    initial public offering of American International Assurance
    Company, Limited (“AIA”) and the sale of American Life
    Insurance Company (“ALICO”), respectively; and
    (ii) cash generated by AIG and its subsidiaries;
    (b) AIG and the UST will amend and restate the SPA (as
    defined in the Term Sheet) relating to the Series F
    Preferred Stock to convert (the “Series F/G Drawdown
    Exchange”) a portion, not to exceed $2 billion, of the
    amount of Series F Preferred Stock that AIG can require UST
    to subscribe for and purchase (the “Series F Drawdown
    Right”), into a right of AIG to require UST to subscribe
    for and purchase an equivalent amount (the “Series G
    Designated Amount”) of a new series of preferred stock of
    AIG to be designated as “Series G Cumulative Mandatory
    Convertible Preferred Stock” (the “Series G
    Preferred Stock”) for general corporate purposes (the
    “Series G Drawdown Right”); (c) pursuant to
    an exercise of the Series F Drawdown Right, AIG will
    require UST to subscribe for and purchase Series F
    Preferred Stock (the “Series F Drawdown Shares”)
    in an aggregate stated amount (the “Series F Closing
    Drawdown Amount”) equal to the lesser of (i) the
    remaining balance undrawn pursuant to the Series F Drawdown
    Right (less the Series G Designated Amount) and
    (ii) the aggregate liquidation preference of the preferred
    interests in AIA Aurora LLC and ALICO Holdings LLC outstanding
    at the Closing (the “AIA Preferred Interests” and the
    “ALICO Preferred Interests”, respectively, and
    collectively, the “AIA/ALICO Preferred Interests”);
    (d) AIG will purchase from the FRBNY the
    AIA/ALICO

    C-1-2

    Board of Directors

    American International Group, In