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(AIG Letterhead)

September 30, 2011

VIA EDGAR CORRESPONDENCE

Mr. Jeffrey 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.

Form 10-Q for the Quarterly Period Ended June 30, 2011

Filed August 4, 2011

File No. 001-08787

Dear Mr. Riedler:

     We are in receipt of your letter dated September 1, 2011 with respect to American
International Group, Inc.’s (“AIG”) Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2011 (“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 Securities and Exchange Commission (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.

* * * * *

Notes To Consolidated Financial Statements

6. Fair Value Measurements

Embedded Policy Derivatives, page 26

    1.

    With respect to your variable annuity and equity-indexed annuity and life contracts, it
appears that you are accounting for certain future policy benefit guarantees as bifurcated
embedded derivatives recorded at fair value with changes in fair value each period
recognized in earnings. These include at a minimum the following guarantees: GMWB and
GMAV. Please provide us a detailed description of these products which identifies what

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    Securities and Exchange Commission

    features within each led you to conclude that they were bifurcated embedded derivatives.
Cite the specific authoritative literature you used to support your conclusions, including
your consideration of the guidance in ASC 815-10-15 paragraphs 52-53 and ASC 815-15-55
paragraphs 57-61 in arriving at your conclusions for the accounting method applied for each
product.

AIG Response

     We confirm the Staff’s observation that certain policy benefit guarantees in AIG’s
non-traditional long-duration contracts have certain features that are accounted for as bifurcated
embedded derivatives recorded at fair value with changes in fair value recognized in earnings.
This is based on our analysis, as described below, that certain features meet the requirements for
bifurcation under Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging
(“ASC 815”). Specifically, our response includes a description of the non-traditional
long-duration contracts and related policy benefit guarantees along with a discussion of our
assessment regarding why these policy benefit guarantees meet the definition of a derivative
requiring bifurcation under ASC 815. The following table summarizes AIG’s non-traditional
long-duration contracts with these features as of June 30, 2011 (amounts in millions):

    Embedded

    Total Contract

    Derivative

    Product type

    Value

    Fair Value

    Nature of the Embedded Derivative

    GMAV — guaranteed
minimum
accumulation value
with a ten-year
waiting period

    $
    1,210

    $
    40

    A written option that guarantees a
minimum accumulation value

GMWB 1
 — guaranteed
minimum withdrawal
benefit

    625

    138

    Series of written options that
guarantee withdrawals from the
highest anniversary value within
a specific period

GMWB 2
 — life-time
guaranteed
withdrawal benefit

    12,311

    Series of written options that
guarantees withdrawals from the
highest anniversary value for
life

    Equity-indexed

annuity

    1,025

    120

    Equity-indexed (written) option
under the
point-to-point1
design and forward-starting
options under the periodic
ratchet design

    Equity-indexed

universal life

    524

    108

    Equity-indexed (written) option

    Total

    $
    15,695

    $
    406

    1

    The point-to-point and periodic ratchet
designs are described in ASC 815-15-55-63a and b.

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    Securities and Exchange Commission

    *

    See Note 10 — Derivatives and Hedge Accounting on page 55 of the Form 10-Q for
total embedded derivatives recorded in AIG’s financial statements, of which this amount represents
a subset.

Guaranteed Minimum Account Value (“GMAV”) and Guaranteed Minimum Withdrawal Benefits (“GMWB”)
Contracts

     The variable annuity host contracts for both GMAV and GMWB are held in separate accounts and
are accounted for as investment contracts under ASC 944-20, Financial
Services—Insurance—Insurance Activities (“ASC 944-20”).

     GMAV. Variable annuity contracts with a GMAV, a living benefit feature, are non-traditional
variable annuity contracts under which AIG guarantees, at the end of a ten-year period, that the
contract value will at least equal the amount of eligible premiums (deposits) invested during the
first 90 days of the contract, adjusted for any subsequent withdrawals. This guarantee is provided
for a fee, calculated as a percentage of the contract value less
ineligible premiums, and deducted
quarterly from the contract value. AIG bears the risk that under-performance of the financial
markets could result in GMAV benefits being greater than the underlying contract value and that the
fees collected under the contract are insufficient to cover the costs of the benefits to be
provided. At the end of the ten-year period, the contract holder is entitled to a return of the
eligible premiums adjusted for withdrawals if that amount is greater than the contract value (which
fluctuates based on the investment performance of the fixed accounts/underlying
subaccounts selected by the contract holder). If entitled to the GMAV guarantee, an adjustment equal to the difference between the
contract value and the adjusted eligible premiums is added to the contract. If the contract is
surrendered before the end of the ten-year period, the guarantee is not payable and the contract
holder is entitled to the contract value at the time of surrender (which could be above or below
the eligible premiums). The GMAV guarantee does not apply on death or life contingent events.
However, these variable annuity contracts provide guaranteed minimum death benefit features
(“GMDB”), which are accounted for under ASC 944-20.

     The GMAV feature is embedded within a variable annuity and, at the end of the ten-year period,
the embedded derivative feature ceases to exist because the guarantee ends (either with or without
an adjustment made to the contract).

     GMWB. Under a GMWB, also a living benefit feature, AIG provides, regardless of the investment
performance of the selected fixed accounts/underlying subaccounts, a guaranteed minimum annual
withdrawal stream either for a specified period of time or for life, depending on the feature
elected at contract issue. This guarantee is provided for a fee, calculated as a percentage of the
benefit base, and deducted quarterly from the contract value. The amount of the guaranteed withdrawal
stream is a percentage of a benefit base defined by the elected feature which generally can include
eligible premiums, and/or eligible premiums increased by an income credit, and/or the highest
contract anniversary value. The initial benefit base varies among features, and is generally
eligible premiums (deposits) received during a specified period of time. The GMWB guarantee offers
in most cases lifetime withdrawals up to a specified percentage of the benefit base regardless of
contract value (which fluctuates based on the investment performance of the selected fixed
accounts/underlying subaccounts). Therefore, there is not a clearly-defined end to the
accumulation phase and no clearly-defined duration of the payout phase of the feature. AIG bears
the risk that under-performance of the financial markets and/or greater-than-expected longevity
could result in GMWB benefits being greater than the underlying contract value and that the fees
collected (which are paid quarterly as long as the GMWB feature is active) are insufficient to
cover the cost of the benefits to be provided. The GMWB guarantee does not apply on death or life
contingent events. However, these variable annuity host contracts provide GMDB features, which are
accounted for under ASC 944-20.

     Two variations of GMWB contracts are summarized as follows:

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    Securities and Exchange Commission

    •

    GMWB 1. (No lifetime guarantee; no highest contract anniversary value step-ups). The
benefit base, which is initially equal to the amount of eligible premiums invested during the
first 90 days of the contract is guaranteed to increase by a
specified percentage if withdrawals commence after the specified
waiting period and is
adjusted for any subsequent withdrawals. The contract
holder can withdraw up to ten percent of the benefit base per year until the eligible premiums
plus the increase is depleted. When the contract holder exhausts the benefit base, the
embedded derivative ceases to exist because there is either no remaining contract value (i.e.,
withdrawals brought the contract value to zero) or there is remaining contract value but no
guarantee is payable.

    •

    GMWB 2. (Generally offers lifetime guarantee, highest contract anniversary value step-ups
and/or income credits). The benefit base is initially equal to the amount of eligible
premiums invested during a specified period of time depending on the feature
elected. The benefit base is generally guaranteed to increase based on the greater of
positive investment performance of the selected fixed accounts/underlying subaccounts or, for
some features, the addition of income credits to the benefit base for a specified period of
time. Most of the features allow for withdrawals for life. Therefore, embedded derivatives
continue to exist. Certain features allow for withdrawals for a specified period of time.
Therefore, when the benefit base is exhausted, the embedded derivative ceases to exist.
Certain variations of these features allow for lifetime benefits for the contract holder and
spouse (i.e., the lifetime component will continue to exist until both contract holders die).

     In the variations described above, there is significant market risk as long as the GMWB
feature is in effect because the contract value fluctuates based on the investment performance of
the selected fixed accounts/underlying subaccounts. The GMWB guarantee does not become a net cost
to AIG until actual guaranteed payments that are made to the contract
holder under the guarantee, reduces the contract value to zero. However, based on the terms of the guarantee, AIG is obligated to
make guaranteed payments based on the benefit base (either lifetime or for a specified period of
time depending on the elected feature). When the contract value is zero, the embedded derivative
ceases to exist. AIG is obligated to provide the remaining amount owed under the guarantee (i.e.,
either lifetime or for a specified period of time), and the amount of the guaranteed payment is
locked in.

     AIG Analysis. AIG evaluated the criteria under ASC 815-15-25-1 to determine whether each of
the GMAV or GMWB embedded derivatives described above is required to be bifurcated from the
variable annuity host contract and accounted for at fair value with changes in fair value
recognized in income.

    •

    Criterion 1 — Feature is Not Clearly and Closely Related to its Host:

    o

    The economic characteristics and risks of the GMAV feature are a minimum guarantee of
account value, a non-traditional feature as discussed under ASC 944-20-05-24. ASC
944-815-25-5 states that “[n]ontraditional features, such as a guaranteed investment return
through a minimum accumulation benefit or a guaranteed account value floor, would be
considered embedded derivatives subject to the requirements of Subtopic 815-15. The
economic characteristics and risks of the investment guarantee and those of the traditional
variable annuity contract typically would not be considered to be clearly and closely
related.” Therefore, AIG concluded that GMAV is not considered to be clearly and closely
related to the variable annuity host contract (accounted for under ASU 944-20 as investment
contracts).

    o

    The economic characteristics and risks of the guaranteed withdrawals of the GMWB, which
provides a payment alternative, as discussed under ASC 815-15-55-55d, the value of which is
driven by investment performance of the selected fixed accounts/underlying subaccounts of
the

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    Securities and Exchange Commission

    account holder’s separate account, are not considered clearly and closely related to the
variable annuity host contracts (accounted for under ASU 944-20 as investment contracts).

    •

    Criterion 2 — Hybrid is Not Remeasured at Fair Value:

    o

    The hybrid GMAV and GMWB variable annuity contracts (i.e., the host contract and the
investment component) are accounted for under ASC 944-20 as investment contracts and are
not remeasured at fair value.

    •

    Criterion 3 — Separate Instrument Criterion:

    o

    In evaluating this criterion, AIG considered whether both the GMAV and GMWB features
meet all of the criteria of ASC 815-10-15-83 as follows:

    a.

    Underlying, Notional Amount or Payment Provisions:

    o

    The underlyings for GMAV and GMWB contracts are primarily the
performance of pools of equity and other financial instruments selected by the
contract holder. The notional amount is the deposit invested during a specified
time period.

    b.

    Initial Net Investment:

    o

    Fees paid for contracts with the GMAV and GMWB are smaller than would
be required for other types of contracts with a similar response to changes in
market factors. These fees are determined similarly to how a premium on a written
option or a series of written options is priced on the same notional amount.

    c.

    Net Settlement:

    o

    Under the GMAV feature, contract holders may elect an immediate payment
of the account value beginning on the tenth anniversary of the inception of the
contract. Therefore, contract holders may realize the value of the guarantee
feature in cash by electing to withdraw the entire guaranteed account balance. AIG
believes this provides the contract holder with the right to net settle the
contract under ASC 815-10-15-100 because neither party is required to deliver an
asset that is associated with the underlying (i.e., the performance of contract
holder-directed investments). This feature represents a floor consistent with the
guidance in ASC 815-15-55-59, because the “contract holder is able to withdraw all
or a portion of the guaranteed account balance during the payout (annuitization)
period . . . this is equivalent to net settlement, and the guarantee (or the
portion of the guarantee that is withdrawable, if applicable) is an embedded
derivative . . . .”

    o

    Under the GMWB feature, the contract holder is guaranteed an annual
withdrawal stream either for a specified period of time or for life, regardless of
investment performance, depending on the specific product purchased. ASC
815-15-55-59 states that “if the contract holder is able to withdraw all or a
portion of the guaranteed account balance during the payout (annuitization) period,
or the payout (annuitization) period is set to an unrealistically short period such
as one year, this is equivalent to net settlement, and the guarantee (or the
portion of the guarantee that is withdrawable, if