<PAGE>   1
 
                                  SCHEDULE 14A
                                 (RULE 14A-101)

                    INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION

          PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
                 EXCHANGE ACT OF 1934 (AMENDMENT NO.  )
 
     Filed by the registrant /X/
     Filed by a party other than the registrant / /

     Check the appropriate box:
     / / Preliminary proxy statement
     /X/ Definitive proxy statement
     / / Definitive additional materials
     / / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
 
                      AMERICAN INTERNATIONAL GROUP, INC.
- --------------------------------------------------------------------------------
                (Name of Registrant as Specified in Its Charter)
 
                      AMERICAN INTERNATIONAL GROUP, INC.
- --------------------------------------------------------------------------------
                   (Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):
     /X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
     / / $500 per each party to the controversy pursuant to Exchange Act Rule
         14a-6(i)(3).
     / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
         0-11.
 
     (1) Title of each class of securities to which transaction applies:
 
- --------------------------------------------------------------------------------

     (2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------
     (3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/1

- --------------------------------------------------------------------------------
     (4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------
     / / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
 
     (1) Amount previously paid:
 
- --------------------------------------------------------------------------------
     (2) Form, schedule or registration statement no.:
 
- --------------------------------------------------------------------------------
     (3) Filing party:
 
- --------------------------------------------------------------------------------
     (4) Date filed:
 
- --------------------------------------------------------------------------------
 
- ---------------
  /1 Set forth the amount on which the filing fee is calculated and state how it
was determined.

<PAGE>   2
 
                       AMERICAN INTERNATIONAL GROUP, INC.
                      70 Pine Street, New York, N.Y. 10270
 

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                            TO BE HELD MAY 16, 1994
 
                                                                  March 30, 1994
 
To the Shareholders of
  AMERICAN INTERNATIONAL GROUP, INC.:
 
     The Annual Meeting of Shareholders of AMERICAN INTERNATIONAL GROUP, INC.
("AIG") will be held at the offices of AIG at 72 Wall Street, Eighth Floor, New
York, New York, on Monday, May 16, 1994, at 11:00 o'clock A.M., for the
following purposes:
 
     1. To elect 15 directors of AIG to hold office until the next annual
        election and until their successors are elected and qualified;
 
     2. To act upon a proposal to approve a performance-based compensation plan
        for the chief executive officer;
 
     3. To act upon a proposal to amend the 1991 Employee Stock Option Plan;
 
     4. To act upon a proposal to select Coopers & Lybrand as independent
        accountants for 1994;
 
     5. To act upon a shareholder proposal requesting AIG to distribute certain
        statistical data on employees;
 
     6. To act upon a shareholder proposal requesting AIG to initiate a study
        relating to investment in tobacco companies; and
 
     7. To transact any other business that may properly come before the
        meeting.
 
     Shareholders of record at the close of business on March 25, 1994 will be
entitled to vote at the meeting. During the ten days prior to the meeting, a
list of the shareholders will be available for inspection at the offices of AIG
at 70 Pine Street, New York, New York.
 
                                                By Order of the Board of
                                                Directors
 
                                                  KATHLEEN E. SHANNON
                                                                       Secretary
- --------------------------------------------------------------------------------
 
    If you cannot be present at the meeting, please sign the enclosed Proxy and
return it at once in the accompanying postage
prepaid envelope.

<PAGE>   3
 
                       AMERICAN INTERNATIONAL GROUP, INC.
                      70 Pine Street, New York, N.Y. 10270
 
 
                               PROXY STATEMENT
                                                                  March 30, 1994
 
     The enclosed proxy is solicited on behalf of the Board of Directors for use
at the Annual Meeting of Shareholders of American International Group, Inc., a
Delaware corporation ("AIG"), to be held on May 16, 1994, or at any adjournment
thereof. It may be revoked at any time prior to its use. Proxies will be voted
as specified and, unless otherwise specified, will be voted for the election of
directors, for the proposal to approve a performance-based compensation plan,
for the proposal to amend the 1991 Employee Stock Option Plan, for the selection
of Coopers & Lybrand as independent accountants for 1994, against the
shareholder proposal requesting AIG to distribute certain statistical data on
employees and against the shareholder proposal requesting AIG to initiate a
study related to investment in tobacco companies.
 
     Only shareholders of record at the close of business on March 25, 1994 will
be entitled to vote at the meeting. On that date, 316,873,204 shares (exclusive
of shares held by AIG and certain subsidiaries) of common stock, par value $2.50
per share ("AIG Common Stock"), were outstanding, each such share of stock
having one vote.
 
                           I.  ELECTION OF DIRECTORS
 
     Fifteen directors are to be elected at the meeting to hold office until the
next annual election and until their successors are elected and qualified. It is
the intention of the persons named in the accompanying proxy to vote for the
election of the nominees listed below, all of whom are currently members of your
Board of Directors. Mrs. Marion E. Fajen and Mr. Pierre Gousseland will retire
from the Board at the Annual Meeting. It is not expected that any of the
nominees will become unavailable for election as a director, but if any should
prior to the meeting, proxies will be voted for such persons as your Board of
Directors shall recommend. Directors will be elected by a plurality of the votes
cast. Any shares not voted (whether by abstention, broker non-vote, or
otherwise) will have no impact on the vote. The nominees and certain information
supplied by them to AIG are as follows:
 

<TABLE>
                        <S>                             <C>
                        M. BERNARD AIDINOFF             PARTNER, SULLIVAN & CROMWELL
       (PHOTO)                                          (Attorneys)
                        Age 65  

                        Director since 1984


                        MARSHALL A. COHEN               PRESIDENT AND CHIEF EXECUTIVE OFFICER,
       (PHOTO)                                          THE MOLSON COMPANIES LIMITED
                        Age 58                          (Brewing, Chemical Specialties, Retail
                                                        Merchandising and Sports and Entertainment)
                        Director since 1992             Director, American Barrick Resources   
                                                                  Corporation                  
                                                                  Lafarge Corporation          
                                                                                               
</TABLE>
                                                
 
- --------------------------------------------------------------------------------
 
                                        2

<PAGE>   4
 

<TABLE>
                        <S>                             <C>
                        BARBER B. CONABLE, JR.          RETIRED; FORMER PRESIDENT, WORLD BANK, AND
     (PHOTO)                                            FORMER MEMBER, UNITED STATES HOUSE OF REP-
                        Age 71                          RESENTATIVES

                        Director since 1991             Director, Corning, Inc.
                                                                  First Empire State Corp.
                                                                  Manufacturers & Traders Trust Co.


                        MARTIN FELDSTEIN                PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY;
     (PHOTO)                                            PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL
                        Age 54                          BUREAU OF ECONOMIC RESEARCH
                                                        (Nonprofit Economic Research Center)
                        Director since 1987
                                                        Director, TRW, Inc.
                                                                  J. P. Morgan & Co. Incorporated


                        HOUGHTON FREEMAN                RETIRED VICE CHAIRMAN--FOREIGN GENERAL INSUR-
     (PHOTO)                                            ANCE, AIG
                        Age 72                          Director, Transatlantic Holdings, Inc.
                                                                  ("Transatlantic"), which is owned
                        Director since 1967                       46 percent by AIG

                                                        Also serves as a director of C.V. Starr & Co.,
                                                        Inc. ("Starr") and Starr International Company,
                                                        Inc. ("SICO"), private holding companies (see
                                                        "Ownership of Certain Securities")


                        LESLIE L. GONDA                 CHAIRMAN, INTERNATIONAL LEASE FINANCE CORPO-
     (PHOTO)                                            RATION ("ILFC")
                        Age 74                          (a wholly-owned subsidiary of AIG)
                        Director since 1990


                        MAURICE R. GREENBERG            CHAIRMAN AND CHIEF EXECUTIVE OFFICER, AIG
     (PHOTO)            Age 68                          Also serves as a director of Transatlantic, a
                                                        director, President and Chief Executive Officer
                        Director since 1967             of Starr, and a director of SICO and ILFC
</TABLE>

 
- --------------------------------------------------------------------------------
 
                                        3

<PAGE>   5
 

<TABLE>
                        <S>                             <C>
                        CARLA A. HILLS                  CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
     (PHOTO)                                            HILLS & COMPANY, INTERNATIONAL CONSULTANTS;
                        Age 60                          FORMER UNITED STATES TRADE REPRESENTATIVE
                                                        (Hills & Company provides international
                        Elected May 12, 1993            investment, trade and risk advisory services)
                                                        Director, American Telephone and
                                                                  Telegraph Company
                                                                  Chevron Corporation
                                                                  Time Warner Inc.
                                                                  UAL Corp.


                        FRANK J. HOENEMEYER             FINANCIAL CONSULTANT;
     (PHOTO)                                            RETIRED VICE CHAIRMAN,
                        Age 74                          PRUDENTIAL INSURANCE COMPANY OF AMERICA
                                                        Director, Ariad Pharmaceuticals, Inc.
                        Director since 1985                       Wellsford Residential Property Trust
                                                                  Carey Fiduciary Advisors, Inc.


                        JOHN I. HOWELL                  RETIRED CHAIRMAN, EXECUTIVE COMMITTEE, J. HENRY
     (PHOTO)                                            SCHRODER BANK & TRUST COMPANY
                        Age 77                          Director, Schroder Capital Funds, Inc.    
                                                                  Schroder Asian Growth Fund, Inc.
                        Director since 1969                                                       

                                                        
                        EDWARD E. MATTHEWS              VICE CHAIRMAN--FINANCE, AIG
     (PHOTO)                                            Also serves as a director of Transatlantic,
                        Age 62                          Starr, SICO and ILFC
                                           
                        Director since 1973
                        

                        DEAN P. PHYPERS                 RETIRED SENIOR VICE PRESIDENT,
     (PHOTO)                                            INTERNATIONAL BUSINESS MACHINES CORPORATION
                        Age 65                          Director, Bethlehem Steel Corporation    
                                                                  Cambrex                        
                        Director since 1979                       Church & Dwight Co. Inc.       
                                                                  Cytogen Inc.                   
                                                                                                 
                                                        
                        JOHN J. ROBERTS                 VICE CHAIRMAN--EXTERNAL AFFAIRS, AIG
     (PHOTO)                                            Director, The Adams Express Company
                        Age 71                                    Petroleum & Resources Corporation
                                                        Also serves as a director of Starr and SICO
                        Director since 1967 
</TABLE>
                
 
- --------------------------------------------------------------------------------
 
                                        4

<PAGE>   6
 

<TABLE>
                        <S>                             <C>
                        ERNEST E. STEMPEL               VICE CHAIRMAN--LIFE INSURANCE, AIG
     (PHOTO)            Age 77                          Also serves as a director of Starr and SICO
                        Director since 1967

                        THOMAS R. TIZZIO                PRESIDENT, AIG
     (PHOTO)            Age 56                          Also serves as a director of Transatlantic,
                                                        Starr and SICO
                        Director since 1986
</TABLE>

 
- --------------------------------------------------------------------------------
 
     The principal occupation or affiliation of the nominees is shown in bold
face type. Each of the directors who is also an executive officer of AIG has,
for more than five years, occupied an executive position with AIG or companies
that are now its subsidiaries, and, except as hereinafter noted, each other
director has occupied an executive position with his company or organization
listed above for at least five years. Mr. Conable retired on September 1, 1991
as President of The World Bank. Ambassador Hills served as United States Trade
Representative from 1989 until 1993.
 
     Mrs. Fajen, who is 73, has served as an AIG director since 1984. She
retired in 1986 from her position as Vice President and Secretary of AIG. Mr.
Gousseland, who is 72, has served as an AIG director since 1977, and is the
retired Chairman of AMAX Inc.
 
     There were four regularly scheduled meetings, comprising all the meetings
of the Board, during 1993. All of the directors attended at least 75% of the
aggregate of all meetings of the directors and of the committees of the Board on
which they served.
 
     Messrs. Aidinoff, Conable, Hoenemeyer, Howell and Phypers and Mrs. Hills
are the current members of the Audit Committee, which held four meetings during
1993. The primary function of the Audit Committee is to give general advice to
the Board and the officers in matters relating to the audits of the records of
account of AIG and its subsidiaries. The Committee reviews the performance and
scope of audit and non-audit services provided by the independent accountants
during the fiscal year and recommends to the Board the nomination of the
independent public accountants as auditors for the ensuing fiscal year. In
addition, the Committee reviews reports issued by the internal auditing
department and the independent accountants.
 
     The Stock Option and Compensation Committee, which held nine meetings
during 1993, administers the various AIG stock option plans, establishes the
compensation of the Chief Executive Officer and sets policy for compensation for
senior management. Current members of the Committee are Messrs. Cohen,
Gousseland, Hoenemeyer and Howell.
 
     The Executive Committee, comprised of Messrs. Aidinoff, Greenberg, Howell,
Roberts, Stempel and Tizzio, also functions as a nominating committee. All
proposed nominees for membership on the Board of Directors submitted in writing
by shareholders to the Secretary of AIG will be brought to the attention of the
Executive Committee. The Executive Committee held seven meetings during 1993.
Messrs. Conable, Feldstein, Greenberg, Hoenemeyer, Howell, Matthews and Phypers
serve as members of the Finance Committee, which oversees the financial affairs
and investment activities of AIG and its subsidiaries and which held twelve
meetings during 1993.
 
                                        5

<PAGE>   7
 
OWNERSHIP OF CERTAIN SECURITIES
 
     The following table summarizes the ownership of equity securities of AIG
and its parents by the directors/nominees and by the directors and executive
officers as a group.
 

<TABLE>
<CAPTION>
                                                          EQUITY SECURITIES OF AIG AND ITS PARENTS
                                                        OWNED BENEFICIALLY AS OF JANUARY 31, 1994(1)
                               ----------------------------------------------------------------------------------------------
                                                                               STARR                          SICO
                                             AIG                            COMMON STOCK                  VOTING STOCK
                                         COMMON STOCK                --------------------------    --------------------------
                               --------------------------------        AMOUNT AND                    AMOUNT AND
                               AMOUNT AND NATURE OF     PERCENT         NATURE OF       PERCENT       NATURE OF       PERCENT
                                    BENEFICIAL            OF           BENEFICIAL         OF         BENEFICIAL         OF
          DIRECTOR             OWNERSHIP(2)(3)(4)(5)     CLASS        OWNERSHIP(6)       CLASS        OWNERSHIP        CLASS
- ----------------------------   ---------------------    -------      ---------------    -------    ---------------    -------
<S>                            <C>                      <C>          <C>                <C>        <C>                <C>
M. Bernard Aidinoff.........             4,348                 (7)             0            --             0              --
Marshall A. Cohen...........               450                 (7)             0            --             0              --
Barber B. Conable, Jr. .....             2,550                 (7)             0            --             0              --
Marion E. Fajen.............            13,210                 (7)             0            --             0              --
Martin Feldstein............             7,329                 (7)             0            --             0              --
Houghton Freeman............         1,371,285             .43               750          3.45            10            9.09
Leslie L. Gonda.............         3,510,900            1.11                 0            --             0              --
Pierre Gousseland...........            11,730                 (7)             0            --             0              --
M. R. Greenberg.............         7,089,089            2.23             5,000         22.99            10            9.09
Ambassador Carla Hills......             1,158                 (7)             0            --             0              --
Frank Hoenemeyer............             7,893                 (7)             0            --             0              --
John I. Howell..............            37,465             .01                 0            --             0              --
Edward E. Matthews..........           244,738             .08             2,250         10.34            10            9.09
Dean P. Phypers.............             5,346                 (7)             0            --             0              --
John J. Roberts.............           826,458             .26             1,250          5.75            10            9.09
Ernest E. Stempel...........         4,171,310            1.31             1,750          8.05            10            9.09
Thomas R. Tizzio............           103,648             .03             1,500          6.90            10            9.09
All Directors and Executive
  Officers of AIG as a Group
  (43 individuals)..........        20,899,905            6.56            19,625         90.23            80           72.72
</TABLE>

 
- ------------
 
(1) Amounts of equity securities of Starr and SICO shown represent shares as to
     which the individual has sole voting and investment power. With respect to
     shares of AIG Common Stock, totals include shares as to which the
     individual shares voting and investment power as follows:
     Feldstein -- 5,625 shares, Freeman -- 951,624 shares, Howell -- 30,360
     shares, Tizzio -- 44,211 shares, all directors and executive officers of
     AIG as a group -- 1,373,514 shares.
 
(2) Amount of equity securities shown includes shares of AIG Common Stock
     subject to options which may be exercised within 60 days as follows:
     Freeman -- 58,380 shares, Greenberg -- 271,875 shares, Matthews -- 78,375
     shares, Roberts -- 1,500 shares, Stempel -- 29,250 shares, Tizzio -- 59,437
     shares, all directors and executive officers of AIG as a group -- 724,586
     shares.
 
(3) Amount of shares shown for each of Messrs. Greenberg, Roberts and Stempel
     does not include 3,426,303 shares held as trustee for the Starr Trust, as
     to which they disclaim beneficial ownership. Inclusion of these shares
     would increase the total ownership shown for each of the trustees by 1.08
     percent.
 
(4) Amount of equity securities shown also excludes the following securities
     owned by members of the named individual's immediate family or by the
     individual as trustee as to which securities such individual has disclaimed
     beneficial interest: Fajen -- 3,690 shares, Matthews -- 3,000 shares,
     Tizzio -- 8,868 shares, all directors and executive officers of AIG as a
     group -- 23,434 shares.
 
(5) Amount of shares shown for Mr. Greenberg also excludes 935,376 shares owned
     directly by Starr as to which Mr. Greenberg disclaims beneficial interest.
 
(6) As of February 1, 1994, Starr also had outstanding 4,125 shares of Common
     Stock Class B, a non-voting stock, and 151 shares of Special Preferred
     Stock, Series 3. None of the nominees holds such shares. Shares of Starr's
     Series A, Series B, Series C, Series D, Series E, Series F, Series G,
     Series H, Series I and Series J Preferred
 
                                        6

<PAGE>   8
 
     Stock and its 5% Subordinated Preferred Stock were held by the nominees as
     follows on January 31, 1994: Preferred Stock, Series A--Freeman (1,750),
     Greenberg (5,000), Matthews (1,500), Roberts (2,500) and Stempel (2,500);
     Preferred Stock, Series B--Freeman (1,750), Greenberg (5,000), Matthews
     (1,750), Roberts (2,500) and Stempel (2,500); Preferred Stock, Series
     C--Freeman (1,750), Greenberg (5,000), Matthews (1,750), Roberts (2,500),
     Stempel (2,500) and Tizzio (125); Preferred Stock, Series D--Freeman
     (1,750), Greenberg (5,000), Matthews (1,750), Roberts (2,500), Stempel
     (2,500) and Tizzio (375); Preferred Stock, Series E--Freeman (2,000),
     Greenberg (5,000), Matthews (2,000), Roberts (2,500), Stempel (2,500) and
     Tizzio (625); Preferred Stock, Series F--Freeman (2,000), Greenberg
     (5,000), Matthews (2,000), Roberts (2,500), Stempel (2,500) and Tizzio
     (1,000); Preferred Stock, Series G--Freeman (2,250), Greenberg (5,000),
     Matthews (2,250), Roberts (2,250), Stempel (2,250) and Tizzio (1,000);
     Preferred Stock, Series H--Freeman (2,250), Greenberg (5,000), Matthews
     (2,250), Roberts (1,500), Stempel (2,250) and Tizzio (1,000); Preferred
     Stock, Series I--Freeman (2,250), Greenberg (5,000), Matthews (2,250),
     Roberts (1,500), Stempel (2,250) and Tizzio (1,000); Preferred Stock,
     Series J--Freeman (2,250), Greenberg (5,000), Matthews (2,250), Roberts
     (1,500), Stempel (2,250) and Tizzio (1,000) and 5% Subordinated Preferred
     Stock--Freeman (50), Greenberg (100), Roberts (50) and Stempel (70). The
     total outstanding shares were: Preferred Stock, Series A (16,240),
     Preferred Stock, Series B (16,305), Preferred Stock, Series C (17,055),
     Preferred Stock, Series D (18,180), Preferred Stock, Series E (20,305),
     Preferred Stock, Series F (22,305), Preferred Stock, Series G (22,375),
     Preferred Stock, Series H (22,125), Preferred Stock, Series I (22,625),
     Preferred Stock Series J (24,250) and 5% Subordinated Preferred Stock
     (340).
 
(7) Less than .01%.
 
     The only person who, to the knowledge of AIG, owns in excess of five
percent of the AIG Common Stock is SICO, P.O. Box 152, Hamilton, Bermuda. At
January 31, 1994, SICO held 50,649,744 shares, or 15.95 percent of the AIG
Common Stock. The Starr Foundation and Starr (both having executive offices at
70 Pine Street, New York, New York) held 11,879,942 shares and 7,494,923 shares
(including 3,426,303 shares held by the C. V. Starr & Co. Inc. Trust), or 3.74
percent and 2.36 percent, respectively, of the outstanding AIG Common Stock on
that date.
 
     Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and 10 percent holders of AIG Common Stock to file reports
concerning their ownership of AIG equity securities. During 1993, each of Mr.
Greenberg, Mrs. Hills and Mr. Stempel filed a late report on Form 4 in which he
or she disclosed one transaction which was required to be previously reported.
Mr. Greenberg failed to report timely a gift of 105 shares of AIG Common Stock
made to a family member in October, 1993. Mrs. Hills failed to report timely the
acquisition of 422 shares of AIG Common Stock held indirectly in an Individual
Retirement Account. Mr. Stempel failed to report timely that the estate of his
wife held 8,792 shares of AIG Common Stock. Each of Messrs. Colayco, Dooley,
Nottingham and Edmund Tse, executive officers of AIG, filed one late report. Mr.
Colayco failed to file timely Form 5 relating to the acquisition of options with
respect to 600 shares of AIG Common Stock pursuant to the AIG 1991 Employee
Stock Option Plan, and Mr. Dooley failed to report timely the acquisition of
purchase privileges with respect to 51 shares of AIG Common Stock pursuant to
the AIG Employee Stock Purchase Plan. Mr. Nottingham failed to report timely his
sale of 1,000 shares of AIG Common Stock, and Mr. Tse failed to report timely
the acquisition of purchase privileges with respect to 50 shares under the AIG
Employee Stock Purchase Plan and the direct acquisition of those shares at the
termination of the purchase plan period.
 

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
 
     Directors who are employees of AIG or its subsidiaries do not receive fees
for service on the Board or the committees. Each other director of AIG receives
director's fees of $15,000 per year, plus $1,500 for each Board meeting
attended. An annual fee of $3,500 is paid to each member of each committee of
the Board. Members of each committee also receive $1,500 for each committee
meeting attended. In addition, directors who are not employees of AIG and its
subsidiaries each purchase 75 shares of AIG Common Stock per quarter, for which
they are reimbursed by AIG.
 
                                        7

<PAGE>   9
 
     The following Summary Compensation Table shows the compensation accrued for
services in all capacities to AIG and its subsidiaries by M.R. Greenberg, the
Chairman and Chief Executive Officer of AIG, and the other four most highly
compensated executive officers of AIG at December 31, 1993.
 
                           SUMMARY COMPENSATION TABLE
 

<TABLE>
<CAPTION>
                                                                               LONG TERM
                                                                             COMPENSATION
                                         ANNUAL COMPENSATION       ---------------------------------
          NAME AND                     ------------------------         AWARDS          PAYOUTS          ALL OTHER
     PRINCIPAL POSITION        YEAR      SALARY        BONUS       STOCK OPTIONS(#) LTIP PAYOUTS(1)   COMPENSATION(2)
- -----------------------------  ----    ----------    ----------    ---------------- ---------------- ------------------
<S>                            <C>     <C>           <C>           <C>              <C>              <C>
M.R. Greenberg...............  1993    $1,231,731    $1,100,000         25,000         $2,685,750         $  2,998
Chairman and Chief             1992     1,147,115     1,100,000(3)      37,500(4)        --                  2,909
  Executive Officer            1991     1,000,000       950,000(3)      30,000(4)        --                  2,067
E.E. Matthews................  1993       316,923       350,000         10,000            789,750            2,998
Vice Chairman -- Finance       1992       250,193       300,000(3)      15,000(4)        --                  2,909
                               1991       215,000       275,000(3)      13,500(4)        --                  1,664
T.R. Tizzio..................  1993       329,273       300,000         10,000            631,800            2,998
President                      1992       276,154       235,000(3)      15,000(4)        --                  2,909
                               1991       213,000       240,000(3)      13,500(4)        --                  1,862
E.E. Stempel.................  1993       200,000       250,000          8,000            631,800         --
Vice Chairman -- Life
  Insurance                    1992       175,000       250,000(3)      12,000(4)        --               --
                               1991       150,000       250,000(3)      10,500(4)        --               --
E.S.W. Tse...................  1993       266,580       199,430(5)       6,000            315,900           33,322(5)
Executive Vice President --    1992       241,572       175,262(3)       7,500(4)        --                 30,196(5)
  Life Insurance               1991       213,226       165,540(3)       3,000(4)        --                 26,653(5)
</TABLE>

 
- ---------------
(1) Amounts shown in 1993 represent the value, based on the closing sale price
    of AIG Common Stock on December 31, 1993 ($87.75), of shares of AIG Common
    Stock allocated but not distributed under a Deferred Compensation Profit
    Participation Plan (the "SICO Plan") provided to certain senior AIG
    employees, including AIG executive officers, by SICO. The SICO Plan came
    into being in 1975 when the voting shareholders and Board of Directors of
    SICO, a private holding company whose principal asset consists of AIG Common
    Stock, decided that a portion of the capital value of SICO should be used to
    provide an incentive plan for the current and succeeding managements of all
    American International companies, including AIG. Participation in the SICO
    Plan by any person, and the amount of such participation, is at the sole
    discretion of SICO's Board of Directors, and none of the costs of the
    various benefits provided under such plan is charged to or absorbed by AIG.
    The SICO Plan provides that shares may be set aside by SICO for the benefit
    of the participant and distributed upon retirement. Prior to retirement, the
    participant is not entitled to vote, dispose of or receive dividends with
    respect to such shares. Shares are subject to forfeiture under certain
    conditions, including but not limited to the participant's voluntary
    termination of employment with AIG prior to normal retirement age. In
    addition, SICO's Board of Directors may elect to pay a participant cash in
    lieu of shares of AIG Common Stock. In March, 1993, a determination was made
    as to the number of AIG shares allocable to the accounts of the participants
    in the SICO Plan with respect to units awarded in December, 1990. The number
    of AIG shares allocated to named executive officers is as follows:
    Greenberg -- 30,600 shares; Matthews -- 9,000 shares; Tizzio -- 7,200
    shares; Stempel -- 7,200 shares; Tse -- 3,600 shares.
(2) Amounts shown for Messrs. Greenberg, Matthews and Tizzio represent matching
    contributions under AIG's 401(k) Plan. Amounts representing the accrual
    under the Current Retirement Plan and the Supplemental Plan cannot readily
    be individually calculated by the actuaries for those plans.
(3) Includes cash benefits paid by SICO under the SICO Plan. Commencing January
    1, 1993, cash benefits were no longer payable under the SICO Plan.
(4) Adjusted to reflect 50 percent stock split effected as a stock dividend in
    1993.
(5) Amounts shown reflect contributions by AIG to the Amercian International
    Companies (Hong Kong) Staff Provident Plan.
 
                                        8

<PAGE>   10
 
     The following table summarizes certain information with respect to grants
of options to purchase AIG Common Stock which were granted during 1993 to the
five individuals named in the Summary Compensation Table, to all executive
officers of AIG as a group, and to all employees.
 
                             OPTION GRANTS IN 1993
 

<TABLE>
<CAPTION>
                                                                                        POTENTIAL REALIZABLE
                                                                                      VALUE* AT ASSUMED ANNUAL
                                                                                        RATES OF STOCK PRICE
                                           PERCENTAGE OF                              APPRECIATION FOR OPTION
                                           TOTAL OPTIONS                                        TERM
                                  OPTIONS   GRANTED TO    EXERCISE                    ------------------------
                        DATE      GRANTED    EMPLOYEES      PRICE      EXPIRATION          5           10
        NAME          OF GRANT      (1)     DURING 1993   PER SHARE       DATE        PERCENT(2)   PERCENT(3)
- --------------------- ---------   -------  -------------  ---------    ----------     -----------  -----------
<S>                   <C>         <C>      <C>            <C>          <C>            <C>          <C>
M.R. Greenberg.......  12/13/93    25,000        7.2       $ 88.75       12/13/03     $ 1,395,360  $ 3,536,116
E.E. Matthews........  12/13/93    10,000        2.9         88.75       12/13/03         558,144    1,414,446
T.R. Tizzio..........  12/13/93    10,000        2.9         88.75       12/13/03         558,144    1,414,446
E.E. Stempel.........  12/13/93     8,000        2.3         88.75       12/13/03         446,515    1,131,557
E. S. W. Tse.........  12/13/93     6,000        1.7         88.75       12/13/03         334,886      848,668
All Executive
  Officers of AIG as
  a Group (31
  individuals).......   Various    93,950       27.0         88.77(4)     Various       5,244,944   13,291,719
All Employees........   Various   347,575      100.0         88.81(4)     Various      19,412,805   49,195,859
All Shareholders
  Stock
  Appreciation(5)....    N/A        N/A       N/A           N/A           N/A         $17.7 billion $44.9 billion
All Unaffiliated
  Shareholders Stock
  Appreciation(5)....    N/A        N/A       N/A           N/A           N/A         $12.6 billion $32.0 billion
</TABLE>

 
- ---------------
 
  * Options would have no realizable value if there were no appreciation or if
    there were depreciation from the price at which the options were granted,
    $88.75.
 
(1) All options were granted pursuant to the 1991 Employee Stock Option Plan at
    an exercise price equal to the fair market value of such stock at the date
    of grant. The grants provide that 25 percent of the options granted on any
    date become exercisable on each anniversary date in each of the successive
    four years.
 
(2) Appreciated price would be $144.56 per share for the individuals named,
    $144.60 per share for all executive officers and $144.66 per share for all
    employees.
 
(3) Appreciated price would be $230.19 per share for the individuals named,
    $230.25 per share for all executive officers and $230.35 per share for all
    employees.
 
(4) Weighted average exercise price per share.
 
(5) Calculated using the 317,628,067 shares of AIG Common Stock outstanding at
    December 31, 1993.
 
     The following table summarizes certain information with respect to the
exercise of options to purchase AIG Common Stock during 1993 by the five
individuals named in the Summary Compensation Table and the unexercised options
to purchase AIG Common Stock held by such individuals at December 31, 1993.
 
      AGGREGATED OPTION EXERCISES DURING THE YEAR ENDED DECEMBER 31, 1993
                      AND DECEMBER 31, 1993 OPTION VALUES
 

<TABLE>
<CAPTION>
                                                          NUMBER OF UNEXERCISED        VALUE OF UNEXERCISED
                                                               OPTIONS AT              IN-THE-MONEY OPTIONS
                            SHARES                          DECEMBER 31, 1993         AT DECEMBER 31, 1993(2)
                          ACQUIRED ON       VALUE       -------------------------    -------------------------
         NAME              EXERCISE      REALIZED(1)    EXERCISABLE/UNEXERCISABLE    EXERCISABLE/UNEXERCISABLE
- -----------------------   -----------    -----------    -------------------------    -------------------------
<S>                       <C>            <C>            <C>                          <C>
M.R. Greenberg.........      37,500      $2,761,250           271,875/75,625          $14,446,094/$1,074,531
E.E. Matthews..........       1,834         111,920            78,375/30,625            3,974,313/   435,437
T.R. Tizzio............       4,500         297,175            59,437/30,625            2,789,197/   435,437
E.E. Stempel...........          --              --            29,250/24,875            1,054,844/   369,125
E.S.W. Tse.............       1,312         103,003            14,812/13,875              644,722/   130,656
</TABLE>

 
- ---------------
 
(1) Aggregate market value on date of exercise (closing sale price as reported
    in the New York Stock Exchange Composite Transactions Report) less aggregate
    exercise price.
 
(2) Aggregate market value on December 31, 1993 (closing sale price as reported
    in the New York Stock Exchange Composite Transactions Report) less aggregate
    exercise price.
 
                                        9

<PAGE>   11
 
     The following table summarizes certain information with respect to benefits
that the proxy rules classify as granted under Long-Term Incentive Plans which
were granted during 1993 to the five individuals named in the Summary
Compensation Table.
 
                 LONG-TERM INCENTIVE PLANS -- AWARDS IN 1993(1)
 

<TABLE>
<CAPTION>
                NAME                NUMBER OF UNITS     PERFORMANCE PERIOD      ESTIMATED FUTURE PAYOUTS
- ---------------------------------------------------     -------------------    --------------------------
<S>                                 <C>                 <C>                    <C>
M. R. Greenberg.....................    8,500                Two years                30,600 shares
E. E. Matthews......................    3,000                Two years                10,800 shares
T. R. Tizzio........................    2,500                Two years                 9,000 shares
E. E. Stempel.......................    2,000                Two years                 7,200 shares
E.S.W. Tse..........................    1,200                Two years                 4,320 shares
</TABLE>

 
- ------------
 
(1) Awards represent grants of units under the SICO Plan described in Note 1 to
     the Summary Compensation Table on page 8 with respect to the two-year
     period from January 1, 1993 through December 31, 1994. The SICO Plan
     contains neither threshold amounts nor maximum payout limitations. The
     number of shares of AIG Common Stock allocated to a unit upon payout is
     based on a percentage selected by SICO's Board of Directors of between 20
     percent and 100 percent of the increase of SICO's retained earnings
     attributable to the AIG Common Stock held by SICO over the two year period.
     As a result, the number of shares to be allocated with respect to units
     held for the 1993-1994 period and the value of such shares cannot be
     determined at this time. The number of shares shown under "Estimated Future
     Payouts" represent the number of shares allocable to the named individuals
     based upon the units awarded to them for the 1993-1994 period, assuming the
     percentage selected by the SICO Board of Directors and the increase in
     SICO's retained earnings for the 1993-1994 period were the same as those
     used to allocate the shares of AIG Common Stock for the 1991-1992 period.
     As noted in the description of the SICO Plan in Note 2 to the Summary
     Compensation Table on page 8, prior to retirement, the participant is not
     entitled to vote, dispose of or receive dividends with respect to such
     shares, and the shares are subject to forfeiture under certain conditions,
     including but not limited to the participant's voluntary termination of
     employment with AIG prior to normal retirement age.
 
     In order to facilitate the performance of their management
responsibilities, AIG provides to Messrs. Greenberg and Roberts automobiles and
drivers and to these individuals and other officers and employees the use of a
yacht and corporate aircraft, club memberships and recreational opportunities.
These facilities are provided for use for business purposes and the costs
thereof are considered ordinary and necessary business expenses of AIG. Any
personal benefit any of these persons may have derived from the use of these
facilities is regarded as incidental to such business use and the amount thereof
has therefore not been included in the compensation shown in the Summary
Compensation Table on page 8.
 
     Messrs. Freeman, Greenberg, Matthews, Roberts, Stempel, Tizzio and Tse or
certain of them, are directors and officers of SICO, directors and members of
the Starr Foundation and directors and officers of Starr. These individuals also
receive compensation as officers of Starr for services rendered to Starr as well
as compensation from SICO for services rendered to SICO. These services are not
considered to detract materially from the business time of these individuals
available for AIG matters and such compensation is not included in the
compensation for services to AIG shown in the Summary Compensation Table on page
8.
 
     AIG maintains a policy of directors and officers liability insurance for
itself, its directors and officers, its subsidiaries, and their directors and
officers. The premium for the year ending May 24, 1994 is approximately
$2,800,000.
 
PENSION BENEFITS
 
     Through March 31, 1985, when such plan was terminated, employees of AIG and
its subsidiaries who are citizens of the United States or non-citizens working
in the United States were covered under the American International Group, Inc.
Pension Plan, a contributory, qualified, defined benefit plan ("Original Pension
Plan"). The annual pension for a participant was equal to 1.75% of Average Final
Compensation multiplied by years of credited service as a participant (up to 40
years) less 1.4286% of his Social Security Benefit multiplied by years of
credited service (limited to 35 years). Average Final Compensation was defined
as the average annual compensation of a participant during the 3 consecutive
years in the last 10 years of his credited service affording the highest such
average, or during all of the years of his credited service if less than 3
years. Benefits were paid monthly during the life of the participant, or, if
applicable, during the joint lives of the participant and his contingent
annuitant. The annual retirement allowance for participants with at least 10
years of credited service was not less than 50% of 1.75% of Average Final
Compensation, or $1,200, whichever was greater. On April 1, 1985, a new
non-contributory, qualified, defined benefit plan ("Current Retirement Plan")
was established, with provisions substantially the same as the Original Pension
Plan, except for the non-contributory feature and except that in the annual
pension formula described above, 1.25% of Average Final Compensation is
multiplied by years of credited service as a participant
 
                                       10

<PAGE>   12
 
(up to 44 years) less 1.25% of his Social Security Benefit multiplied by years
of credited service (limited to 35 years). The 1.25% of Average Final
Compensation is also used in the determination of the minimum retirement
allowance. Effective January 1, 1989, the Current Retirement Plan formula
changed in accordance with government mandated regulations from a Social
Security offset to a Social Security integration method of computation where the
Current Retirement Plan formula is the average of the final three years'
compensation but no greater than 150% of the employee's "covered compensation"
(the average of the Social Security Wage bases during the 35 years preceding the
Social Security retirement age) times credited service up to 35 years,
multiplied by an applicable Social Security retirement age factor. For employees
terminating from active service after January 1, 1993, the benefit formula for
credited service on and after April 1, 1985 changed from 1.25% to 1.35% of
Average Final Compensation.
 
     As a result of the termination of the Original Pension Plan, all benefits
accruing to the termination date became vested regardless of an employee's years
of service and annuities were purchased for benefits payable under that plan.
AIG was entitled to receive the surplus remaining in the Original Pension Plan,
other than the portion of the surplus attributable to employee contributions.
 
     The AIG savings plan ("401(k) Plan") for employees provides for salary
reduction contributions by employees and matching contributions by AIG. The
retirement benefits for most employees who participate in both the Current
Retirement Plan and the 401(k) Plan will be substantially greater than the
benefits which would have been received under the Original Pension Plan.
 
     Annual amounts of normal retirement pension commencing at normal retirement
age of 65 based upon Average Final Compensation and credited service under the
Current Retirement Plan and the Supplemental Plan are illustrated in the
following table:
 
                       ESTIMATED ANNUAL PENSION AT AGE 65
 

<TABLE>
<CAPTION>
                                                 TOTAL YEARS OF CREDITED SERVICE AS A PLAN PARTICIPANT
  3 YEAR AVERAGE                   ---------------------------------------------------------------------------------
FINAL COMPENSATION                 10 YEARS    15 YEARS    20 YEARS    25 YEARS    30 YEARS    35 YEARS    40 YEARS
- ------------------                 ---------   ---------   ---------   ---------   ---------   ---------   ---------
<S>                   <C>          <C>         <C>         <C>         <C>         <C>         <C>         <C>
  $  125,000.....................  $  16,248   $  31,248   $  46,248   $  61,248   $  61,248   $  61,248   $  61,248
  $  150,000.....................     22,248      40,248      58,248      76,248      76,248      76,248      76,248
  $  175,000.....................     28,248      49,248      70,248      91,248      91,248      91,248      91,248
  $  200,000.....................     34,248      58,248      82,248     106,248     106,248     106,248     106,248
  $  225,000.....................     40,248      67,248      94,248     121,248     121,248     121,248     121,248
  $  250,000.....................     46,248      76,248     106,248     136,248     136,248     136,248     136,248
  $  300,000.....................     58,248      94,248     130,248     166,248     166,248     166,248     166,248
  $  375,000.....................     76,248     121,248     166,248     211,248     211,248     211,248     211,248
  $  400,000.....................     82,248     130,248     178,248     226,248     226,248     226,248     226,248
  $  500,000.....................    106,248     166,248     226,248     286,248     286,248     286,248     286,248
  $  750,000.....................    166,248     256,248     346,248     436,248     436,248     436,248     436,248
  $1,000,000.....................    226,248     346,248     466,248     586,248     586,248     586,248     586,248
  $1,375,000.....................    316,248     481,248     646,248     811,248     811,248     811,248     811,248
</TABLE>

 
- ------------
     With respect to the individuals named in the Summary Compensation Table on
page 8 other than Mr. Tse, their respective years of credited service (under
both plans) through December 31, 1993 are as follows: Greenberg--33 years;
Matthews--20.2 years; Stempel--44 years; Tizzio--25.7 years. Pensionable salary
includes only the regular salary paid by AIG and its subsidiaries and does not
include amounts attributable to bonuses or overtime pay. For such named
individuals, pensionable salary during 1993 was as follows:
Greenberg--$1,231,731; Matthews--$316,923; Stempel--$200,000; Tizzio--$329,273.
Amounts representing the accrual under the Current Retirement Plan for 1993
cannot readily be individually calculated by the actuaries for the Plan.
 
     During 1986, AIG adopted the Supplemental Plan to provide additional
retirement benefits to designated executives and key employees. Under the
Supplemental Plan, annual benefits, not to exceed 60% of Average Final
Compensation, accrue at a rate of 2.4% of Average Final Compensation for each
year of service or fraction thereof for each full month of active employment.
The benefit payable under the Supplemental Plan is reduced by payments from the
Original Pension Plan, the Current Retirement Plan, Social Security Benefit and
any payments from a qualified pension plan of a prior employer. Messrs.
Greenberg, Matthews, Roberts, Stempel and Tizzio were participants in the
Supplemental Plan at December 31, 1993. Federal legislation limits the benefits
which may be payable from the Current Retirement Plan. Effective January 1,
1991, the Supplemental Plan was amended to provide a benefit to Current
Retirement Plan participants in an amount equal to the reduction in the benefit
payable as a result of the Federal limitation.
 
     Mr. Tse participates in the American International Companies (Hong Kong)
Staff Provident Plan, a defined contribution plan which requires employee
contributions of five percent of salary. Contributions to this plan by AIG vary
based on employee service. During 1993, AIG contributed 12.5 percent of Mr Tse's
pensionable salary of $266,580 to the plan based on his 32.6 years of service.
 
                                       11

<PAGE>   13
 
C
ERTAIN TRANSACTIONS
 
     Certain transactions in 1993 effected in the ordinary course of business
between AIG and its subsidiaries and SICO and Starr are summarized in the
following table:
 

<TABLE>
<CAPTION>
 
                                                                                  SICO             STARR
                                                                                   AND               AND
                                                                               SUBSIDIARIES      SUBSIDIARIES
                                                                               ------------      ------------
<S>                                                                            <C>               <C>
                                                                                       (in thousands)
AIG and Subsidiaries Paid:
  For production of insurance business*...................................       $     --          $ 25,800
  For services (at cost)**................................................          1,100                60
  Rentals.................................................................          3,400                --
AIG and Subsidiaries Received:
  For services (at cost)**................................................            600            10,900
  Rentals.................................................................             --               900
</TABLE>

 
- ------------
* From these payments, which constituted approximately 32% of Starr's gross
  revenues for the year, Starr is required to pay its operating expenses and
  commissions due originating brokers. The amounts are paid at terms available
  to unaffiliated parties, and represent approximately .1% of the gross revenues
  of AIG.
 
**These services are provided and obtained at a cost which, in the opinion of
  the management of AIG, does not exceed the cost of obtaining such services
  from unaffiliated sources.
 
     Mr. Aidinoff is a partner in the law firm of Sullivan & Cromwell, and,
during 1993, Ambassador Hills was a partner in the law firm of Shea & Gould,
both of which in 1993 provided legal services to AIG and its subsidiaries,
receiving normal fees for services rendered.
 
             REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE
 
     The Stock Option and Compensation Committee, currently comprised of Messrs.
Cohen, Gousseland, Hoenemeyer and Howell, is the committee of the Board
responsible for establishing the compensation of the Chief Executive Officer and
setting policy for compensation at the senior levels of AIG, as well as
administering AIG's various employee stock option plans.
 
     In determining the compensation which is appropriate for both the Chief
Executive Officer and other members of senior management, the Stock Option and
Compensation Committee's starting point is AIG's salary administration
philosophy, which is to pay within a range that helps meet business objectives
while considering external and internal influences and the level of funding
allocated to fixed compensation expenses. At senior positions, one of the
objectives is to pay at a level that allows AIG to attract, retain and motivate
key executives by paying them competitively compared to peers within a selected
group of major companies in the insurance industry while comparing AIG's
performance to the performance of those companies. In so doing, a variety of
factors are considered, including the performance of AIG relative to those
companies as measured by standards such as net income and its growth over prior
periods, return on equity and property and casualty underwriting performance;
the level of compensation paid to senior officers within the selected group of
companies; the level of individual contribution by these senior officers to the
performance of AIG; and, in the case of the Chief Executive Officer, his
compensation as a percentage of net income. During 1993, the Committee did not
use a specific formula in evaluating the various factors, in determining the
specific amount of compensation payable or in determining the allocation of
compensation to salary, bonus and stock option grants but believes that such
compensation is commensurate with the services rendered.
 
     AIG's net income per share and after-tax return on equity (excluding
capital gains) for 1992 were $5.20 and 13.3 percent, respectively, and for 1993
were $6.11 and 13.9 percent, respectively. The average net income per share of
AIG's peer group, which is the same as the peer group used for the performance
graph presented below, was $.22 for 1992 and $3.85 for 1993, respectively, and
the average after-tax return on equity (excluding capital gains) for a larger
industry group selected by Conning & Company, a leading insurance research and
asset management company, was reported by Conning to be -1.2 percent for 1992
and estimated by Conning to be 3.5 percent for 1993, respectively. AIG evaluates
underwriting performance on the basis of the combined ratio (which is the sum of
the statutory loss ratio and the statutory expense ratio), a measure of
underwriting performance commonly used by property and casualty insurers. AIG's
property and casualty underwriting performance for 1992 and 1993, as measured by
its combined ratio, exceeded that of AIG's peer group. AIG's combined ratios for
1992 and 1993 were 102.36 and 100.07, respectively, while those for its peer
group averaged 120.85 and 116.33, respectively. The total compensation of the
Chief Executive Officer for 1993 represented approximately .12 percent of net
income of AIG for that year.
 
                                       12

<PAGE>   14
 
     As part of its consideration of the Chief Executive Officer's compensation,
the Committee also reviewed the activities and accomplishments of the Chief
Executive Officer in promoting the long-term interests of AIG through
participation in the debate on the future of the financial services and
insurance industries, in discussions on trade relations and international
affairs and in similar endeavors.
 
     On the basis of the general factors set forth above, the Committee
determined the base salaries for 1994 and bonuses for 1993 performance.
 
     The Committee has recognized, in making these compensation determinations,
that AIG has traditionally encouraged long-term strategic management and the
enhancement of shareholder value by providing high performing key executives the
opportunity for superior capital accumulation over the course of their careers
with AIG in the form of stock options. This is a tradition that the Committee
believes to have contributed significantly to AIG's considerable success over
the years.
 
     Section 162(m) of the Internal Revenue Code (the "Code") denies a tax
deduction to any publicly-held corporation such as AIG for compensation paid to
the chief executive officer and four most highly compensated officers of a
corporation in a taxable year to the extent that any such individual's
compensation exceeds $1,000,000 unless certain requirements for
performance-based compensation are satisfied. It is currently the intention of
AIG that all compensation for the Chief Executive Officer and the four other
most highly compensated officers in excess of $1,000,000 will be
performance-based and therefore will be deductible in accordance with Section
162(m). AIG has adopted and is submitting to its shareholders for their approval
a plan (the "Plan") for performance-based bonus compensation for the Chief
Executive Officer. If the Plan is approved by shareholders and is otherwise in
conformity with applicable laws and regulations, bonus payments to the Chief
Executive Officer pursuant to the Plan will be deductible by AIG for federal
income tax purposes.
 
     No member of the Committee is a former or current officer or employee of
AIG or any of its affiliated companies or is receiving compensation from AIG in
any capacity other than as a director.
 
                                         Stock Option and Compensation Committee
                                         American International Group, Inc.
 
                                         Marshall A. Cohen
                                         Pierre Gousseland  
                                         Frank J. Hoenemeyer
                                         John I. Howell     


                                       13

<PAGE>   15
 
PERFORMANCE GRAPH
 
     The following Performance Graph compares the cumulative total shareholder
return on AIG Common Stock for a five year period (December 31, 1988 to December
31, 1993) with the cumulative total return of the Standard & Poor's 500 stock
index (which includes AIG) and a peer group of companies (the "Peer Group")
consisting of nine multi-line or property/casualty insurance companies to which
AIG has traditionally compared its business and operations: Aetna Life &
Casualty Company, Chubb Corporation, CIGNA Corporation, CNA Financial
Corporation, The Continental Corporation, General Re Corporation, The St. Paul
Companies, The Travelers Corporation and USF & G Corporation. Dividend
reinvestment has been assumed and, with respect to companies in the Peer Group,
the returns of each such company have been weighted to reflect relative stock
market capitalization.
 
                       FIVE YEAR CUMULATIVE TOTAL RETURNS
 
                  VALUE OF $100 INVESTED ON DECEMBER 31, 1988
 

<TABLE>
<CAPTION>
      MEASUREMENT PERIOD
    (FISCAL YEAR COVERED)             AIG           S&P 500       PEER GROUP
<S>                              <C>             <C>             <C>
1988                                    100.00          100.00          100.00
1989                                    153.53          131.69          137.56
1990                                    143.34          127.60          113.81
1991                                    184.39          166.47          147.13
1992                                    218.62          179.15          165.89
1993                                    249.16          197.21          171.62
</TABLE>

 
             II.  APPROVAL OF A PERFORMANCE-BASED COMPENSATION PLAN
 
     It is proposed by the Board of DIrectors that the performance-based
compensation plan (the "Plan") adopted by the Stock Option and Compensation
Committee be approved.
 
     The Plan provides that, if for any calendar year the pre-tax return, with
certain adjustments, including adjustments in the event of extraordinary
catastrophic losses, on AIG's consolidated common shareholders' equity as of the
prior year-end, with certain adjustments ("Consolidated Common Shareholders'
Equity"), equals or exceeds 15 percent, a bonus shall be paid to the Chief
Executive Officer. The amount of the bonus will range from $750,000 to
$3,550,000 and will depend on the pre-tax return on AIG's Consolidated Common
Shareholders' Equity. The Stock Option and Compensation Committee shall have the
authority to reduce such bonus, but may not increase the bonus payable pursuant
to this Plan without the approval of holders of AIG Common Stock. Had the Plan
been in effect for 1993, the maximum amount payable pursuant to the Plan,
subject to review and possible reduction by the Stock Option and Compensation
Committee, would have been $2,350,000.
 
     If at the end of a calendar quarter a proportionate part of such return has
been earned for the period beginning with the commencement of such calendar year
and ending on the last day of such calendar quarter, the Chief Executive Officer
shall be entitled to a proportionate part of such bonus which shall be paid to
him upon publication of the earnings for such period and the approval of the
Stock Option and Compensation Committee.
 
     Under the requirements for performance-based compensation set forth in
Section 162(m) of the Internal Revenue Code, compensation paid under the Plan
will not be subject to the deduction limit if the Plan is approved by the
holders of AIG Common Stock and certain other criteria are satisfied. It is the
intent of AIG to operate the Plan so that all amounts paid thereunder are
deductible for federal income tax purposes.
 
                                       14

<PAGE>   16
 
     The Stock Option and Compensation Committee is of the view that adoption of
the Plan will advance the interests of AIG and its shareholders in that it will
provide incentives to the Chief Executive Officer to manage AIG so as to achieve
the indicated returns on Consolidated Common Shareholders' Equity. The Board of
Directors concurs in the view of the Stock Option and Compensation Committee and
is of the further view that shareholders should approve the Plan so that,
assuming compliance with all applicable laws and regulations, payments made
pursuant to the Plan will be deductible by AIG for federal tax purposes.
 
     Approval of this proposal requires approval by a majority of the holders of
AIG Common Stock present and entitled to vote at the meeting. Any shares not
voted (whether by abstention, broker non-vote or otherwise) will have no impact
on the vote.
 
     The Board of Directors recommends a vote FOR this proposal.
 
    III.  APPROVAL OF PROPOSAL TO AMEND THE 1991 EMPLOYEE STOCK OPTION PLAN
 
     The Board of Directors has adopted, subject to approval of the
shareholders, an amendment to the 1991 Employee Stock Option Plan (the "1991
Plan"). The amendment to the 1991 Plan provides that options may not be granted
to any one person to purchase more than 10% of the aggregate AIG Common Stock
covered by the 1991 Plan (300,000 shares). No other amendments are being made to
the 1991 Plan. An amended and restated copy of the 1991 Plan (the "Amended 1991
Plan") is attached as Appendix A.
 
     The purpose of the Amended 1991 Plan is to advance the growth and
prosperity of AIG and its subsidiaries by providing their officers and other key
employees with additional incentives. The Amended 1991 Plan is to be
administered by a committee of the Board of Directors (the "Committee") drawn
solely from its members who are not eligible to receive options.
 
     Under the Amended 1991 Plan, options may be granted to such officers and
other key employees to purchase up to an aggregate of 3,000,000 present shares
of AIG Common Stock (which reflects adjustment for the stock split in the form
of a 50 percent stock dividend paid in July 1993), at exercise prices not less
than the fair market value of such stock at the dates of grant. Shares to be
reserved for issuance under the Amended 1991 Plan will consist of newly issued
shares or shares acquired by AIG from time to time and held as treasury stock.
Options may be exercisable for periods not exceeding ten years from grant dates
and shall be granted upon such other terms and conditions as the Committee may
approve. No cash consideration will be received for the granting of options.
Options will not be transferable otherwise than by will or the laws of descent
and distribution. The Amended 1991 Plan provides that the Committee shall
determine at the time of grant whether all or any part of a stock option shall
be an incentive stock option. The number of shares available for options or
issuable upon the exercise of options, and option prices, will be subject to
antidilution and similar adjustments. Shares subject to options which terminate
or expire prior to exercise will be available for further options under the
Amended 1991 Plan. No options may be granted under the Amended 1991 Plan after
December 31, 2001. The Board may from time to time amend the Amended 1991 Plan,
but no alteration or amendment may be made without the approval of shareholders
if such approval is required by Rule 16b-3 under the Securities Exchange Act of
1934 for transactions pursuant to the Amended 1991 Plan to be exempt thereunder.
 
     Because the granting of options under the provisions of the Amended 1991
Plan will be entirely within the discretion of the Committee, it is not possible
to designate the employees to whom options will be granted under the Amended
1991 Plan or the number of shares to be covered by such options. It is expected
that the aggregate number of optionees under the Amended 1991 Plan is not likely
to exceed 1,000.
 
     Grants of options under the 1991 Plan made during 1993 are shown in the
table on page 9. Total options granted to date under the 1991 Plan (as adjusted
for the stock split in the form of a 50 percent stock dividend paid in July
1993) were as follows: Greenberg -- 68,500 shares; Matthews -- 27,700 shares;
Tizzio -- 27,700 shares; Stempel -- 22,100 shares; Tse -- 14,100 shares; all
executive officers as a group -- 271,320 shares; all employees -- 906,760
shares.
 
     The market value of the AIG Common Stock on March 15, 1994 was $83.75 per
share.
 
TAX MATTERS
 
     Upon the grant or exercise of an incentive stock option, no income will be
realized by the optionee for federal income tax purposes, and AIG will not be
entitled to any deduction. If the shares received on the exercise of an
incentive stock option are not disposed of within the one-year period beginning
on the date of the transfer of such shares to the optionee, nor within the
two-year period beginning on the date of the grant of the option, any profit
realized by the optionee upon the disposition of such shares will be taxed as
long-term capital gain. In such event, no
 
                                       15

<PAGE>   17
 
deduction will be allowed to AIG. If the shares are disposed of within the
one-year period from the date of transfer of such shares to the optionee or
within the two-year period from the date of the grant of the option, the excess
of the fair market value of the shares on the date of exercise or, if less, the
fair market value on the date of disposition, over the exercise price will be
taxable as ordinary income of the optionee at the time of disposition, and AIG
will be entitled to a corresponding deduction at such time.
 
     Upon the grant of an option which is not an incentive stock option, no
income will be realized by the optionee. Upon the exercise of such an option,
the amount by which the fair market value of the shares at the time of exercise
exceeds the exercise price will be taxed as ordinary income of the optionee and
AIG will be entitled to a corresponding deduction. The optionee may be required
to pay to AIG the applicable withholding taxes with respect to the ordinary
income realized on exercise of a nonqualified stock option.
 
     Approval of the amendment to the 1991 Plan requires approval by a majority
of the shares of AIG Common Stock present and entitled to vote at the meeting.
Any shares not voted (whether by abstention, broker non-vote or otherwise) will
have no impact on the vote.
 
     Your Board of Directors recommends a vote FOR the proposal to approve the
amendment to the 1991 Plan.
 
                         IV.  SELECTION OF ACCOUNTANTS
 
     The Audit Committee and the Board of Directors have recommended the
employment of Coopers & Lybrand as independent accountants of AIG for 1994. That
firm has no direct or indirect financial interest in AIG or any of its parents
or subsidiaries. Representatives of that firm are expected to be present at the
Annual Meeting with an opportunity to make a statement if they desire to do so
and to be available to respond to appropriate questions.
 
     Approval of the selection of accountants requires approval by a majority of
the shares of AIG Common Stock present and entitled to vote at the meeting. Any
shares not voted (whether by abstention, broker non-vote or otherwise) will have
no impact on the vote.
 
     Your Board of Directors recommends a vote FOR the proposal to employ
Coopers & Lybrand.
 
                            V.  SHAREHOLDER PROPOSAL
 
     The Presbyterian Church (U.S.A.), 100 Witherspoon Street, Louisville,
Kentucky 40202, which states that it owns 83,525 shares of AIG Common Stock, has
notified AIG in writing that it intends to present a resolution for action by
the shareholders at the Annual Meeting. The Adrian Dominican Sisters, 1257 East
Siena Heights Drive, Adrian, Michigan 49221, the Evangelical Lutheran Church in
America, 122 C Street N.W. Suite 300, Washington, D.C. 20001-2172, the Pension
Fund of the Christian Church (Disciples of Christ), 155 East Market Street,
Indianapolis, Indiana 46204, and the Unitarian Universalist Association of
Congregations, 25 Beacon Street, Boston, Massachusetts 02108, who state that
they hold 2,600 shares, 2,000 shares, 38,550 shares and 5,490 shares,
respectively, of AIG's Common Stock, have notified AIG that they are joining as
proponents of the resolution to be proposed by the Presbyterian Church (U.S.A.).
The text of the resolution and the supporting statement submitted by the
sponsors are as follows:
 
                                "1994 RESOLUTION
                       AMERICAN INTERNATIONAL GROUP, INC.
 
"WHEREAS equal employment opportunity remains a national priority, and provides
a vehicle to address social and economic injustice.
 
"WHEREAS American International Group, Inc., headquartered in New York City,
employed approximately 33,000 people in 1992, over 13,000 in the United States:
 
"RESOLVED that the shareholders request the Board of Directors to provide all
shareholders the following information upon request within six months of the
1994 annual meeting, provided that proprietary information may be omitted and
cost limited to a reasonable amount:
 
     "1. A chart identifying employees according to their sex and race in each
         of the nine major EEOC defined job categories for 1991, 1992, and 1993,
         listing either numbers or percentages in each category.
 
     "2. A summary description of any Affirmative Action policies and programs
         to improve performances, including job categories where women and
         minorities are under utilized.
 
     "3. A description of any policies and programs oriented specifically toward
         increasing the number of managers who are qualified females and/or
         belong to ethnic minorities.
 
                                       16

<PAGE>   18
 
     "4. Any other information which the Board believes will assist shareholders
         to understand the company's efforts to promote equal employment
         opportunity and equitable treatment for all employees.
 
                             "SUPPORTING STATEMENT
 
"The religious organizations which have filed this resolution have supported
equal employment opportunity and equitable treatment as basic human rights
undergirding economic justice for women and racial/ethnic minorities.
 
"Equal employment opportunity and equitable treatment are recognized as good
business practice. They encourage employee performance and morale, and help our
workforce reflect the communities where we operate. However, a substandard
record leaves AIG open to expensive legal action, poor employee morale and
potential loss of business.
 
"We know our company believes that we have a good record. AIG makes employment
decisions solely on the basis of merit, and believes such a practice results in
a diversified workforce throughout the organization. However, we are concerned
as well about subtle discrimination forming a "glass ceiling" blocking access of
women and minorities to top positions. Only one of thirty-two officers listed in
the Annual Report is a woman. Our company refuses to disclose basic EEO
information which would permit shareholders to evaluate whether women and
racial/ethnic persons are represented fairly throughout the company.
 
"We believe shareholders are entitled to receive EEO information in order to
form independent judgments. Many other companies willingly share EEO information
in various formats. Bristol-Myers Squibb, ABC/Capital Cities and Travelers
produced excellent magazine-style reports. General Motors includes EEO data in
its Public Interest Report.
 
"Disclosure also keeps the issue high on the company's agenda, and reaffirms a
commitment to equal opportunity. This report would also permit AIG to tell its
story. Your support of this resolution will help promote equal employment
opportunity and equitable treatment. Please mark your proxy in favor."
 
                      MANAGEMENT'S STATEMENT IN OPPOSITION
 
     Your Board of Directors opposes this proposal. AIG is fully committed to
providing equal employment opportunity and complying with equal employment
opportunity laws. It is AIG's policy to recruit, hire, train and promote into
all job levels the most qualified applicants without regard to race, color,
religion, sex, national origin, age, handicap or veteran status. All employees
at every level are judged only on the basis of their contribution to the company
with emphasis placed on qualities such as imagination, initiative and integrity.
Your Board of Directors believes that the key to non-discrimination is a
qualitative rather than a quantitative methodology.
 
     Your Board of Directors urges a vote against this proposal. The goal of
equal employment opportunity is worthy; it is also one to which AIG has always
been committed. In your Board of Directors' judgment, providing reports is not
the appropriate approach and would not enhance AIG's efforts to provide equal
opportunity.
 
     Approval of this proposal requires approval by a majority of the shares of
AIG Common Stock present and entitled to vote at the meeting. Any shares not
voted (whether by abstention, broker non-vote or otherwise) will have no impact
on the vote.
 
     Your Board of Directors recommends a vote AGAINST this proposal.
 
                           VI.  SHAREHOLDER PROPOSAL
 
     The Sisters of Mercy Consolidated Asset Management Program, 20 Washington
Square North, New York, New York 10011, which states that it owns 9,000 shares
of AIG Common Stock, has notified AIG in writing that it intends to present a
resolution for action by the shareholders at the Annual Meeting. Mercy Health
Services, 34605 Twelve Mile Road, Farmington Hills, Michigan 48331-3221, and the
Sisters of Charity of Saint Elizabeth, P.O. Box 476, Convent Station, New Jersey
07961-0476, who state that they hold 8,809 shares and 750 shares, respectively,
of AIG's Common Stock, have notified AIG that they are joining as proponents of
the resolution to be proposed by the Mercy Consolidated Assets Management
Program. The text of the resolution and the supporting statement submitted by
the sponsors are as follows:
 
                                       17

<PAGE>   19
 
               "INSURANCE COMPANIES' TIES TO THE TOBACCO INDUSTRY
 
"WHEREAS
 
     We are deeply concerned about the ethical implications of insurance
companies investing in the tobacco industry, especially when they are so
critically aware of the negative health effects of smoking;
 
"Cigarette smoking is the leading cause of death and disease in the United
States, causing an estimated 430,000 deaths last year, with 53,000 more dying
from the effects of passive smoking;
 
"An estimated $23.7 billion was spent in 1985 to treat diseases caused by
smoking. $10.2 billion was lost because of smoking-induced liability. An
additional $18.5 billion was lost to the economy because of premature deaths
from smoking, all facts insurance companies are well aware of;
 
"Cigarette companies also have been criticized for their special promotion
campaigns aimed at low-income persons, women, and minorities. The RJR Nabisco
"Joe Camel" ads have been severely criticized by the U.S. Surgeon General who
demanded the company drop the ad campaign because of its manipulative appeal to
young people. Many of the tobacco ads and marketing campaigns by companies like
Philip Morris and RJR Nabisco are highly irresponsible;
 
"Our company continues to buy stocks and bonds in tobacco companies and to our
knowledge has not done a full review of the social and financial implications of
these holdings:
 
"We believe an insurance company, which invests in tobacco equities, and stands
for health, sends mixed messages and should review its posture related to these
apparently contradictory positions. We do not assume the only response to this
review must be the sale of tobacco securities. A creative response as an active
shareholder expressing concern to the tobacco company might also be appropriate.
 
"RESOLVED
 
     That shareholders request the Board to initiate a study conducted at
reasonable cost, of the appropriate ethical response to take related to its
investment in tobacco companies and report to requesting shareholders the
results of this review. This review should focus on the following questions:
 
     "1. The appropriateness of an insurance company holding stock in tobacco
         companies and whether it is socially or financially responsible to
         divest of this stock. This should take into account the depressed price
         of tobacco company stock and expected long term impact on our
         portfolio.
 
     "2. Ways in which our company can keep its shares and creatively express
         itself to the tobacco companies regarding their policies and practices.
 
     "3. The impact smoking has on our insurance payments for
         smoking-attributable deaths, diseases and property loss.
 
                                 "SUPPORTING STATEMENT
 
"A number of insurance companies have reviewed the implications of owning
tobacco securities as requested in this resolution. Sears-Allstate has a
smoke-free equity portfolio. Travellers attempts to avoid tobacco investments
where possible. Other major insurance companies don't publicize their stand but
have policies and/or practices that have resulted in prohibitions or limitations
on investments in tobacco companies. Meanwhile institutions like Harvard and
Johns Hopkins have divested all tobacco stocks. We believe this study will
enable concerned shareholders and customers to better understand the thinking of
our Company on this crucial issue."
 
                      MANAGEMENT'S STATEMENT IN OPPOSITION
 
     Your Board of Directors opposes this proposal. AIG complies with all
Federal, state and other laws and regulations regarding its investment
portfolios. Your Board of Directors believes that AIG shareholders are best
served by not co-mingling investment decisions with what may be considered to be
social issues. Your Board of Directors therefore does not believe it would be
appropriate for AIG to conduct the study or issue the report to shareholders
requested in this proposal. Your Board of Directors urges a vote against this
proposal.
 
                                       18

<PAGE>   20
 
     Approval of this proposal requires approval by a majority of the shares of
AIG Common Stock present and entitled to vote at the meeting. Any shares not
voted (whether by abstention, broker non-vote or otherwise) will have no impact
on the vote.
 
     Your Board of Directors recommends a vote AGAINST this proposal.
 
              VII.  SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
 
     All suggestions from shareholders are given careful attention. Proposals
intended for inclusion in next year's proxy statement should be sent to the AIG
Secretary at 70 Pine Street, New York, New York 10270 and must be received by
December 1, 1994.
 
                              VIII.  OTHER MATTERS
 
     If any other matters properly come before the meeting, it is the intention
of the persons named in the accompanying proxy form to vote the proxy in
accordance with their judgment on such matters.
 
PROXY SOLICITATION
 
     AIG will bear the cost of this solicitation of proxies. Proxies may be
solicited by mail, personal interview, telephone and telegraph by directors,
their associates, and approximately eight officers and regular employees of AIG
and its subsidiaries. In addition to the foregoing, AIG has retained Georgeson &
Co. to assist in the solicitation of proxies for a fee of approximately $8,000
plus reasonable out-of-pocket expenses and disbursements of that firm. AIG will
also reimburse brokers and others holding stock in their names, or in the names
of nominees, for forwarding proxy materials to their principals.
 
                                       19

<PAGE>   21
 
                                   APPENDIX A
 
                       AMERICAN INTERNATIONAL GROUP, INC.
              AMENDED AND RESTATED 1991 EMPLOYEE STOCK OPTION PLAN
                                  (THE "PLAN")
 
     1.  Purpose.  The purpose of this Plan is to advance the interests of
American International Group, Inc. ("AIG") by providing certain of the key
employees of AIG and of any subsidiary corporation of AIG, upon whose judgment,
initiative and efforts the successful conduct of the business AIG largely
depends, with an additional incentive to continue their efforts on behalf of
such corporations, as well as to attract to such corporations people of
training, experience and ability.
 
     2.  Administration.  The Plan shall be administered by a committee (the
"Committee") of the Board of Directors of AIG (the "Board") to be drawn solely
from members of the Board who are not eligible to participate in the Plan and
who have not been eligible for one year prior to serving on the Committee. The
Committee is authorized, subject to the provisions of the Plan, to establish
such rules and regulations as it deems necessary for the proper administration
of the Plan and to make such determinations and interpretations and to take such
action in connection with the Plan and any stock options granted thereunder as
it deems necessary or advisable. All determinations and interpretations made by
the Committee shall be binding and conclusive on all optionees and on their
legal representatives and beneficiaries. The Committee shall have the authority,
in its absolute discretion, to determine which of the eligible employees of AIG
and any subsidiary corporation of AIG shall receive stock options, the time when
stock options shall be granted, the terms of such options and the number of
shares for which options shall be granted.
 
     3.  Stock Subject to the Plan.  Subject to adjustment as provided in
Section 7 hereof, the maximum number of shares as to which options may at any
time be granted under the Plan is 2,000,000 shares of the Common Stock of AIG of
the par value of $2.50 per share (the "Common Stock") as such shares shall exist
on December 19, 1991 which shares of Common Stock may, in the discretion of the
Committee, be either authorized but unissued shares or shares previously issued
and reacquired by AIG. AIG may acquire by purchase all or any portion of the
shares which it will need to satisfy stock options, either at the time such
options are exercised or from time to time in advance whenever such purchases
are deemed advisable by the Committee or by such officer or officers of AIG as
the Committee may from time to time designate. Upon the expiration or
termination (in whole or in part) of unexercised options, shares of Common Stock
subject thereto shall again be available for option under the Plan.
 
     4.  Eligibility.  Key employees of AIG or any subsidiary corporation of
AIG, including officers (whether or not directors), shall be eligible to receive
stock options under the Plan. Directors who are not employees or officers of AIG
or any subsidiary corporation of AIG shall not be eligible to receive stock
options under the Plan.
 
     5.  Grant of Stock Options.  Stock options may be granted to eligible
employees in such number and at such times during the term of this Plan as the
Committee shall determine; provided, however, that options under this Plan to
purchase more than 10% of the aggregate shares of Common Stock set forth in
Section 3 above (as adjusted pursuant to the provisions of Section 7) shall not
be granted to any one employee.
 
     At time of grant, the Committee shall determine (A) whether all or any part
of a stock option granted to an eligible employee shall be an incentive stock
option and (B) the number of shares subject to such incentive stock option. The
form of any stock option which is all or in part an incentive stock option shall
clearly indicate that such stock option is an incentive stock option or, if
applicable, the number of shares subject to the incentive stock option. The
aggregate fair market value (determined as of the time the option is granted) of
the stock with respect to which incentive stock options are exercisable for the
first time by an eligible employee during any calendar year (under all such
plans of AIG and of any subsidiary corporation of AIG) shall not exceed
$100,000. The term "incentive stock option" means an option meeting the
requirements of Section 422 of the Internal Revenue Code of 1986.
 
     6. Terms and Conditions of Stock Options.  All stock options granted under
the Plan shall be in such form as the Committee may from time to time determine
and shall be subject to the following terms and conditions:
 
          (a) Option Price.  The option price per share with respect to each
     option shall be determined by the Committee but shall not be less than 100%
     of the fair market value of the Common Stock on the date the option is
     granted, as determined by the Committee.
 
                                       A-1

<PAGE>   22
 
          (b) Term of Option.  In no event shall any stock option be exercisable
     after the expiration of 10 years from the date on which the stock option is
     granted.
 
          (c) Exercise of Stock Option and Payment for Shares.  Except as
     provided in paragraphs (e) and (f) of this Section below, the shares
     covered by each stock option may not be purchased for one year after the
     date on which the stock option is granted, but thereafter may be purchased
     in such installments as shall be determined by the Committee at the time
     the stock option is granted. Any shares not purchased on the applicable
     installment date may be purchased thereafter at any time prior to the final
     expiration of the stock option. To exercise a stock option, the optionee
     shall give written notice to AIG specifying the number of shares to be
     purchased and accompanied by payment of the full purchase price therefor:
     (i) in cash or by certified or official bank check, (ii) in shares of
     Common Stock, valued as of the date of exercise, of the same class as those
     to be granted by exercise of the option, or (iii) in a combination of (i)
     and (ii). The Common Stock will be valued on the date of exercise at the
     fair market value as determined by the Committee. Any person exercising a
     stock option shall make such representations and agreements and furnish
     such information as the Committee may in its discretion deem necessary or
     desirable to assure compliance by AIG, on terms acceptable to AIG, with the
     provisions of the Securities Act of 1933 and any other applicable legal
     requirements. If an optionee so requests, shares purchased may be issued in
     the name of the optionee and another jointly with the right of
     survivorship.
 
          (d) Non-transferability of Options.  No stock option granted under the
     Plan shall be transferable by the optionee other than by will or the laws
     of descent and distribution, and such option shall be exercisable, during
     his lifetime, only by the optionee.
 
          (e) Termination of Employment.  No part of any option may be exercised
     after the termination of employment of an optionee with AIG or subsidiary
     corporation of AIG, except that
 
             (i) if such termination of employment is at or after normal
        retirement age or due to disability, any portion of an option, whether
        or not exercisable at the time of such termination, may be exercised by
        the optionee at any time within the term of the option; and
 
             (ii) if such termination of employment is not at or after normal
        retirement age or due to disability or death, with the approval of the
        Board, any portion of an option may be exercised by the optionee within
        three months after such termination, but only to the extent such option
        was exercisable at the time of such termination.
 
          (f) Death of Optionee.  In the event of the death of the optionee
     (whether during or after the termination of his employment) any portion of
     an option exercisable at the time of death may be exercised within 12
     months after the death of the optionee (but in no event after the
     expiration of the term of the option) by the person or persons to whom the
     optionee's rights under such option are transferred by will or the laws of
     descent and distribution. In the event of the death of the optionee during
     his employment but prior to the time an option would normally become fully
     exercisable, such option shall be considered fully exercisable at the time
     of death.
 
     7. Adjustment in Event of Changes in Capitalization.  In the event of a
recapitalization, stock split, stock dividend, combination or exchange of
shares, merger, consolidation, rights offering, separation, reorganization or
liquidation, or any other change in the corporate structure or shares of AIG,
subsequent to December 19, 1991, the Committee shall make such equitable
adjustments, designed to protect against dilution or enlargement of rights, as
it may deem appropriate, in the number and kind of shares authorized by the Plan
and, with respect to outstanding stock options, in the number and kind of shares
covered thereby and in the option price.
 
     8. Rights as a Shareholder.  An optionee shall have no rights as a
shareholder with respect to any shares covered by a stock option until the date
of issuance of a stock certificate for such shares.
 
     9. Withholding Taxes.  Whenever shares of Common Stock are to be issued in
satisfaction of stock options granted under the Plan, AIG shall have the right
to require the recipient to remit to AIG an amount sufficient to satisfy all
applicable withholding tax requirements prior to the delivery of any certificate
or certificates for shares.
 
     10. Terms of Plan.  No stock options shall be granted pursuant to the Plan
after December 31, 2001 but stock options theretofore granted may extend beyond
the date and the terms and conditions of the Plan shall continue to apply
thereto.
 
     11. Termination or Amendment of Plan.  The Board may at any time terminate
the Plan with respect to any shares of Common Stock of AIG not at the time
subject to option, and may from time to time alter or amend the Plan
 
                                       A-2

<PAGE>   23
 
or any part thereof, provided that no change may be made in any stock option
theretofore granted which would impair the rights of an optionee without the
consent of such optionee, and further, that no alteration or amendment may be
made without the approval of shareholders if such approval is required by Rule
16b-3 under the Securities Exchange Act of 1934 for transactions pursuant to the
Plan to be exempt thereunder.
 
     12. Approval of Shareholders.  This Plan has been approved by the
shareholders of AIG at the Annual Meeting of Shareholders held on May 13, 1992
and the amendment giving rise to this Amended and Restated Plan has been adopted
on March 14, 1994 by the Board subject to approval by the shareholders of AIG at
the Annual Meeting of Shareholders to be held on May 16, 1994.
 
                                       A-3

<PAGE>   24

AMERICAN INTERNATIONAL GROUP, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 1994
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints M. R. Greenberg, John J. Roberts and Ernest
E.  Stempel, and each of them, with full power to act without the other and
with full power of substitution, as proxies to represent and to vote, as
directed herein, all shares the undersigned is entitled to vote at the
annual meeting of the shareholders of American International Group, Inc. to
be held at Eighth Floor, 72 Wall Street, New York, New York 10270, on
Monday, May 16, 1994 at 11:00 a.m., and all adjournments thereof, as
follows:

PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE AND RETURN IT
PROMPTLY USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.

UNLESS OTHERWISE MARKED, THE PROXIES ARE APPOINTED WITH AUTHORITY TO VOTE
"FOR" ALL NOMINEES "FOR" ELECTION, "FOR" THE PROPOSAL TO ADOPT A
PERFORMANCED-BASED COMPENSATION PLAN, FOR THE PROPOSAL TO AMEND THE 1991
EMPLOYEE STOCK OPTION PLAN, FOR THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
AND "AGAINST" ITEM 5 AND ITEM 6.

(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN ITEM 1, "FOR"
ITEMS 2, 3 AND 4, AND "AGAINST" ITEMS 5 AND 6.

1. Election as Directors of the following nominees identified in the Proxy
   Statement: M. Aidinoff, M. Cohen, B. Conable, M. Feldstein, H. Freeman, L.
   Gonda,  M. Greenberg, C. Hills, F. Hoenemeyer, J. Howell, E. Matthews, D.
   Phypers, J. Roberts, E. Stempel, T. Tizzio

   For  /X/          Withhold  /X/

(INSTRUCTION: To withhold authority to vote for any of the foregoing
individuals, write the name(s) on the following lines.)

.............................................................................

.............................................................................


2. Approval of Performance-Based Compensation Plan

For  /X/       Against        /X/       Abstain        /X/

3. Amendment of 1991 Employee Stock Option Plan

For  /X/       Against        /X/       Abstain        /X/

4. Appointment of Independent Accountants

For  /X/       Against        /X/       Abstain        /X/

5. Shareholder Proposal Described in the Proxy Statement

For  /X/       Against        /X/       Abstain        /X/

6. Shareholder Proposal Described in the Proxy Statement

For  /X/       Against        /X/       Abstain        /X/

If you have noted either an Address Change or made Comments on the reverse
side of the card, mark here.

Address Change and/or Comments Mark Here               /X/

PROXY DEPARTMENT
NEW YORK, N.Y. 10203-0300

In their discretion to vote upon other matters that may properly come before
the meeting.
Please sign exactly as your name appears to the left.

DATED                                                              , 1994    
     --------------------------------------------------------------

- -------------------------------------------------------------------------
Signature                                                                    

- -------------------------------------------------------------------------
Signature

WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE YOUR FULL TITLE. IF SHARES ARE HELD JOINTLY, EACH HOLDER SHOULD
SIGN.
VOTES MUST BE INDICATED /X/ IN BLACK OR BLUE INK.

SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.