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                                                                     Exhibit 1.1


                       AMERICAN INTERNATIONAL GROUP, INC.

                 5.75% SERIES A-2 JUNIOR SUBORDINATED DEBENTURES

                             UNDERWRITING AGREEMENT

                                                                   March 8, 2007

Citigroup Global Markets Limited,
Deutsche Bank AG, London Branch,
J.P. Morgan Securities Ltd.,
   As representatives of the several Underwriters named in
   Schedule I hereto.
c/o Citigroup Global Markets Limited,
   Citigroup Centre,
   Canada Square,
   London E14 5LB.

Ladies and Gentlemen:

     American International Group, Inc., a Delaware corporation (the "COMPANY"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the firms named in Schedule I hereto (the "UNDERWRITERS"), for whom you are
acting as Representatives (the "REPRESENTATIVES"), (pounds)750,000,000 aggregate
principal amount of its 5.75% Series A-2 Junior Subordinated Debentures (the
"SECURITIES").

     1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:

          (a) A post-effective amendment No. 1 to the registration statements on
Form S-3 (Registration Nos. 333-106040 and 333-31024) in respect of the
Securities has been filed with the Securities and Exchange Commission (the
"COMMISSION"); such post-effective amendment, in the form heretofore delivered
to the Representatives (excluding exhibits to such post-effective amendment, but
including all documents incorporated by reference in the prospectus describing
junior subordinated debentures included in the post-effective amendment), has
been declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a "RULE
462(B) REGISTRATION STATEMENT"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "ACT"), which became effective upon
filing, since the delivery to the Representatives no other document with respect
thereto or document incorporated by reference therein has been filed or
transmitted for filing with the Commission (other than filings by the Company
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and
other than preliminary prospectuses, preliminary prospectus supplements and
other prospectuses filed pursuant to Rule 424(b) or Rule 433 of the rules and
regulations of the Commission under the Act that relate to securities other than
the Securities); and no stop order suspending the effectiveness of the
post-effective amendment No. 1 or the Rule 462(b) Registration Statement, if
any, has been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (the basic prospectus describing



junior subordinated debentures filed as part of such post-effective amendment
No. 1 is hereinafter called the "BASIC PROSPECTUS"; any preliminary prospectus
(including the Basic Prospectus as supplemented by any preliminary prospectus
supplement) relating to the Securities filed with the Commission pursuant to
Rule 424(b) of the rules and regulations of the Commission under the Act is
hereinafter called a "PRELIMINARY PROSPECTUS"; the various parts of such
post-effective amendment No. 1 and the Rule 462(b) Registration Statement, if
any, including all exhibits thereto and the documents incorporated by reference
in the Basic Prospectus at the time such post-effective amendment became
effective but excluding any Statement of Eligibility under the Trust Indenture
Act of 1939, as amended (the "TRUST INDENTURE ACT"), and including any
prospectus supplement relating to the Securities that is filed with the
Commission and deemed by virtue of Rule 430B to be part of the registration
statement, each as amended at the time such post-effective amendment became
effective or such part of the Rule 462(b) Registration Statement, if any, became
or hereafter becomes effective, are hereinafter collectively called the
"REGISTRATION STATEMENT"; the Basic Prospectus as amended and supplemented
immediately prior to the Applicable Time (as defined in Section 1(c) hereof), is
hereinafter called the "PRICING PROSPECTUS"; the form of the final prospectus
relating to the Securities filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 5(a) hereof is hereinafter called the
"PROSPECTUS"; any reference herein to the Basic Prospectus, the Pricing
Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Act, as of the date of such prospectus; any
reference to any amendment or supplement to the Basic Prospectus, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
any post-effective amendment to the Registration Statement, any prospectus
supplement relating to the Securities filed with the Commission pursuant to Rule
424(b) under the Act and any documents filed under the Exchange Act and
incorporated therein, in each case after the date of the Basic Prospectus, such
Preliminary Prospectus or the Prospectus, as the case may be; any reference to
any amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the Registration Statement
that is incorporated by reference in the Registration Statement; and any "issuer
free writing prospectus" as defined in Rule 433 under the Act relating to the
Securities is hereinafter called an "ISSUER FREE WRITING PROSPECTUS";

          (b) No order preventing or suspending the use of any Preliminary
Prospectus or any Issuer Free Writing Prospectus has been issued by the
Commission, and each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the Act and the Trust
Indenture Act, and the rules and regulations of the Commission thereunder, and
did not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through the Representatives expressly
for use therein;

          (c) For the purposes of this Agreement, the "APPLICABLE TIME" is 12:00
p.m. (New York City time) on the date of this Agreement; the Pricing Prospectus,
as supplemented by the information contained in the final term sheet prepared
and filed pursuant to Section 5(a) hereof, taken together (collectively, the
"PRICING DISCLOSURE PACKAGE") as of the Applicable Time, did not include any
untrue statement of a material fact or omit to state any


                                       -2-



material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and each other
Issuer Free Writing Prospectus listed on Schedule II(a) hereto does not conflict
with the information contained in the Registration Statement, the Pricing
Prospectus or the Prospectus, and each such other Issuer Free Writing
Prospectus, as supplemented by and taken together with the Pricing Disclosure
Package as of the Applicable Time, did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to statements or omissions made in an Issuer Free Writing
Prospectus in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through the Representatives expressly
for use therein;

          (d) The documents incorporated by reference in the Pricing Prospectus
and the Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents contained
an untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and any further documents so filed
and incorporated by reference in the Prospectus, when such documents become
effective or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder and will
not contain an untrue statement of a material fact or, in the case of an Annual
Report on Form 10-K, omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or, in the case of
any other document filed under the Exchange Act, omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to (i) any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by an Underwriter through the Representatives expressly for use
therein, or (ii) any statement in any such document which does not constitute
part of the Registration Statement, Pricing Prospectus or Prospectus pursuant to
Rule 412 under the Act;

          (e) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement and the
Prospectus will conform, in all material respects to the requirements of the Act
and the Trust Indenture Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date as to
the Registration Statement and any amendment thereto and as of its date as to
the Prospectus and any supplement thereto, contain an untrue statement of a
material fact or, in the case of the Registration Statement, omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, in the case of the Prospectus, omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to (i) the Statement of
Eligibility (Form T-1) under the Trust Indenture Act of the Trustee, (ii) any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by any Underwriter through the
Representatives expressly for use in the Prospectus or any amendment or
supplement thereto,


                                       -3-



or (iii) any statement which does not constitute part of the Registration
Statement or Prospectus pursuant to Rule 412 under the Act;

          (f) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware and has
full power and authority to own its properties and to conduct its business as
described in the Prospectus;

          (g) Since the date of the latest audited financial statements
incorporated by reference in the Basic Prospectus as amended or supplemented
there has not been (i) any material change in the capital stock (other than as
occasioned by Common Stock having been issued pursuant to the Company's employee
stock purchase plans, equity incentive plans and upon conversion of convertible
securities), or (ii) any material adverse change in or affecting the financial
position, shareholders' equity or results of operations of the Company and its
consolidated subsidiaries considered as an entirety, in each case, otherwise
than as set forth or contemplated in such Basic Prospectus as amended or
supplemented (any such change described in clause (ii) is referred to as a
"MATERIAL ADVERSE CHANGE");

          (h) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, the Securities will have been duly
executed, authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Company entitled to the benefits provided by
the Junior Subordinated Indenture, dated as of March 13, 2007, as supplemented
by the Second Supplemental Indenture, dated March 15, 2007 (as so supplemented,
the "INDENTURE"), between the Company and The Bank of New York, as Trustee (the
"TRUSTEE"), subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles; the Indenture
has been duly authorized and qualified under the Trust Indenture Act and
constitutes a valid and legally binding instrument, enforceable against the
Company in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles; and the Indenture conforms, and the Securities will conform, in all
material respects to the descriptions thereof contained in the Pricing
Disclosure Package and in the Prospectus;

          (i) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture and this
Agreement, and the consummation of the transactions herein and therein
contemplated, will not conflict with or result in a breach of any of the terms
or provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other material agreement or instrument to which the
Company is a party or by which the Company is bound or to which any of the
property or assets of the Company is subject, or result in any violation of any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its properties, except, in
each case, for such conflicts, breaches, defaults and violations that would not
have a material adverse effect on the business, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries considered as an entirety (a "MATERIAL ADVERSE EFFECT") or affect
the validity of the Securities, nor will such action result in any violation of
the provisions of the Restated Certificate of Incorporation, as amended, or the
By-Laws of the Company; and no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body is required by the Company for the issue


                                       -4-



and sale of the Securities or the consummation by the Company of the
transactions contemplated by this Agreement or the Indenture, except such
consents, approvals, authorizations, orders, registrations or qualifications the
failure to obtain or make would not have a Material Adverse Effect or affect the
validity of the Securities, and such consents, approvals, authorizations,
orders, registrations or qualifications as have been, or will have been prior to
the date of this Agreement, obtained under the Act or the Trust Indenture Act
and such consents, approvals, authorizations, orders, registrations or
qualifications as may be required under state securities or Blue Sky laws
(including insurance laws of any state relating to offers and sales of
securities in such state) in connection with the purchase and distribution of
the Securities by the Underwriters; and

          (j) There is no action, suit or proceeding pending, or to the
knowledge of the executive officers of the Company, threatened against the
Company or any of its subsidiaries, which has, or may reasonably be expected in
the future to have, a Material Adverse Effect, except as set forth or
contemplated in the Pricing Disclosure Package or the Prospectus as amended or
supplemented in accordance with Section 5(a) hereof.

     2. (a) Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price of 98.035% of the principal amount thereof, the principal
amount of Securities set forth opposite the name of such Underwriter in Schedule
I hereto.

        (b) Each Underwriter represents and agrees with the Company that it
will comply with or observe any restrictions or limitations set forth in the
Prospectus as amended or supplemented on persons to whom, or the jurisdictions
in which, or the manner in which, the Securities may be offered, sold, resold or
delivered.

     3. Upon the authorization by the Representatives of the release of such
Securities, the several Underwriters propose to offer such Securities for sale
upon the terms and conditions set forth in the Prospectus.

     4. The Securities to be purchased by each Underwriter hereunder will be
represented by one or more definitive global Securities in book-entry form which
will be deposited by or on behalf of the Company with a common depositary for
Clearstream Banking, societe anonyme ("Clearstream"), and Euroclear Bank
S.A./N.V., as operator of the Euroclear System ("Euroclear"), or their
designated custodians. The Company will deliver the Securities to one or more of
the Representatives, for the account of each Underwriter, against payment by or
on behalf of such Underwriter of the purchase price therefor by wire transfer of
Federal (same-day) funds to the account specified by the Company to the
Representatives at least twenty-four hours in advance, by causing Clearstream or
Euroclear to credit the Securities to the account of one or more of the
Representatives at Clearstream or Euroclear. The Company will cause the
certificates representing the Securities to be made available to the
Representatives for checking prior to the Time of Delivery (as defined below) at
the office of Clearstream or Euroclear or its designated custodian (the
"DESIGNATED OFFICE"). The time and date of such delivery and payment shall be
9:30 a.m., London time, on March 15, 2007 or at such other place and time and
date as the Representatives and the Company may agree upon in writing. Such time
and date are herein called the "TIME OF DELIVERY".


                                       -5-



          The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 8 hereof, including the cross-receipt
for the Securities, will be delivered at the offices of Sullivan & Cromwell LLP,
125 Broad Street, New York, NY 10004 (the "CLOSING LOCATION"), and the
Securities will be delivered at the Designated Office, all at the Time of
Delivery. A meeting will be held at the Closing Location at 4:00 p.m., New York
City time, on the New York Business Day next preceding the Time of Delivery, at
which meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For the
purposes of this Section 4, "NEW YORK BUSINESS DAY" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York City are generally authorized or obligated by law or
executive order to close.

     5. The Company covenants and agrees with each of the Underwriters:

          (a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under the
Act not later than the Commission's close of business on the second business day
following the date of this Agreement; to make no further amendment or supplement
(other than an amendment or supplement as a result of filings by the Company
under the Exchange Act and other than amendments or supplements in connection
with offerings of medium-term notes under any medium-term note program existing
on the date of this Agreement) to the Registration Statement or the Prospectus
prior to the Time of Delivery which shall be disapproved by the Representatives
promptly after reasonable notice thereof; between the signing of this Agreement
and the Time of Delivery, to give reasonable advance notice to the
Representatives of any filings by the Company under the Exchange Act; between
the signing of this Agreement and the Time of Delivery, to advise the
Representatives promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective or
any amendment or supplement to the Prospectus has been filed (other than an
amendment or supplement as a result of filings by the Company under the Exchange
Act and other than amendments or supplements in connection with offerings of
medium-term notes under any medium-term note program existing on the date of
this Agreement) and to furnish the Representatives with copies thereof; to
prepare a final term sheet, containing solely a description of the Securities,
in the form set forth in Exhibit A to Schedule II hereto and to file such term
sheet pursuant to Rule 433(d) under the Act within the time required by such
Rule; to file promptly all other material required to be filed by the Company
with the Commission pursuant to Rule 433(d) under the Act; to file promptly all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act for so long as the delivery of a prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Act) is required in
connection with the offering or sale of the Securities, and during such same
period to advise the Representatives, promptly after it receives notice thereof,
of the time when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended Prospectus
has been filed with the Commission (other than an amendment or supplement as a
result of filings by the Company under the Exchange Act and other than the
filing of prospectuses, preliminary prospectuses, preliminary prospectus
supplements, issuer free-writing prospectuses and other documents pursuant to
Rule 424(b) or Rule 433 under the Act that relate to securities other than the
Securities), of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any prospectus relating to the Securities,
of the suspension of the qualification of the Securities for offering or sale in
any jurisdiction, of the


                                       -6-



initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the event of the
issuance of any such stop order or of any such order preventing or suspending
the use of any such prospectus relating to the Securities or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;

          (b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Securities for offering
and sale under the securities laws of such jurisdictions as the Representatives
may request and to comply with such laws so as to permit the continuance of
sales and dealings in such jurisdictions for as long as may be necessary to
complete the distribution of the Securities; provided, however, that in
connection therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;

          (c) From time to time, to furnish the Underwriters with written and
electronic copies of the Prospectus in such quantities as the Representatives
may reasonably request, and, if the delivery of a prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Act) is required at any
time prior to the expiration of nine months after the time of issuance of the
Prospectus in connection with the offering or sale of the Securities and if at
such time any event shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made
when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a)
under the Act) is delivered, not misleading, or if for any other reason it shall
be necessary during such same period to amend or supplement the Prospectus or to
file under the Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Act, the Exchange Act or the Trust
Indenture Act, to notify the Representatives and upon their request to file such
document and to prepare and furnish without charge to each Underwriter and to
any dealer in securities as many copies as the Representatives may from time to
time reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance; and in case any Underwriter is required to deliver a prospectus (or
in lieu thereof, the notice referred to in Rule 173(a) under the Act) in
connection with sales of any of the Securities at any time nine months or more
after the time of issue of the Prospectus, upon the request of the
Representatives but at the expense of such Underwriter, to prepare and deliver
to such Underwriter as many written and electronic copies as the Representatives
may request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;

          (d) To make generally available to its security holders as soon as
practicable, but in any event not later than sixteen months after the effective
date of the Registration Statement (as defined in Rule 158(c)), an earnings
statement of the Company and its subsidiaries (which need not be audited)
complying with Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including, at the option of the Company, Rule 158);

          (e) During the period beginning from the date hereof and continuing to
and including the earlier of (i) the termination of trading restrictions for the
Securities, as notified to the Company by the Representatives, and (ii) the Time
of Delivery for the Securities, not to offer,


                                       -7-



sell, contract to sell or otherwise dispose of any debt securities of the
Company which mature more than nine months after such Time of Delivery and which
are pari passu with, and otherwise substantially similar to, the Securities,
without the prior written consent of the Representatives, provided that the
foregoing agreement shall not apply to the 6.25% Series A-1 Junior Subordinated
Debentures or the 4.875% Series A-3 Junior Subordinated Debentures of the
Company; and

          (f) To use all commercially reasonable efforts to ensure that, no
later than 30 days following the Time of Delivery, the Securities will be listed
on the New York Stock Exchange.

     6. (a) The Company and each Underwriter agree that the Underwriters may
prepare and use one or more preliminary term sheets relating to the Securities
containing customary information; provided that such information has been
approved by the Company before the first communication containing such
information is used;

          (b) Each Underwriter represents that it has not and will not use,
authorize use of, refer to, or participate in the planning for use of, any
written communication that constitutes an offer to sell or the solicitation of
an offer to buy the Securities other than (A) any written communication
permitted under subparagraph (a) above, (B) the final term sheet prepared and
filed pursuant to Section 5(a) hereof, or (C) any written communication prepared
by such Underwriter and approved in writing by the Company in advance;

          (c) The Company represents to the Underwriters that it has not and
will not use, authorize use of, refer to, or participate in the planning for use
of, any written communication that constitutes an offer to sell or the
solicitation of an offer to buy the Securities other than (A) any written
communication permitted under subparagraph (a) above, (B) the final term sheet
prepared and filed pursuant to Section 5(a) hereof, (C) a press release or other
announcement relating to the Securities that complies with Rule 134 or Rule 135
under the Act and that the Company issues after giving notice to the
Representatives of its intent to issue a press release, or (D) any written
communication approved by the Representatives in advance in writing;

          (d) Any such free writing prospectus the use of which has been
consented to by the Company or the Representatives, as the case may be
(including the final term sheet prepared and filed pursuant to Section 5(a)
hereof), is listed on Schedule II(a) hereto;

          (e) The Company represents and agrees that it has complied and will
comply with the requirements of Rule 433 under the Act applicable to any Issuer
Free Writing Prospectus, including timely filing with the Commission, where
required, and legending; and

          (f) The Company agrees that if at any time following the issuance of
an Issuer Free Writing Prospectus any event occurred or occurs as a result of
which such Issuer Free Writing Prospectus would conflict with the information in
the Registration Statement, the Pricing Prospectus or the Prospectus, or would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances then prevailing, not misleading, the Company will, if the
Underwriters are then required to deliver a prospectus under the Act in respect
of sales of Securities (or, in lieu thereof, the notice referred to in Rule 173
under the Act), give prompt notice thereof to the


                                       -8-



Representatives and, if requested by the Representatives, will prepare and
furnish without charge to each Underwriter an Issuer Free Writing Prospectus or
other document which will correct such conflict, statement or omission;
provided, however, that this representation and warranty shall not apply to any
statements or omissions in an Issuer Free Writing Prospectus made in reliance
upon and in conformity with information furnished in writing to the Company by
an Underwriter through the Representatives expressly for use therein.

     7. The Underwriters jointly and severally agree to pay or cause to be paid
all of the Company's expenses in connection with the transactions contemplated
by this Agreement, up to an amount equal to 10% of the total discounts and
commissions received by the Underwriters in connection with the offering of the
Securities, including without limitation, (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Securities under the Act and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, the Basic Prospectus, any Preliminary Prospectus, any Issuer Free
Writing Prospectus and the Prospectus and amendments and supplements thereto and
the mailing and delivering of copies thereof to the Underwriters; (ii) the cost
of printing, word-processing or reproducing this Agreement, any Indenture, any
Blue Sky and Legal Investment Memoranda and any other documents in connection
with the offering, purchase, sale and delivery of the Securities; (iii) all
expenses in connection with the qualification of the Securities for offering and
sale under state securities laws as provided in Section 5(b) hereof, including
the fees and disbursements of the Company's counsel in connection with such
qualification and in connection with the Blue Sky and legal investment surveys;
(iv) any fees charged by securities rating services for rating the Securities;
(v) any filing fees incident to any required review by the National Association
of Securities Dealers, Inc. of the terms of the sale of the Securities; (vi) the
cost of preparing the Securities; (vii) the fees and expenses of any Trustee and
any agent of any Trustee and the fees and disbursements of counsel for any
Trustee in connection with any Indenture and the Securities; and (viii) all
other costs and expenses incident to the performance of the Company's
obligations hereunder and under the Indenture which are not otherwise
specifically provided for in this Section.

     8. The obligations of the Underwriters shall be subject, in the discretion
of the Representatives, to the condition that all representations and warranties
and other statements of the Company herein shall be true and correct in all
material respects, at and as of the Time of Delivery, the condition that the
Company shall have performed, in all material respects, all of its obligations
hereunder theretofore to be performed and the following additional conditions:

          (a) No stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission or, to the
knowledge of the executive officers of the Company, shall be contemplated by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to the reasonable satisfaction of the
Representatives;

          (b) Davis Polk & Wardwell, counsel to the Underwriters, shall have
furnished to the Representatives such opinion, dated the Time of Delivery, with
respect to the Indenture, the validity of the Securities, the Registration
Statement, the Pricing Disclosure Package, the Prospectus, and other related
matters as the Representatives may reasonably request,


                                       -9-



and the Company shall have furnished to such counsel such documents as they
reasonably request to enable them to pass upon such matters;

          (c) Sullivan & Cromwell LLP, counsel for the Company, shall have
furnished to the Representatives their opinion or opinions, dated the Time of
Delivery, to the effect set forth in Schedule III hereto;

          (d) Kathleen E. Shannon, Senior Vice President, Secretary and Deputy
General Counsel of the Company, shall have furnished to the Representatives her
opinion, dated the Time of Delivery, to the effect set forth in Schedule IV
hereto;

          (e) On the date of the Prospectus at a time prior to the execution of
this Agreement and at the Time of Delivery, the independent registered public
accounting firm who have audited the financial statements of the Company and its
subsidiaries incorporated by reference in the Registration Statement, the
Pricing Disclosure Package and the Prospectus shall have furnished to the
Representatives a letter, dated the respective dates of delivery thereof, to the
effect set forth in Schedule V hereto, and with respect to such letter dated
such Time of Delivery, as to such other matters as the Representatives may
reasonably request and in form and substance satisfactory to the
Representatives;

          (f) Since the respective dates as of which information is given in the
Pricing Disclosure Package, there shall not have been any Material Adverse
Change which, in the judgment of the Representatives, materially impairs the
investment quality of the Securities, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented in accordance with
Section 5(a) hereof;

          (g) The Company shall have furnished or caused to be furnished to the
Representatives a certificate of the Chief Executive Officer, the President, any
Vice Chairman, any Executive or Senior Vice President or any Vice President and
a principal financial or accounting officer of the Company, dated the Time of
Delivery, in which such officers, to the best of their knowledge after
reasonable investigation, shall state that the representations and warranties of
the Company in this Agreement are true and correct, in all material respects, as
of the Time of Delivery, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied, in all
material respects, at or prior to the Time of Delivery, that no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are threatened by the
Commission, and that, since the respective dates as of which information is
given in the Pricing Disclosure Package, there has not been any Material Adverse
Change, otherwise than as set forth or contemplated in the Prospectus as amended
or supplemented in accordance with Section 5(a) hereof; and

          (h) On or after the date hereof, there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange if the effect of any such event, in the
reasonable judgment of the Representatives, is to make it impracticable or
inadvisable to proceed with the purchase by the Underwriters of the Securities
from the Company; (ii) a general moratorium on commercial banking activities in
New York declared by either Federal or New York State authorities; (iii) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United


                                      -10-


States of a national emergency or war, other than any such outbreak, escalation
or declaration arising out of or relating to the U.S. war on terrorism that does
not represent a significant departure from the conditions that exist at the date
hereof, if the effect of any such event in the reasonable judgment of the
Representatives is to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Securities on the terms and in the manner
contemplated by the Pricing Disclosure Package or the Prospectus as amended or
supplemented in accordance with Section 5(a) hereof; (iv) the suspension of
trading in the Company's common stock, par value $2.50 per share, on the New
York Stock Exchange, if the effect of such event in the reasonable judgment of
the Representatives is to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Securities on the terms and in the
manner contemplated by the Pricing Disclosure Package or the Prospectus as
amended or supplemented in accordance with Section 5(a); or (v) any downgrading
in the rating accorded the Company's senior debt securities by Moody's Investors
Service, a subsidiary of Moody's Corporation, or Standard & Poor's, a division
of the McGraw-Hill Companies, Inc., if the effect of such event in the
reasonable judgment of the Representatives is to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities on the terms and in the manner contemplated by the Pricing Disclosure
Package or the Prospectus as amended or supplemented in accordance with Section
5(a).

     9. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus or any
amendment or supplement thereto, any Issuer Free Writing Prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse such Underwriter for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, the Basic Prospectus, any Preliminary
Prospectus, the Pricing Prospectus, or any amendment or supplement thereto, or
any Issuer Free Writing Prospectus, in reliance upon and in conformity with
written information furnished to the Company by such Underwriter expressly for
use therein; and provided, further, that the foregoing indemnity agreement
contained in this Section 9(a), with respect to the Registration Statement, the
Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, or any
amendment or supplement thereto, or any Issuer Free Writing Prospectus shall not
inure to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Securities, where (i) prior to
the Applicable Time the Company shall have notified such Underwriter that the
Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the
Pricing Prospectus, or any amendment or supplement thereto, or any Issuer Free
Writing Prospectus contains an untrue statement of material fact or omits to
state therein a material fact necessary in order to make the statements therein
not misleading, (ii) such untrue statement or omission of a material fact was
corrected in a further amendment or supplement to the Registration Statement,
the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, or any
amendment or supplement thereto, or, where permitted by law, an Issuer Free


                                      -11-



Writing Prospectus, and such corrected Prospectus or Issuer Free Writing
Prospectus was provided to such Underwriter prior to the Applicable Time, (iii)
such corrected Registration Statement, Prospectus, Preliminary Prospectus or
Issuer Free Writing Prospectus (excluding any document incorporated by reference
therein) was not conveyed to such person at or prior to the contract for sale of
the Securities to such person and (iv) such loss, claim, damage or liability
would not have occurred had the corrected Registration Statement, Prospectus,
Preliminary Prospectus or Issuer Free Writing Prospectus (excluding any document
incorporated by reference therein) been conveyed to such person as provided for
in clause (iii) above.

          (b) Each Underwriter will, severally and not jointly, indemnify and
hold harmless the Company against any losses, claims, damages or liabilities to
which the Company or such controlling person may become subject, under the Act,
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Basic Prospectus, any Preliminary Prospectus,
the Pricing Prospectus or any amendment or supplement thereto, or any Issuer
Free Writing Prospectus, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing
Prospectus or any amendment or supplement thereto, or any Issuer Free Writing
Prospectus, in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
expressly for use therein; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.

          (c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action is brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation.

          (d) If the indemnification provided for in this Section 9 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such


                                      -12-



proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters of the Securities on the other from
the offering of the Securities to which such loss, claim, damage or liability
(or action in respect thereof) relates. If, however, the allocation provided by
the immediately preceding sentence is not permitted by applicable law, or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one
hand and the Underwriters of the Securities on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and such Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from such offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by such Underwriters in respect thereof. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading relates to information supplied by the Company
on the one hand or by such Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the applicable Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters of Securities in this
subsection (d) to contribute are several in proportion to their respective
underwriting obligations with respect to such Securities and not joint.

          (e) The obligations of the Company under this Section 9 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 9 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.

     10. (a) If any Underwriter shall default in its obligation to purchase the
Securities which it has agreed to purchase, the Representatives may in their
discretion arrange for


                                      -13-



themselves or another party or other parties to purchase such Securities on the
terms contained herein. If within thirty-six hours after such default by any
Underwriters, the Representatives do not arrange for the purchase of such
Securities, then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to the
Representatives to purchase such Securities on such terms. In the event that,
within the prescribed period, the Representatives notify the Company that they
have so arranged for the purchase of such Securities, or the Company notifies
the Representatives that it has so arranged for the purchase of such Securities,
the Representatives or the Company shall have the right to postpone the Time of
Delivery for such Securities for a period of not more than seven days, in order
to effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments or supplements to the
Registration Statement or the Prospectus which in the opinion of the
Representatives may thereby be made necessary. The term "UNDERWRITER" as used in
this Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such Securities.

          (b) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of such Securities which remains unpurchased does not
exceed one-tenth of the aggregate principal amount of the Securities, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the principal amount of Securities which such Underwriter agreed to
purchase under this Agreement relating to such Securities and, in addition, to
require each non-defaulting Underwriter to purchase its pro rata share (based on
the principal amount of Securities which such Underwriter agreed to purchase
under this Agreement) of the Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.

          (c) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of Securities which remains unpurchased exceeds
one-tenth of the aggregate principal amount of the Securities, as referred to in
subsection (b) above, or if the Company shall not exercise the right described
in subsection (b) above to require non-defaulting Underwriters to purchase
Securities of a defaulting Underwriter or Underwriters, then this Agreement
relating to such Securities shall thereupon terminate, without liability on the
part of any non-defaulting Underwriter or the Company, except for the expenses
to be borne by the Company and the Underwriters as provided in Section 7 hereof
and the indemnity and contribution agreements in Section 9 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.

     11. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.


                                      -14-



     12. If this Agreement shall be terminated pursuant to Section 10 or for any
other reason, the Company shall not then be under any liability to any
Underwriters except as provided in Section 9 hereof.

     13. In all dealings hereunder, the Representatives of the Underwriters of
the Securities shall act on behalf of each of such Underwriters, and the parties
hereto shall be entitled to act and rely upon any statement, request, notice or
agreement on behalf of any Underwriter made or given by such Representatives
jointly.

     All statements, requests, notices and advices hereunder shall be in
writing, or by telephone if promptly confirmed in writing, and if to an
Underwriter, shall be sufficient in all respects when delivered or sent by
facsimile transmission or registered mail as set forth in Schedule I hereto
under such Underwriter's name, and if to the Company shall be sufficient in all
respects when delivered or sent by registered mail to 70 Pine Street, New York,
New York 10270, Facsimile Transmission No. (212) 785-1584, Attention: Corporate
Secretary.

     14. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and, to the extent provided in Section 9 and
Section 11 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter, and their respective heirs, executors,
administrators, personal representatives, successors and assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement. No
purchaser of any of the Securities from any Underwriter shall be deemed a
successor or assign by reason merely of such purchase.

     15. The Company acknowledges and agrees that (i) the purchase and sale of
the Securities pursuant to this Agreement is an arm's-length commercial
transaction between the Company, on the one hand, and the several Underwriters,
on the other, (ii) in connection therewith and with the process leading to such
transaction each Underwriter is acting solely as a principal and not the agent
or fiduciary of the Company, (iii) no Underwriter has assumed an advisory or
fiduciary responsibility in favor of the Company with respect to the offering
contemplated hereby or the process leading thereto (irrespective of whether such
Underwriter has advised or is currently advising the Company on other matters)
or any other obligation to the Company except the obligations expressly set
forth in this Agreement and (iv) the Company has consulted its own legal and
financial advisors to the extent it deemed appropriate. The Company agrees that
it will not claim that the Underwriters, or any of them, has rendered advisory
services of any nature or respect (other than services rendered by any of the
Underwriters in its role as a joint structuring advisor), or owes a fiduciary or
similar duty to the Company, in connection with such transaction or the process
leading thereto.

     16. This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company and the Underwriters, or any of
them, with respect to the subject matter hereof.

     17. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.

     18. Time shall be of the essence in this Agreement.


                                      -15-



     19. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all of such counterparts shall together constitute one and the same
instrument.


                                      -16-



     If the foregoing is in accordance with your understanding, please sign and
return to us five counterparts hereof, whereupon this letter and the acceptance
by each of you thereof shall constitute a binding agreement between the Company
and each of you in accordance with its terms.

                                        Very truly yours,

                                        AMERICAN INTERNATIONAL GROUP, INC.


                                        By /s/ Robert A. Gender
                                           -------------------------------------
                                        Name: Robert A. Gender
                                        Title: Vice President and Treasurer

Accepted in New York, New York

CITIGROUP GLOBAL MARKETS LIMITED


By /s/ Ivan Browne
   ----------------------------------
Name: Ivan Browne
Title: Duly Authorized Signatory

DEUTSCHE BANK AG, LONDON BRANCH


By /s/ Stephanie Osatenko
   ----------------------------------
Name: Stephanie Osatenko
Title: Vice President and Counsel


By /s/ Ian J. Reid
   ----------------------------------
Name: Ian J. Reid
Title: Vice President and Counsel


J.P. MORGAN SECURITIES LTD.


By /s/ Charles Gibb
   ----------------------------------
Name: Charles Gibb
Title: Executive Director


                                      -16-


                                   SCHEDULE I



                                                                       PRINCIPAL
                                                                       AMOUNT OF
                                                                     5.75% SERIES
                                                                      A-2 JUNIOR
                                                                     SUBORDINATED
                                                                      DEBENTURES
                                                                         TO BE
           UNDERWRITERS                       ADDRESS                  PURCHASED
           ------------                       -------                ------------
                                                               
Citigroup Global Markets Limited..   Citigroup Centre                (pounds)150,000,000
                                     Canada Square
                                     London E14 5LB

Deutsche Bank AG, London Branch...   Winchester House                (pounds)150,000,000
                                     1 Great Winchester Street
                                     London EC2N 2DB

J.P. Morgan Securities Ltd........   125 London Wall                 (pounds)150,000,000
                                     London EC2Y 5AJ

Barclays Bank PLC.................   5 North Colonnade               (pounds)112,500,000
                                     Canary Wharf
                                     London E14 4BB

HSBC Bank plc.....................   8 Canada Square                 (pounds)112,500,000
                                     London E14 5HQ

Banco Santander Central
   Hispano, S.A...................   Ciudad Grupo Santander           (pounds)18,750,000
                                     Edificio Encinar, planta baja
                                     Avenida de Cantabria, s/n
                                     28660 Boadilla del Monte
                                     (Madrid)



                                       I-1




                                                               
Royal Bank of Canada Europe
   Limited........................   71 Queen Victoria Street         (pounds)18,750,000
                                     London EC4V 4DE

The Royal Bank of Scotland plc....   135 Bishopsgate                  (pounds)18,750,000
                                     London EC2M 3UR

UBS Limited.......................   1 Finsbury Avenue                (pounds)18,750,000
                                     London EC2M 2PP
                                                                     -------------------
      Total.......................                                   (pounds)750,000,000
                                                                     ===================



                                       I-2



                                   SCHEDULE II

(a) Issuer Free Writing Prospectuses:

     Final Term Sheet, attached as Exhibit A to Schedule II, as filed with the
Commission pursuant to Rule 433 on March 8, 2007.


                                      II-1



                            EXHIBIT A TO SCHEDULE II
                            FORM OF FINAL TERM SHEET

                       AMERICAN INTERNATIONAL GROUP, INC.
                              (pounds)750,000,000
                 5.75% SERIES A-2 JUNIOR SUBORDINATED DEBENTURES

                                FINAL TERM SHEET


                                  
ISSUER:                              American International Group, Inc.

TITLE OF SECURITIES:                 5.75% Series A-2 Junior Subordinated
                                     Debentures

AGGREGATE PRINCIPAL AMOUNT:          (pounds)750,000,000

PRICE TO PUBLIC:                     99.035%

PURCHASE PRICE BY UNDERWRITERS:      98.035%

SCHEDULED MATURITY DATE:             March 15, 2037

FINAL MATURITY DATE:                 March 15, 2067

INTEREST RATE AND INTEREST PAYMENT   5.75% from and including March 15, 2007 to
DATES DURING FIXED RATE PERIOD:      but excluding March 15, 2017, payable
                                     semi-annually in arrears on each March 15
                                     and September 15, beginning on September
                                     15, 2007.

INTEREST RATE AND INTEREST PAYMENT   Annual rate equal to three-month Sterling
DATES DURING FLOATING RATE PERIOD:   LIBOR +170.5 bp, from and including March
                                     15, 2017, payable quarterly in arrears on
                                     each March 15, June 15, September 15 and
                                     December 15, beginning on June 15, 2017. If
                                     three-month Sterling LIBOR cannot be
                                     determined for the quarterly interest
                                     period beginning on March 15, 2017 in the
                                     manner specified in the preliminary
                                     prospectus supplement for the 5.75% Series
                                     A-2 Junior Subordinated Debentures,
                                     "three-month Sterling LIBOR" will be 5.53%.

TRADE DATE:                          March 8, 2007

SETTLEMENT DATE:                     March 15, 2007



                                      II-2




                                  
OPTIONAL REDEMPTION:                 Subject to restrictions under the
                                     Replacement Capital Covenant, redeemable

                                     -    in whole but not in part, at any time
                                          prior to March 15, 2017, at greater of
                                          par and discounted present value
                                          (discounted from March 15, 2017) at
                                          the Gilt rate plus 15 bp, together, in
                                          either case, with interest accrued to
                                          the redemption date; and

                                     -    in whole or in part, at any time on or
                                          after March 15, 2017 at par, together
                                          with interest accrued to the
                                          redemption date.

REDEMPTION FOR TAX EVENT OR RATING   Subject to restrictions under the
AGENCY EVENT:                        Replacement Capital Covenant, redeemable in
                                     whole but not in part, at any time prior to
                                     March 15, 2017, at greater of par and
                                     discounted present value (discounted from
                                     March 15, 2017) at the Gilt rate plus 50 bp
                                     together, in either case, with interest
                                     accrued to the redemption date

REDEMPTION IF OBLIGATED TO PAY       Subject to restrictions under the
ADDITIONAL AMOUNTS:                  Replacement Capital Covenant, redeemable in
                                     whole but not in part, at any time if the
                                     Issuer is obligated to pay Additional
                                     Amounts (other than as a result of an event
                                     that would, upon receipt of the required
                                     opinion, constitute a Tax Event) at par,
                                     together with interest accrued to the
                                     redemption date.

REPLACEMENT CAPITAL COVENANT:        A replacement capital covenant will apply
                                     until March 15, 2047. The dates referred to
                                     in the prospectus supplement on which the
                                     "applicable percentage" and the types of
                                     securities that constitute "qualifying
                                     capital securities" (as therein defined)
                                     will change are March 15, 2017 and March
                                     15, 2037.

REOFFER SPREAD TO BENCHMARK GILT:    +110 bp

BENCHMARK GILT:                      UKT 4.00% due September 7, 2016

BENCHMARK GILT YIELD:                4.779%

REOFFER YIELD:                       5.879%

ISIN:                                XS0291641420

JOINT STRUCTURING ADVISORS:          Citigroup Global Markets Limited, Deutsche
                                     Bank AG, London Branch, and J.P. Morgan
                                     Securities Ltd.



                                      II-3




                                  
JOINT BOOKRUNNING                    Barclays Bank PLC, Citigroup Global Markets
MANAGERS:                            Limited, Deutsche Bank AG, London Branch,
                                     HSBC Bank plc, and J.P. Morgan Securities Ltd.

CO-MANAGERS:                         Banco Santander Central Hispano, S.A, Royal
                                     Bank of Canada Europe Limited, The Royal
                                     Bank of Scotland plc and UBS Limited


THE ISSUER HAS FILED A REGISTRATION STATEMENT (INCLUDING A PROSPECTUS) WITH THE
SEC FOR THE OFFERING TO WHICH THIS COMMUNICATION RELATES. BEFORE YOU INVEST, YOU
SHOULD READ THE PROSPECTUS IN THAT REGISTRATION STATEMENT, THE PRELIMINARY
PROSPECTUS SUPPLEMENT AND OTHER DOCUMENTS THE ISSUER HAS FILED WITH THE SEC FOR
MORE COMPLETE INFORMATION ABOUT THE ISSUER AND THIS OFFERING. YOU MAY GET THESE
DOCUMENTS FOR FREE BY VISITING EDGAR ON THE SEC WEB SITE AT WWW.SEC.GOV.
ALTERNATIVELY, THE ISSUER, ANY UNDERWRITER OR ANY DEALER PARTICIPATING IN THE
OFFERING WILL ARRANGE TO SEND YOU THE PROSPECTUS IF YOU REQUEST IT BY CALLING
CITIGROUP GLOBAL MARKETS LIMITED COLLECT AT 44-20-7986-9000, DEUTSCHE BANK AG,
LONDON BRANCH, COLLECT AT 44-207-545-1138 AND J.P. MORGAN SECURITIES LTD.
COLLECT AT 44-207-779-2468.


                                      II-4


                                  SCHEDULE III

                   Form of Opinion of Sullivan & Cromwell LLP

                                                                  March __, 2007

Citigroup Global Markets Limited,
Deutsche Bank AG, London Branch,
J.P. Morgan Securities Ltd.,
   As Representatives of the several Underwriters
c/o [Name],
[Address].

Ladies and Gentlemen:

     In connection with the several purchases today by you and the other
Underwriters named in Schedule I to the Underwriting Agreement, dated March __,
2007 (the "UNDERWRITING AGREEMENT"), between American International Group, Inc.,
a Delaware corporation (the "COMPANY"), and you, as Representatives of the
several Underwriters named therein (the "UNDERWRITERS"), of (pounds)__________
aggregate principal amount of the Company's _____% Series A-2 Junior
Subordinated Debentures (the "SECURITIES") issued pursuant to the Indenture,
dated as of March __, 2007, as supplemented by the Second Supplemental
Indenture, dated March __, 2007 (together, the "INDENTURE"), between the Company
and The Bank of New York, as Trustee (the "TRUSTEE"), we, as counsel for the
Company, have examined such corporate records, certificates and other documents,
and such questions of law, as we have considered necessary or appropriate for
the purposes of this opinion. Upon the basis of such examination, it is our
opinion that:

     (1) The Company has been duly incorporated and is an existing corporation
in good standing under the laws of the State of Delaware.

     (2) The Indenture has been duly authorized, executed and delivered by the
Company and duly qualified under the Trust Indenture Act of 1939; the Securities
have been duly authorized, executed, authenticated, issued and delivered; and
the Indenture and the Securities constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms, subject
to bankruptcy,


                                      III-1



insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.

     (3) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.

     In connection with the opinion in paragraph (2), we note that, as of the
date of this opinion, a judgment for money in an action based on the Securities
in a Federal or state court in the United States ordinarily would be enforced in
the United States only in United States dollars. The date used to determine the
rate of conversion of Sterling into United States dollars will depend upon
various factors, including which court renders the judgment. Under Section 27 of
the New York Judiciary Law, a state court in the State of New York rendering a
judgment on a Security would be required to render such judgment in Sterling,
and such judgment would be converted into United States dollars at the exchange
rate prevailing on the date of entry of the judgment.

     The foregoing opinion is limited to the Federal laws of the United States,
the laws of the State of New York and the General Corporation Law of the State
of Delaware, and we express no opinion as to the effect of the laws of any other
jurisdiction.

     We have also relied as to certain matters upon information obtained from
public officials, officers of the Company and other sources believed by us to be
responsible, and we have assumed that the Indenture has been duly authorized,
executed and delivered by the Trustee, that the Securities conform to the
specimen thereof examined by us, that the Trustee's certificates of
authentication of the Securities have been manually signed by one of the
Trustee's authorized officers, and that the signatures on all documents examined
by us are genuine, assumptions which we have not independently verified.

                                        Very truly yours,


                                        ----------------------------------------


                                      III-2



                    FORM OF LETTER OF SULLIVAN & CROMWELL LLP

                                                                  March __, 2007

Citigroup Global Markets Limited,
Deutsche Bank AG, London Branch,
J.P. Morgan Securities Ltd.,
   As Representatives of the several Underwriters
c/o [Name],
[Address].

Ladies and Gentlemen:

     This is with reference to the registration under the Securities Act of 1933
(the "Securities Act") and offering of (pounds)__________ aggregate principal
amount of _____% Series A-2 Junior Subordinated Debentures (the "Securities") of
American International Group, Inc. (the "Company").

     The two Registration Statements relating to the Securities (File Nos.
333-106040 and 333-31024) were filed on different dates on Form S-3 in
accordance with procedures of the Securities and Exchange Commission (the
"Commission") permitting a delayed or continuous offering of securities pursuant
thereto and, if appropriate, a post-effective amendment, document incorporated
by reference therein or prospectus supplement that provides information relating
to the terms of the securities and the manner of their distribution.

     The Registration Statements were amended by a Post-Effective Amendment No.
1, declared effective by the Commission on July 24, 2006. References in this
letter to the Registration Statement refer to the latest Registration Statement
as amended by Post-Effective Amendment No. 1. The Securities have been offered
by the Prospectus dated July 24, 2006 (the "Basic Prospectus"), as supplemented
by the Prospectus Supplement, dated March __, 2007 (the "Prospectus
Supplement"). The Basic Prospectus, as supplemented by the Prospectus
Supplement, does not necessarily contain a current description of the Company's
business and affairs since, pursuant to Form S-3, it incorporates by reference
certain documents filed with the Commission that contain information as of
various dates.


                                      III-3



     As counsel to the Company, we reviewed the Registration Statement, the
Basic Prospectus, the Prospectus Supplement and the documents listed in Schedule
A hereto (those listed documents, taken together with the Basic Prospectus,
being referred to herein as the "Pricing Disclosure Package") and participated
in discussions with your representatives and those of the Company and its
accountants. Between the date of the Prospectus Supplement and the time of
delivery of this letter, we participated in further discussions with your
representatives and those of the Company, its accountants and its counsel
concerning certain matters relating to the Company and reviewed certificates of
certain officers of the Company, a letter addressed to you from the Company's
accountants and an opinion addressed to you from counsel to the Company. On the
basis of the information that we gained in the course of the performance of the
services referred to above, considered in the light of our understanding of the
applicable law (including the requirements of Form S-3 and the character of
prospectus contemplated thereby) and the experience we have gained through our
practice under the Securities Act, we confirm to you that, in our opinion, each
part of the Registration Statement, as of the effective date of Post-Effective
Amendment No. 1, and the Basic Prospectus, as supplemented by the Prospectus
Supplement, as of the date of the Prospectus Supplement, appeared on their face
to be appropriately responsive, in all material respects relevant to the
offering of the Securities, to the requirements of the Securities Act, the Trust
Indenture Act of 1939 and the applicable rules and regulations of the Commission
thereunder. Further, nothing that came to our attention in the course of such
review has caused us to believe that, insofar as relevant to the offering of the
Securities,

     (a) any part of the Registration Statement, when such part became
effective, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or

     (b) the Pricing Disclosure Package, as of [__:00] [A/P].M. on March __,
2007 (which you have informed us is prior to the time of the first sale of the
Securities by any Underwriter), [when considered together with any other
disclosure added in the Prospectus Supplement,] contained any untrue statement
of a material fact or omitted to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or


                                      III-4



     (c) the Basic Prospectus, as supplemented by the Prospectus Supplement, as
of the date of the Prospectus Supplement, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.

     We also advise you that nothing that came to our attention in the course of
the procedures described in the second sentence of this paragraph has caused us
to believe that (a) the Basic Prospectus, as supplemented by the Prospectus
Supplement, or (b) the Pricing Disclosure Package, [when considered together
with any other disclosures added in the Prospectus Supplement,] as of the time
of delivery of this letter, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

     The limitations inherent in the independent verification of factual matters
and the character of determinations involved in the registration process are
such, however, that we do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Basic Prospectus, the Prospectus Supplement or the Pricing
Disclosure Package, except for those made under the captions "Description of
Junior Subordinated Debentures" in the Basic Prospectus and "Description of
Terms of the Series A-2 Junior Subordinated Debentures", "Certain United States
Federal Income Tax Consequences" and "Underwriting" in the Prospectus
Supplement, in each case insofar as they relate to provisions of the Securities,
the Indenture under which the Securities are to be issued or the Underwriting
Agreement relating to the Securities, or insofar as they relate to provisions of
U.S. Federal tax law therein described. Also, we do not express any opinion or
belief as to the financial statements or other financial data derived from
accounting records contained in the Registration Statements, the Basic
Prospectus, the Prospectus Supplement or the Pricing Disclosure Package, or as
to the report of management's assessment of the effectiveness of internal
control over financial reporting or the auditors' attestation report thereon,
each as included in the Registration Statement, the Basic Prospectus, the
Prospectus Supplement and the Pricing Disclosure Package, or as to the statement
of the eligibility and qualification of the Trustee under the Indenture under
which the Securities are being issued.


                                      III-5



     This letter is furnished by us, as counsel to the Company, to you, as
Representatives of the Underwriters, solely for the benefit of the Underwriters
in their capacity as such, and may not be relied upon by any other person. This
letter may not be quoted, referred to or furnished to any purchaser or
prospective purchaser of the Securities and may not be used in furtherance of
any offer or sale of the Securities.

                                        Very truly yours,


                                        ----------------------------------------


                                      III-6



                                   SCHEDULE A

[List documents that are included in the Pricing Disclosure Package, including
the Basic Prospectus as supplemented by the Preliminary Prospectus Supplement
and the final term sheet prepared pursuant to Section 5(a) of the Underwriting
Agreement.]


                                      III-7



                                   SCHEDULE IV

                     FORM OF OPINION OF KATHLEEN E. SHANNON

                                                                  March __, 2007

Citigroup Global Markets Limited,
Deutsche Bank AG, London Branch,
J.P. Morgan Securities Ltd.,
   As Representatives of the several Underwriters
c/o [Name],
[Address].

Ladies and Gentlemen:

     I am Senior Vice President, Secretary and Deputy General Counsel of
American International Group, Inc., a Delaware corporation (the "Company"), and,
as such, I am generally familiar with the corporate affairs of the Company.

     This opinion is rendered in connection with the several purchases today by
you and the other Underwriters named in Schedule I to the Underwriting
Agreement, dated March __, 2007 (the "Underwriting Agreement"), between the
Company and you, as Representatives of the several Underwriters named therein
(the "Underwriters"), of (pounds)__________ aggregate principal amount of the
Company's _____% Series A-2 Junior Subordinated Debentures (the "Securities")
issued pursuant to the Junior Subordinated Indenture, dated as of March __,
2007, as supplemented by the Second Supplemental Indenture, dated March __, 2007
(together, the "Indenture"), between the Company and The Bank of New York, as
Trustee (the "Trustee").

     The two Registration Statements relating to the Securities (File Nos.
333-106040 and 333-31024) were filed under the Securities Act of 1933 (the
"Act") on different dates on Form S-3. The Registration Statements were amended
by a Post-Effective Amendment No. 1, declared effective by the Securities and
Exchange Commission (the "Commission") on July 24, 2006. References in this
letter to the Registration Statement refer to the latest Registration Statement
as amended by Post-Effective Amendment No. 1. The Securities have been offered


                                      IV-1



by the Prospectus dated July 24, 2006 (the "Basic Prospectus"), as supplemented
by the Prospectus Supplement, dated March __, 2007 (the "Prospectus
Supplement").

     In rendering my opinion, I, as Senior Vice President, Secretary and Deputy
General Counsel of the Company, have examined the Registration Statement, the
Basic Prospectus, the Prospectus Supplement and the documents listed in Schedule
A hereto (those listed documents, taken together with the Basic Prospectus as
amended or supplemented immediately prior to the Applicable Time (as defined
below) being referred to herein as the "Pricing Disclosure Package"), and I have
examined such corporate records, certificates and other documents, and have
reviewed such questions of law, as I have considered necessary or appropriate
for the purposes of this opinion. Upon the basis of such examination and review,
you are advised that, in my opinion:

(i) The Company has authorized capital as incorporated by reference in the Basic
Prospectus.

(ii) To the best of my knowledge and information, there are no contracts or
other documents required to be summarized or disclosed or filed as exhibits to
the Registration Statement, other than those summarized or disclosed in the
Registration Statement or filed as exhibits thereto, and there are no legal or
governmental proceedings pending or threatened of a character required to be
disclosed in the Registration Statement and the Basic Prospectus, as amended or
supplemented by the Prospectus Supplement, which are not disclosed.

(iii) The issue and sale of the Securities, and the compliance by the Company
with all of the provisions of the Securities, the Indenture and the Underwriting
Agreement, will not result in a breach of any of the terms or provisions of, or
constitute a default under, any material indenture, mortgage, deed of trust,
loan agreement, or other material agreement or instrument in effect on the date
hereof and known to me, to which the Company is a party or by which the Company
may be bound or to which any of the property or assets of the Company is subject
or violate any judgment, order or decree of any court or governmental body
applicable to the Company, except for such breaches, defaults and violations
that would not have a


                                      IV-2



Material Adverse Effect (as defined in the Underwriting Agreement) or affect the
validity of the Securities, nor will such action result in any violation of the
provisions of the Restated Certificate of Incorporation, as amended, or the
By-Laws of the Company in effect on the date hereof; and no consent, approval,
authorization, order, registration or qualification of or with any court or any
regulatory authority or other governmental body is required for the issue and
sale of the Securities or the consummation by the Company of the other
transactions contemplated by the Underwriting Agreement or the Indenture, except
such as have been obtained under the Act and the Trust Indenture Act of 1939, as
amended, and such consents, approvals, authorizations, orders, registrations or
qualifications the failure to obtain or make would not have a Material Adverse
Effect or affect the validity of the Securities and as may be required under
state securities or Blue Sky laws (including insurance laws of any state
relating to offers and sales of securities in such state) in connection with the
purchase and distribution of the Securities by the Underwriters, as contemplated
by the Underwriting Agreement.

(iv) Nothing which came to my attention has caused me to believe that, insofar
as relevant to the offering of the Securities,

     (a) any part of the Registration Statement, when such part became
     effective, contained any untrue statement of a material fact or omitted to
     state any material fact required to be stated therein or necessary to make
     the statements therein not misleading, or

     (b) the Pricing Disclosure Package, as of __:00 [A/P].M. on March __, 2007
     (the "Applicable Time") (which you have informed me is prior to the time of
     the first sale of the Securities by any Underwriter), when considered
     together with any other disclosure added in the Prospectus Supplement,
     contained any untrue statement of a material fact or omitted to state any
     material fact necessary in order to make the statements therein, in the
     light of the circumstances under which they were made, not misleading, or


                                      IV-3



     (c) the Basic Prospectus, as supplemented by the Prospectus Supplement, as
     of the date of the Prospectus Supplement, contained any untrue statement of
     a material fact or omitted to state any material fact necessary in order to
     make the statements therein, in the light of the circumstances under which
     they were made, not misleading.

(v) The documents incorporated by reference in the Basic Prospectus, as
supplemented by the Prospectus Supplement, as of the date they became effective
or were filed with the Commission, as the case may be, complied as to form in
all material respects with the Act and the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.

     In connection with the opinion in paragraph (ii), I note that, as of the
date of this opinion, a judgment for money in an action based on the Securities
in a Federal or state court in the United States ordinarily would be enforced in
the United States only in United States dollars. The date used to determine the
rate of conversion of Sterling into United States dollars will depend upon
various factors, including which court renders the judgment. Under Section 27 of
the New York Judiciary Law, a state court in the State of New York rendering a
judgment on a Security would be required to render such judgment in Sterling,
and such judgment would be converted into United States dollars at the exchange
rate prevailing on the date of entry of the judgment.

     In rendering the opinion in paragraph (iv), (A) I assume no responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement, the Basic Prospectus, the Prospectus Supplement or the
Pricing Disclosure Package, except for those made under the captions
"Description of Junior Subordinated Debentures" in the Basic Prospectus and
"Description of Terms of the Series A-2 Junior Subordinated Debentures" in the
Prospectus Supplement, in each case insofar as they relate to provisions of the
Securities and the Indenture under which the Securities are to be issued therein
described, and (B) I express no opinion or belief as to the financial statements
or other financial data derived from


                                      IV-4



accounting records contained in the Registration Statement, the Basic
Prospectus, the Prospectus Supplement or the Pricing Disclosure Package, or as
to the report of management's assessment of the effectiveness of internal
control over financial reporting or the auditors' attestation report thereon,
each as included in the Registration Statement, the Basic Prospectus, the
Prospectus Supplement and the Pricing Disclosure Package, or as to the statement
of the eligibility and qualification of the Trustee under the Indenture under
which the Securities are being issued.

     In rendering the opinion in paragraph (v), I express no opinion or belief
as to the financial statements or other financial or statistical data contained
in the Basic Prospectus or the Prospectus Supplement, or as to the report of
management's assessment of the effectiveness of internal control over financial
reporting or the auditors' attestation report thereon, each as included in the
Basic Prospectus and the Prospectus Supplement.

     This letter is furnished by me, as Senior Vice President, Secretary and
Deputy General Counsel of the Company, to you, as Representatives of the
Underwriters, solely for the benefit of the Underwriters in their capacity as
such, and may not be relied upon by any other person. This opinion may not be
quoted, referred to or furnished to any purchaser or prospective purchaser of
the Securities and may not be used in furtherance of any offer or sale of the
Securities.

                                        Very truly yours,


                                        ----------------------------------------


                                      IV-5



                                   SCHEDULE A

[List documents that are included in the Pricing Disclosure Package, including
the Basic Prospectus as supplemented by the Preliminary Prospectus Supplement
and the final term sheet prepared pursuant to Section 5(a) of the Underwriting
Agreement.]


                                      IV-6



                                   SCHEDULE V

         FORM OF LETTER OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

March __, 2007

American International Group, Inc.

and

Citigroup Global Markets Limited
Deutsche Bank AG, London Branch
J.P. Morgan Securities Ltd.,
as representatives of the several underwriters

Ladies and Gentlemen:

We have audited:

1.   the consolidated financial statements of American International Group, Inc.
     (the "Company") and subsidiaries as of December 31, 2006 and 2005 and for
     each of the three years in the period ended December 31, 2006 included in
     the Company's annual report on Form 10-K for the year ended December 31,
     2006 (the "Form 10-K"),

2.   the related financial statement schedules included in the Form 10-K,

3.   management's assessment of the effectiveness of the Company's internal
     control over financial reporting as of December 31, 2006 included in the
     Form 10-K, and

4.   the effectiveness of the Company's internal control over financial
     reporting as of December 31, 2006.

The consolidated financial statements, financial statement schedules and
management's assessment referred to above are all incorporated by reference in
the registration statement (No. 333-106040) on Form S-3 filed by the Company
under the Securities Act of 1933 (the "Act"); our report (which contains an
adverse opinion on the effectiveness of internal control over financial
reporting) with respect to the audits referred to above is also incorporated by
reference in such registration statement. Such registration statement of which
the Prospectus dated July 24, 2006 forms a part, is supplemented by the
Preliminary Prospectus Supplement dated March __, 2007 for the offering of
(pounds)__________ of _____% Series A-2 Junior Subordinated Debentures. Such
registration statement is herein referred to as the "Registration Statement."

In connection with the Registration Statement:


                                       V-1



1.   We are an independent registered public accounting firm with respect to the
     Company within the meaning of the Act and the applicable rules and
     regulations thereunder adopted by the Securities and Exchange Commission
     (the "SEC") and the Public Company Accounting Oversight Board (United
     States) (the "PCAOB").

2.   In our opinion, the consolidated financial statements and financial
     statement schedules audited by us and incorporated by reference in the
     Registration Statement comply as to form in all material respects with the
     applicable accounting requirements of the Act and the Securities Exchange
     Act of 1934 and the related rules and regulations adopted by the SEC.

3.   We have not audited any financial statements of the Company as of any date
     or for any period subsequent to December 31, 2006. Therefore, we are unable
     to and do not express any opinion on the Company's financial position,
     results of operations or cash flows as of any date or for any period
     subsequent to December 31, 2006. Also, we have not audited the Company's
     internal control over financial reporting as of any date subsequent to
     December 31, 2006. Therefore, we do not express any opinion on the
     Company's internal control over financial reporting as of any date
     subsequent to December 31, 2006.

4.   For purposes of this letter, we have read the minutes of the 2006 and 2007
     meetings of the stockholders, the Board of Directors and Committees of the
     Board of Directors of the Company as set forth in the minute books at March
     1, 2007, officials of the Company having advised us that the minutes of all
     such meetings through that date were set forth therein, except for the
     minutes of the meetings listed below which were not approved in final form,
     for which agendas were provided to us; officials of the Company have
     represented that such agendas include all substantive actions taken at such
     meetings:

          i)   the Board of Directors of AIG (the "Board"), January 17, 2007 and
               February 27, 2007 meetings;

          ii)  the Audit Committee of the Board, February 14, 2007 and February
               27, 2007 meetings;

          iii) the Compensation Committee of the Board, December 11, 2006
               meeting;

          iv)  the Finance Committee of the Board, February 15, 2007 meeting;

          v)   the Nominating and Corporate Governance Committee of the Board,
               January 16, 2007 meeting;

          vi)  the Public Policy and Social Responsibility Committee of the
               Board, January 16, 2007 meeting;


                                       V-2



          vii) the Regulatory, Compliance and Legal Committee of the Board,
               January 17, 2007 meeting.

     We have carried out other procedures to March 1, 2007 (our work did not
     extend to the period from March 2, 2007 to March __, 2007, inclusive) as
     follows.

5.   Company officials have advised us that no consolidated financial data as of
     any date or for any period subsequent to December 31, 2006 are available;
     accordingly, the procedures carried out by us with respect to changes in
     financial statement items after December 31, 2006 have, of necessity, been
     limited. We have inquired of certain officials of the Company who have
     responsibility for financial and accounting matters as to whether (a) at
     March 1, 2007 there was any change in the capital stock, increase in
     long-term debt, or decrease in consolidated shareholders' equity of the
     Company as compared with amounts shown in the December 31, 2006
     consolidated balance sheet incorporated by reference in the Registration
     Statement; or (b) for the period from January 1, 2007 to March 1, 2007,
     there were any decreases, as compared with the corresponding period in the
     preceding year, in consolidated net income.

     Those officials referred to above stated that due to the fact that there is
     no consolidated financial data available subsequent to December 31, 2006,
     they are not in a position to comment on whether there was any such change,
     increase or decrease.

6.   This letter is solely for the information of the addressees and to assist
     the underwriters in conducting and documenting their investigation of the
     affairs of the Company in connection with the offering of the securities
     covered by the Registration Statement, and is not to be used, circulated,
     quoted, or otherwise referred to for any other purpose, including but not
     limited to the registration, purchase, or sale of securities, nor is it to
     be filed with or referred to in whole or in part in the Registration
     Statement or any other document, except that reference may be made to it in
     the underwriting agreement or in any list of closing documents pertaining
     to the offering of the securities covered by the Registration Statement.

Yours very truly,


- -------------------------------------


                                       V-3

                                                               Execution Version

                       AMERICAN INTERNATIONAL GROUP, INC.

                4.875% SERIES A-3 JUNIOR SUBORDINATED DEBENTURES

                             UNDERWRITING AGREEMENT

                                                                   March 8, 2007

Citigroup Global Markets Limited,
Deutsche Bank AG, London Branch,
J.P. Morgan Securities Ltd.,
   As representatives of the several Underwriters
   named in Schedule I hereto.
c/o Citigroup Global Markets Limited,
   Citigroup Centre,
   Canada Square,
   London E14 5LB.

Ladies and Gentlemen:

     American International Group, Inc., a Delaware corporation (the "COMPANY"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the firms named in Schedule I hereto (the "UNDERWRITERS"), for whom you are
acting as Representatives (the "REPRESENTATIVES"), (euro)1,000,000,000 aggregate
principal amount of its 4.875% Series A-3 Junior Subordinated Debentures (the
"SECURITIES").

     1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:

          (a) A post-effective amendment No. 1 to the registration statements on
Form S-3 (Registration Nos. 333-106040 and 333-31024) in respect of the
Securities has been filed with the Securities and Exchange Commission (the
"COMMISSION"); such post-effective amendment, in the form heretofore delivered
to the Representatives (excluding exhibits to such post-effective amendment, but
including all documents incorporated by reference in the prospectus describing
junior subordinated debentures included in the post-effective amendment), has
been declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a "RULE
462(B) REGISTRATION STATEMENT"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "ACT"), which became effective upon
filing, since the delivery to the Representatives no other document with respect
thereto or document incorporated by reference therein has been filed or
transmitted for filing with the Commission (other than filings by the Company
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and
other than preliminary prospectuses, preliminary prospectus supplements and
other prospectuses filed pursuant to Rule 424(b) or Rule 433 of the rules and
regulations of the Commission under the Act that relate to securities other than
the Securities); and no stop order suspending the effectiveness of the
post-effective amendment No. 1 or the Rule 462(b) Registration Statement, if
any, has been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (the basic prospectus describing



junior subordinated debentures filed as part of such post-effective amendment
No. 1 is hereinafter called the "BASIC PROSPECTUS"; any preliminary prospectus
(including the Basic Prospectus as supplemented by any preliminary prospectus
supplement) relating to the Securities filed with the Commission pursuant to
Rule 424(b) of the rules and regulations of the Commission under the Act is
hereinafter called a "PRELIMINARY PROSPECTUS"; the various parts of such
post-effective amendment No. 1 and the Rule 462(b) Registration Statement, if
any, including all exhibits thereto and the documents incorporated by reference
in the Basic Prospectus at the time such post-effective amendment became
effective but excluding any Statement of Eligibility under the Trust Indenture
Act of 1939, as amended (the "TRUST INDENTURE ACT"), and including any
prospectus supplement relating to the Securities that is filed with the
Commission and deemed by virtue of Rule 430B to be part of the registration
statement, each as amended at the time such post-effective amendment became
effective or such part of the Rule 462(b) Registration Statement, if any, became
or hereafter becomes effective, are hereinafter collectively called the
"REGISTRATION STATEMENT"; the Basic Prospectus as amended and supplemented
immediately prior to the Applicable Time (as defined in Section 1(c) hereof), is
hereinafter called the "PRICING PROSPECTUS"; the form of the final prospectus
relating to the Securities filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 5(a) hereof is hereinafter called the
"PROSPECTUS"; any reference herein to the Basic Prospectus, the Pricing
Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Act, as of the date of such prospectus; any
reference to any amendment or supplement to the Basic Prospectus, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include
any post-effective amendment to the Registration Statement, any prospectus
supplement relating to the Securities filed with the Commission pursuant to Rule
424(b) under the Act and any documents filed under the Exchange Act and
incorporated therein, in each case after the date of the Basic Prospectus, such
Preliminary Prospectus or the Prospectus, as the case may be; any reference to
any amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the Registration Statement
that is incorporated by reference in the Registration Statement; and any "issuer
free writing prospectus" as defined in Rule 433 under the Act relating to the
Securities is hereinafter called an "ISSUER FREE WRITING PROSPECTUS";

          (b) No order preventing or suspending the use of any Preliminary
Prospectus or any Issuer Free Writing Prospectus has been issued by the
Commission, and each Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the Act and the Trust
Indenture Act, and the rules and regulations of the Commission thereunder, and
did not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through the Representatives expressly
for use therein;

          (c) For the purposes of this Agreement, the "APPLICABLE TIME" is 12:00
p.m. (New York City time) on the date of this Agreement; the Pricing Prospectus,
as supplemented by the information contained in the final term sheet prepared
and filed pursuant to Section 5(a) hereof, taken together (collectively, the
"PRICING DISCLOSURE PACKAGE") as of the Applicable Time, did not include any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and each other Issuer Free Writing
Prospectus


                                       -2-



listed on Schedule II(a) hereto does not conflict with the information contained
in the Registration Statement, the Pricing Prospectus or the Prospectus, and
each such other Issuer Free Writing Prospectus, as supplemented by and taken
together with the Pricing Disclosure Package as of the Applicable Time, did not
include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to statements or omissions
made in an Issuer Free Writing Prospectus in reliance upon and in conformity
with information furnished in writing to the Company by an Underwriter through
the Representatives expressly for use therein;

          (d) The documents incorporated by reference in the Pricing Prospectus
and the Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents contained
an untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and any further documents so filed
and incorporated by reference in the Prospectus, when such documents become
effective or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder and will
not contain an untrue statement of a material fact or, in the case of an Annual
Report on Form 10-K, omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or, in the case of
any other document filed under the Exchange Act, omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to (i) any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by an Underwriter through the Representatives expressly for use
therein, or (ii) any statement in any such document which does not constitute
part of the Registration Statement, Pricing Prospectus or Prospectus pursuant to
Rule 412 under the Act;

          (e) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement and the
Prospectus will conform, in all material respects to the requirements of the Act
and the Trust Indenture Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date as to
the Registration Statement and any amendment thereto and as of its date as to
the Prospectus and any supplement thereto, contain an untrue statement of a
material fact or, in the case of the Registration Statement, omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, in the case of the Prospectus, omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to (i) the Statement of
Eligibility (Form T-1) under the Trust Indenture Act of the Trustee, (ii) any
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by any Underwriter through the
Representatives expressly for use in the Prospectus or any amendment or
supplement thereto, or (iii) any statement which does not constitute part of the
Registration Statement or Prospectus pursuant to Rule 412 under the Act;


                                       -3-



          (f) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware and has
full power and authority to own its properties and to conduct its business as
described in the Prospectus;

          (g) Since the date of the latest audited financial statements
incorporated by reference in the Basic Prospectus as amended or supplemented
there has not been (i) any material change in the capital stock (other than as
occasioned by Common Stock having been issued pursuant to the Company's employee
stock purchase plans, equity incentive plans and upon conversion of convertible
securities), or (ii) any material adverse change in or affecting the financial
position, shareholders' equity or results of operations of the Company and its
consolidated subsidiaries considered as an entirety, in each case, otherwise
than as set forth or contemplated in such Basic Prospectus as amended or
supplemented (any such change described in clause (ii) is referred to as a
"MATERIAL ADVERSE CHANGE");

          (h) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, the Securities will have been duly
executed, authenticated, issued and delivered and will constitute valid and
legally binding obligations of the Company entitled to the benefits provided by
the Junior Subordinated Indenture, dated as of March 13, 2007, as supplemented
by the Third Supplemental Indenture, dated March 15, 2007 (as so supplemented,
the "INDENTURE"), between the Company and The Bank of New York, as Trustee (the
"TRUSTEE"), subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles; the Indenture
has been duly authorized and qualified under the Trust Indenture Act and
constitutes a valid and legally binding instrument, enforceable against the
Company in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles; and the Indenture conforms, and the Securities will conform, in all
material respects to the descriptions thereof contained in the Pricing
Disclosure Package and in the Prospectus;

          (i) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture and this
Agreement, and the consummation of the transactions herein and therein
contemplated, will not conflict with or result in a breach of any of the terms
or provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other material agreement or instrument to which the
Company is a party or by which the Company is bound or to which any of the
property or assets of the Company is subject, or result in any violation of any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its properties, except, in
each case, for such conflicts, breaches, defaults and violations that would not
have a material adverse effect on the business, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries considered as an entirety (a "MATERIAL ADVERSE EFFECT") or affect
the validity of the Securities, nor will such action result in any violation of
the provisions of the Restated Certificate of Incorporation, as amended, or the
By-Laws of the Company; and no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency or
body is required by the Company for the issue and sale of the Securities or the
consummation by the Company of the transactions contemplated by this Agreement
or the Indenture, except such consents, approvals, authorizations, orders,


                                       -4-



registrations or qualifications the failure to obtain or make would not have a
Material Adverse Effect or affect the validity of the Securities, and such
consents, approvals, authorizations, orders, registrations or qualifications as
have been, or will have been prior to the date of this Agreement, obtained under
the Act or the Trust Indenture Act and such consents, approvals, authorizations,
orders, registrations or qualifications as may be required under state
securities or Blue Sky laws (including insurance laws of any state relating to
offers and sales of securities in such state) in connection with the purchase
and distribution of the Securities by the Underwriters; and

          (j) There is no action, suit or proceeding pending, or to the
knowledge of the executive officers of the Company, threatened against the
Company or any of its subsidiaries, which has, or may reasonably be expected in
the future to have, a Material Adverse Effect, except as set forth or
contemplated in the Pricing Disclosure Package or the Prospectus as amended or
supplemented in accordance with Section 5(a) hereof.

     2. (a) Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price of 98.798% of the principal amount thereof, the principal
amount of Securities set forth opposite the name of such Underwriter in Schedule
I hereto.

          (b) Each Underwriter represents and agrees with the Company that it
will comply with or observe any restrictions or limitations set forth in the
Prospectus as amended or supplemented on persons to whom, or the jurisdictions
in which, or the manner in which, the Securities may be offered, sold, resold or
delivered.

     3. Upon the authorization by the Representatives of the release of such
Securities, the several Underwriters propose to offer such Securities for sale
upon the terms and conditions set forth in the Prospectus.

     4. The Securities to be purchased by each Underwriter hereunder will be
represented by one or more definitive global Securities in book-entry form which
will be deposited by or on behalf of the Company with a common depositary for
Clearstream Banking, societe anonyme ("Clearstream"), and Euroclear Bank
S.A./N.V., as operator of the Euroclear System ("Euroclear"), or their
designated custodians. The Company will deliver the Securities to one or more of
the Representatives, for the account of each Underwriter, against payment by or
on behalf of such Underwriter of the purchase price therefor by wire transfer of
Federal (same-day) funds to the account specified by the Company to the
Representatives at least twenty-four hours in advance, by causing Clearstream or
Euroclear to credit the Securities to the account of one or more of the
Representatives at Clearstream or Euroclear. The Company will cause the
certificates representing the Securities to be made available to the
Representatives for checking prior to the Time of Delivery (as defined below) at
the office of Clearstream or Euroclear or its designated custodian (the
"DESIGNATED OFFICE"). The time and date of such delivery and payment shall be
9:30 a.m., London time, on March 15, 2007 or at such other place and time and
date as the Representatives and the Company may agree upon in writing. Such time
and date are herein called the "TIME OF DELIVERY".

          The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 8 hereof, including the cross-receipt
for the Securities, will be delivered at the offices of Sullivan & Cromwell LLP,
125 Broad Street, New York, NY 10004 (the "CLOSING LOCATION"), and the
Securities will be delivered at the Designated Office, all at the Time of
Delivery. A meeting will be held at the Closing Location at 4:00 p.m., New York
City


                                       -5-



time, on the New York Business Day next preceding the Time of Delivery, at which
meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For the
purposes of this Section 4, "NEW YORK BUSINESS DAY" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in New York City are generally authorized or obligated by law or
executive order to close.

     5. The Company covenants and agrees with each of the Underwriters:

          (a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under the
Act not later than the Commission's close of business on the second business day
following the date of this Agreement; to make no further amendment or supplement
(other than an amendment or supplement as a result of filings by the Company
under the Exchange Act and other than amendments or supplements in connection
with offerings of medium-term notes under any medium-term note program existing
on the date of this Agreement) to the Registration Statement or the Prospectus
prior to the Time of Delivery which shall be disapproved by the Representatives
promptly after reasonable notice thereof; between the signing of this Agreement
and the Time of Delivery, to give reasonable advance notice to the
Representatives of any filings by the Company under the Exchange Act; between
the signing of this Agreement and the Time of Delivery, to advise the
Representatives promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective or
any amendment or supplement to the Prospectus has been filed (other than an
amendment or supplement as a result of filings by the Company under the Exchange
Act and other than amendments or supplements in connection with offerings of
medium-term notes under any medium-term note program existing on the date of
this Agreement) and to furnish the Representatives with copies thereof; to
prepare a final term sheet, containing solely a description of the Securities,
in the form set forth in Exhibit A to Schedule II hereto and to file such term
sheet pursuant to Rule 433(d) under the Act within the time required by such
Rule; to file promptly all other material required to be filed by the Company
with the Commission pursuant to Rule 433(d) under the Act; to file promptly all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act for so long as the delivery of a prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Act) is required in
connection with the offering or sale of the Securities, and during such same
period to advise the Representatives, promptly after it receives notice thereof,
of the time when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended Prospectus
has been filed with the Commission (other than an amendment or supplement as a
result of filings by the Company under the Exchange Act and other than the
filing of prospectuses, preliminary prospectuses, preliminary prospectus
supplements, issuer free-writing prospectuses and other documents pursuant to
Rule 424(b) or Rule 433 under the Act that relate to securities other than the
Securities), of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any prospectus relating to the Securities,
of the suspension of the qualification of the Securities for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any such stop order or of any
such order preventing or suspending the use of any such prospectus relating to
the Securities or suspending any such qualification, to use promptly its best
efforts to obtain its withdrawal;


                                       -6-



          (b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Securities for offering
and sale under the securities laws of such jurisdictions as the Representatives
may request and to comply with such laws so as to permit the continuance of
sales and dealings in such jurisdictions for as long as may be necessary to
complete the distribution of the Securities; provided, however, that in
connection therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;

          (c) From time to time, to furnish the Underwriters with written and
electronic copies of the Prospectus in such quantities as the Representatives
may reasonably request, and, if the delivery of a prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Act) is required at any
time prior to the expiration of nine months after the time of issuance of the
Prospectus in connection with the offering or sale of the Securities and if at
such time any event shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made
when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a)
under the Act) is delivered, not misleading, or if for any other reason it shall
be necessary during such same period to amend or supplement the Prospectus or to
file under the Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Act, the Exchange Act or the Trust
Indenture Act, to notify the Representatives and upon their request to file such
document and to prepare and furnish without charge to each Underwriter and to
any dealer in securities as many copies as the Representatives may from time to
time reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance; and in case any Underwriter is required to deliver a prospectus (or
in lieu thereof, the notice referred to in Rule 173(a) under the Act) in
connection with sales of any of the Securities at any time nine months or more
after the time of issue of the Prospectus, upon the request of the
Representatives but at the expense of such Underwriter, to prepare and deliver
to such Underwriter as many written and electronic copies as the Representatives
may request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;

          (d) To make generally available to its security holders as soon as
practicable, but in any event not later than sixteen months after the effective
date of the Registration Statement (as defined in Rule 158(c)), an earnings
statement of the Company and its subsidiaries (which need not be audited)
complying with Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including, at the option of the Company, Rule 158);

          (e) During the period beginning from the date hereof and continuing to
and including the earlier of (i) the termination of trading restrictions for the
Securities, as notified to the Company by the Representatives, and (ii) the Time
of Delivery for the Securities, not to offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company which mature more than
nine months after such Time of Delivery and which are pari passu with, and
otherwise substantially similar to, the Securities, without the prior written
consent of the Representatives, provided that the foregoing agreement shall not
apply to the 6.25% Series A-1 Junior Subordinated Debentures or the 5.75% Series
A-2 Junior Subordinated Debentures of the Company; and


                                       -7-



          (f) To use all commercially reasonable efforts to ensure that, no
later than 30 days following the Time of Delivery, the Securities will be listed
on the New York Stock Exchange.

     6. (a) The Company and each Underwriter agree that the Underwriters may
prepare and use one or more preliminary term sheets relating to the Securities
containing customary information; provided that such information has been
approved by the Company before the first communication containing such
information is used;

          (b) Each Underwriter represents that it has not and will not use,
authorize use of, refer to, or participate in the planning for use of, any
written communication that constitutes an offer to sell or the solicitation of
an offer to buy the Securities other than (A) any written communication
permitted under subparagraph (a) above, (B) the final term sheet prepared and
filed pursuant to Section 5(a) hereof, or (C) any written communication prepared
by such Underwriter and approved in writing by the Company in advance;

          (c) The Company represents to the Underwriters that it has not and
will not use, authorize use of, refer to, or participate in the planning for use
of, any written communication that constitutes an offer to sell or the
solicitation of an offer to buy the Securities other than (A) any written
communication permitted under subparagraph (a) above, (B) the final term sheet
prepared and filed pursuant to Section 5(a) hereof, (C) a press release or other
announcement relating to the Securities that complies with Rule 134 or Rule 135
under the Act and that the Company issues after giving notice to the
Representatives of its intent to issue a press release, or (D) any written
communication approved by the Representatives in advance in writing;

          (d) Any such free writing prospectus the use of which has been
consented to by the Company or the Representatives, as the case may be
(including the final term sheet prepared and filed pursuant to Section 5(a)
hereof), is listed on Schedule II(a) hereto;

          (e) The Company represents and agrees that it has complied and will
comply with the requirements of Rule 433 under the Act applicable to any Issuer
Free Writing Prospectus, including timely filing with the Commission, where
required, and legending; and

          (f) The Company agrees that if at any time following the issuance of
an Issuer Free Writing Prospectus any event occurred or occurs as a result of
which such Issuer Free Writing Prospectus would conflict with the information in
the Registration Statement, the Pricing Prospectus or the Prospectus, or would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances then prevailing, not misleading, the Company will, if the
Underwriters are then required to deliver a prospectus under the Act in respect
of sales of Securities (or, in lieu thereof, the notice referred to in Rule 173
under the Act), give prompt notice thereof to the Representatives and, if
requested by the Representatives, will prepare and furnish without charge to
each Underwriter an Issuer Free Writing Prospectus or other document which will
correct such conflict, statement or omission; provided, however, that this
representation and warranty shall not apply to any statements or omissions in an
Issuer Free Writing Prospectus made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through the
Representatives expressly for use therein.


                                       -8-



     7. The Underwriters jointly and severally agree to pay or cause to be paid
all of the Company's expenses in connection with the transactions contemplated
by this Agreement, up to an amount equal to 10% of the total discounts and
commissions received by the Underwriters in connection with the offering of the
Securities, including without limitation, (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Securities under the Act and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, the Basic Prospectus, any Preliminary Prospectus, any Issuer Free
Writing Prospectus and the Prospectus and amendments and supplements thereto and
the mailing and delivering of copies thereof to the Underwriters; (ii) the cost
of printing, word-processing or reproducing this Agreement, any Indenture, any
Blue Sky and Legal Investment Memoranda and any other documents in connection
with the offering, purchase, sale and delivery of the Securities; (iii) all
expenses in connection with the qualification of the Securities for offering and
sale under state securities laws as provided in Section 5(b) hereof, including
the fees and disbursements of the Company's counsel in connection with such
qualification and in connection with the Blue Sky and legal investment surveys;
(iv) any fees charged by securities rating services for rating the Securities;
(v) any filing fees incident to any required review by the National Association
of Securities Dealers, Inc. of the terms of the sale of the Securities; (vi) the
cost of preparing the Securities; (vii) the fees and expenses of any Trustee and
any agent of any Trustee and the fees and disbursements of counsel for any
Trustee in connection with any Indenture and the Securities; and (viii) all
other costs and expenses incident to the performance of the Company's
obligations hereunder and under the Indenture which are not otherwise
specifically provided for in this Section.

     8. The obligations of the Underwriters shall be subject, in the discretion
of the Representatives, to the condition that all representations and warranties
and other statements of the Company herein shall be true and correct in all
material respects, at and as of the Time of Delivery, the condition that the
Company shall have performed, in all material respects, all of its obligations
hereunder theretofore to be performed and the following additional conditions:

          (a) No stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission or, to the
knowledge of the executive officers of the Company, shall be contemplated by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to the reasonable satisfaction of the
Representatives;

          (b) Davis Polk & Wardwell, counsel to the Underwriters, shall have
furnished to the Representatives such opinion, dated the Time of Delivery, with
respect to the Indenture, the validity of the Securities, the Registration
Statement, the Pricing Disclosure Package, the Prospectus, and other related
matters as the Representatives may reasonably request, and the Company shall
have furnished to such counsel such documents as they reasonably request to
enable them to pass upon such matters;

          (c) Sullivan & Cromwell LLP, counsel for the Company, shall have
furnished to the Representatives their opinion or opinions, dated the Time of
Delivery, to the effect set forth in Schedule III hereto;


                                       -9-



          (d) Kathleen E. Shannon, Senior Vice President, Secretary and Deputy
General Counsel of the Company, shall have furnished to the Representatives her
opinion, dated the Time of Delivery, to the effect set forth in Schedule IV
hereto;

          (e) On the date of the Prospectus at a time prior to the execution of
this Agreement and at the Time of Delivery, the independent registered public
accounting firm who have audited the financial statements of the Company and its
subsidiaries incorporated by reference in the Registration Statement, the
Pricing Disclosure Package and the Prospectus shall have furnished to the
Representatives a letter, dated the respective dates of delivery thereof, to the
effect set forth in Schedule V hereto, and with respect to such letter dated
such Time of Delivery, as to such other matters as the Representatives may
reasonably request and in form and substance satisfactory to the
Representatives;

          (f) Since the respective dates as of which information is given in the
Pricing Disclosure Package, there shall not have been any Material Adverse
Change which, in the judgment of the Representatives, materially impairs the
investment quality of the Securities, otherwise than as set forth or
contemplated in the Prospectus as amended or supplemented in accordance with
Section 5(a) hereof;

          (g) The Company shall have furnished or caused to be furnished to the
Representatives a certificate of the Chief Executive Officer, the President, any
Vice Chairman, any Executive or Senior Vice President or any Vice President and
a principal financial or accounting officer of the Company, dated the Time of
Delivery, in which such officers, to the best of their knowledge after
reasonable investigation, shall state that the representations and warranties of
the Company in this Agreement are true and correct, in all material respects, as
of the Time of Delivery, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied, in all
material respects, at or prior to the Time of Delivery, that no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are threatened by the
Commission, and that, since the respective dates as of which information is
given in the Pricing Disclosure Package, there has not been any Material Adverse
Change, otherwise than as set forth or contemplated in the Prospectus as amended
or supplemented in accordance with Section 5(a) hereof; and

          (h) On or after the date hereof, there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange if the effect of any such event, in the
reasonable judgment of the Representatives, is to make it impracticable or
inadvisable to proceed with the purchase by the Underwriters of the Securities
from the Company; (ii) a general moratorium on commercial banking activities in
New York declared by either Federal or New York State authorities; (iii) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, other than any
such outbreak, escalation or declaration arising out of or relating to the U.S.
war on terrorism that does not represent a significant departure from the
conditions that exist at the date hereof, if the effect of any such event in the
reasonable judgment of the Representatives is to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities on the terms and in the manner contemplated by the Pricing Disclosure
Package or the Prospectus as amended or supplemented in accordance with Section
5(a) hereof; (iv) the suspension of trading in the Company's common stock, par
value $2.50 per share, on the New York Stock Exchange, if the effect of such
event in


                                      -10-



the reasonable judgment of the Representatives is to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities on the terms and in the manner contemplated by the Pricing Disclosure
Package or the Prospectus as amended or supplemented in accordance with Section
5(a); or (v) any downgrading in the rating accorded the Company's senior debt
securities by Moody's Investors Service, a subsidiary of Moody's Corporation, or
Standard & Poor's, a division of the McGraw-Hill Companies, Inc., if the effect
of such event in the reasonable judgment of the Representatives is to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Securities on the terms and in the manner contemplated by the Pricing
Disclosure Package or the Prospectus as amended or supplemented in accordance
with Section 5(a).

     9. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus or any
amendment or supplement thereto, any Issuer Free Writing Prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse such Underwriter for any legal or
other expenses reasonably incurred by it in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, the Basic Prospectus, any Preliminary
Prospectus, the Pricing Prospectus, or any amendment or supplement thereto, or
any Issuer Free Writing Prospectus, in reliance upon and in conformity with
written information furnished to the Company by such Underwriter expressly for
use therein; and provided, further, that the foregoing indemnity agreement
contained in this Section 9(a), with respect to the Registration Statement, the
Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, or any
amendment or supplement thereto, or any Issuer Free Writing Prospectus shall not
inure to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Securities, where (i) prior to
the Applicable Time the Company shall have notified such Underwriter that the
Registration Statement, the Basic Prospectus, any Preliminary Prospectus, the
Pricing Prospectus, or any amendment or supplement thereto, or any Issuer Free
Writing Prospectus contains an untrue statement of material fact or omits to
state therein a material fact necessary in order to make the statements therein
not misleading, (ii) such untrue statement or omission of a material fact was
corrected in a further amendment or supplement to the Registration Statement,
the Basic Prospectus, any Preliminary Prospectus, the Pricing Prospectus, or any
amendment or supplement thereto, or, where permitted by law, an Issuer Free
Writing Prospectus, and such corrected Prospectus or Issuer Free Writing
Prospectus was provided to such Underwriter prior to the Applicable Time, (iii)
such corrected Registration Statement, Prospectus, Preliminary Prospectus or
Issuer Free Writing Prospectus (excluding any document incorporated by reference
therein) was not conveyed to such person at or prior to the contract for sale of
the Securities to such person and (iv) such loss, claim, damage or liability
would not have occurred had the corrected Registration Statement, Prospectus,
Preliminary Prospectus or Issuer Free Writing Prospectus (excluding any document
incorporated by reference therein) been conveyed to such person as provided for
in clause (iii) above.


                                      -11-



          (b) Each Underwriter will, severally and not jointly, indemnify and
hold harmless the Company against any losses, claims, damages or liabilities to
which the Company or such controlling person may become subject, under the Act,
the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Basic Prospectus, any Preliminary Prospectus,
the Pricing Prospectus or any amendment or supplement thereto, or any Issuer
Free Writing Prospectus, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, the Basic Prospectus, any Preliminary Prospectus, the Pricing
Prospectus or any amendment or supplement thereto, or any Issuer Free Writing
Prospectus, in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representatives
expressly for use therein; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.

          (c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action is brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation.

          (d) If the indemnification provided for in this Section 9 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
of the Securities on the other from the offering of the Securities to which such
loss, claim, damage or liability (or action in respect thereof) relates. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law, or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and the Underwriters of the
Securities on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations.


                                      -12-



The relative benefits received by the Company on the one hand and such
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from such offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions received by
such Underwriters in respect thereof. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading relates to information supplied by the Company on the one hand or by
such Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this subsection (d),
no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the applicable Securities underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The obligations of the
Underwriters of Securities in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations with respect to such
Securities and not joint.

          (e) The obligations of the Company under this Section 9 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 9 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.

     10. (a) If any Underwriter shall default in its obligation to purchase the
Securities which it has agreed to purchase, the Representatives may in their
discretion arrange for themselves or another party or other parties to purchase
such Securities on the terms contained herein. If within thirty-six hours after
such default by any Underwriters, the Representatives do not arrange for the
purchase of such Securities, then the Company shall be entitled to a further
period of thirty-six hours within which to procure another party or other
parties satisfactory to the Representatives to purchase such Securities on such
terms. In the event that, within the prescribed period, the Representatives
notify the Company that they have so arranged for the purchase of such
Securities, or the Company notifies the Representatives that it has so arranged
for the purchase of such Securities, the Representatives or the Company shall
have the right to postpone the Time of Delivery for such Securities for a period
of not more than seven days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file


                                      -13-



promptly any amendments or supplements to the Registration Statement or the
Prospectus which in the opinion of the Representatives may thereby be made
necessary. The term "UNDERWRITER" as used in this Agreement shall include any
person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Securities.

          (b) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of such Securities which remains unpurchased does not
exceed one-tenth of the aggregate principal amount of the Securities, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the principal amount of Securities which such Underwriter agreed to
purchase under this Agreement relating to such Securities and, in addition, to
require each non-defaulting Underwriter to purchase its pro rata share (based on
the principal amount of Securities which such Underwriter agreed to purchase
under this Agreement) of the Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.

          (c) If, after giving effect to any arrangements for the purchase of
the Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of Securities which remains unpurchased exceeds
one-tenth of the aggregate principal amount of the Securities, as referred to in
subsection (b) above, or if the Company shall not exercise the right described
in subsection (b) above to require non-defaulting Underwriters to purchase
Securities of a defaulting Underwriter or Underwriters, then this Agreement
relating to such Securities shall thereupon terminate, without liability on the
part of any non-defaulting Underwriter or the Company, except for the expenses
to be borne by the Company and the Underwriters as provided in Section 7 hereof
and the indemnity and contribution agreements in Section 9 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.

     11. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.

     12. If this Agreement shall be terminated pursuant to Section 10 or for any
other reason, the Company shall not then be under any liability to any
Underwriters except as provided in Section 9 hereof.

     13. In all dealings hereunder, the Representatives of the Underwriters of
the Securities shall act on behalf of each of such Underwriters, and the parties
hereto shall be entitled to act and rely upon any statement, request, notice or
agreement on behalf of any Underwriter made or given by such Representatives
jointly.

     All statements, requests, notices and advices hereunder shall be in
writing, or by telephone if promptly confirmed in writing, and if to an
Underwriter, shall be sufficient in all respects when delivered or sent by
facsimile transmission or registered mail as set forth in Schedule I hereto


                                      -14-



under such Underwriter's name, and if to the Company shall be sufficient in all
respects when delivered or sent by registered mail to 70 Pine Street, New York,
New York 10270, Facsimile Transmission No. (212) 785-1584, Attention: Corporate
Secretary.

     14. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and, to the extent provided in Section 9 and
Section 11 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter, and their respective heirs, executors,
administrators, personal representatives, successors and assigns, and no other
person shall acquire or have any right under or by virtue of this Agreement. No
purchaser of any of the Securities from any Underwriter shall be deemed a
successor or assign by reason merely of such purchase.

     15. The Company acknowledges and agrees that (i) the purchase and sale of
the Securities pursuant to this Agreement is an arm's-length commercial
transaction between the Company, on the one hand, and the several Underwriters,
on the other, (ii) in connection therewith and with the process leading to such
transaction each Underwriter is acting solely as a principal and not the agent
or fiduciary of the Company, (iii) no Underwriter has assumed an advisory or
fiduciary responsibility in favor of the Company with respect to the offering
contemplated hereby or the process leading thereto (irrespective of whether such
Underwriter has advised or is currently advising the Company on other matters)
or any other obligation to the Company except the obligations expressly set
forth in this Agreement and (iv) the Company has consulted its own legal and
financial advisors to the extent it deemed appropriate. The Company agrees that
it will not claim that the Underwriters, or any of them, has rendered advisory
services of any nature or respect (other than services rendered by any of the
Underwriters in its role as a joint structuring advisor), or owes a fiduciary or
similar duty to the Company, in connection with such transaction or the process
leading thereto.

     16. This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company and the Underwriters, or any of
them, with respect to the subject matter hereof.

     17. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.

     18. Time shall be of the essence in this Agreement.

     19. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all of such counterparts shall together constitute one and the same
instrument.


                                      -15-



     If the foregoing is in accordance with your understanding, please sign and
return to us five counterparts hereof, whereupon this letter and the acceptance
by each of you thereof shall constitute a binding agreement between the Company
and each of you in accordance with its terms.

                                        Very truly yours,

                                        AMERICAN INTERNATIONAL GROUP, INC.


                                        By /s/ Robert A. Gender
                                           -------------------------------------
                                        Name: Robert A. Gender
                                        Title: Vice President and Treasurer


Accepted in New York, New York

CITIGROUP GLOBAL MARKETS LIMITED


By /s/ Ivan Browne
   ----------------------------------
Name: Ivan Browne
Title: Duly Authorized Signatory


DEUTSCHE BANK AG, LONDON BRANCH


By /s/ Stephanie Osatenko
   ----------------------------------
Name: Stephanie Osatenko
Title: Vice President and Counsel


By /s/ Ian J. Reid
   ----------------------------------
Name: Ian J. Reid
Title: Vice President and Counsel


J.P. MORGAN SECURITIES LTD.


By /s/ Charles Gibb
   ----------------------------------
Name: Charles Gibb
Title: Executive Director


                                   SCHEDULE I



                                                                     PRINCIPAL
                                                                     AMOUNT OF
                                                                 4.875% SERIES A-3
                                                                JUNIOR SUBORDINATED
                                                                     DEBENTURES
                                                                       TO BE
           UNDERWRITERS                      ADDRESS                 PURCHASED
- ---------------------------------   -------------------------   -------------------
                                                          
Citigroup Global Markets
Limited..........................   Citigroup Centre              (euro)200,000,000
                                    Canada Square
                                    London E14 5LB

Deutsche Bank AG, London Branch..   Winchester House              (euro)200,000,000
                                    1 Great Winchester Street
                                    London EC2N 2DB

J.P. Morgan Securities Ltd.......   125 London Wall               (euro)200,000,000
                                    London EC2Y 5AJ

ABN AMRO Bank N.V................   250 Bishopsgate               (euro)150,000,000
                                    London EC2M 4AA

Credit Suisse Securities (Europe)
   Limited.......................   One Cabot Square              (euro)150,000,000
                                    London E14 4QJ

Banca IMI S.p.A..................   Corso Matteotti 6             (euro)25,000,000
                                    20121 Milan

BNP Paribas......................   10 Harewood Avenue            (euro)25,000,000
                                    London NW1 6AA

CALYON...........................   122 Leadenhall Street         (euro)25,000,000
                                    London EC3V 4QH



                                       I-1




                                                          
Societe Generale.................   29 Boulevard Haussmann        (euro)25,000,000
                                    75009 Paris

                                                                  ===================
   Total.........................                                 (euro)1,000,000,000
                                                                  -------------------



                                       I-2



                                   SCHEDULE II

(a)  Issuer Free Writing Prospectuses:

     Final Term Sheet, attached as Exhibit A to Schedule II, as filed with the
Commission pursuant to Rule 433 on March 8, 2007.


                                      II-1



                            EXHIBIT A TO SCHEDULE II
                            FORM OF FINAL TERM SHEET

                       AMERICAN INTERNATIONAL GROUP, INC.
                              (euro)1,000,000,000
                4.875% SERIES A-3 JUNIOR SUBORDINATED DEBENTURES

                                FINAL TERM SHEET


                              
ISSUER:                          American International Group, Inc.

TITLE OF SECURITIES:             4.875% Series A-3 Junior Subordinated Debentures

AGGREGATE PRINCIPAL AMOUNT:      (euro)1,000,000,000

PRICE TO PUBLIC:                 99.798%

PURCHASE PRICE BY UNDERWRITERS:  98.798%

SCHEDULED MATURITY DATE:         March 15, 2037

FINAL MATURITY DATE:             March 15, 2067

INTEREST RATE AND INTEREST       4.875% from and including March 15, 2007 to but
PAYMENT DATES DURING FIXED       excluding March 15, 2017, payable annually in
RATE PERIOD:                     arrears on each March 15, beginning on March 15,
                                 2008.

INTEREST RATE AND INTEREST       Annual rate equal to three-month EURIBOR + 173
PAYMENT DATES DURING FLOATING    bp, from and including March 15, 2017, payable
RATE PERIOD:                     quarterly in arrears on each March 15, June 15,
                                 September 15 and December 15, beginning on June
                                 15, 2017. If three-month EURIBOR cannot be
                                 determined for the quarterly interest period
                                 beginning on March 15, 2017, in the manner
                                 specified in the preliminary prospectus
                                 supplement for the 4.875% Series A-3 Junior
                                 Subordinated Debentures, "three-month EURIBOR"
                                 will be 3.879%.

TRADE DATE:                      March 8, 2007

SETTLEMENT DATE:                 March 15, 2007



                                       II-2




                              
OPTIONAL REDEMPTION:             Subject to restrictions under the Replacement
                                 Capital Covenant, redeemable

                                 -   in whole, but not in part, at any time prior
                                     to March 15, 2017, at greater of par and
                                     discounted present value (discounted from
                                     March 15, 2017) at the Bundesobligationen
                                     rate plus 25 bp, together, in either case,
                                     with interest accrued to the redemption
                                     date; and

                                 -   in whole or in part, at any time on or after
                                     March 15, 2017, at par, together with
                                     interest accrued to the redemption date.

REDEMPTION FOR TAX EVENT OR      Subject to restrictions under the Replacement
RATING AGENCY EVENT:             Capital Covenant, redeemable in whole but not in
                                 part, at any time prior to March 15, 2017, at
                                 greater of par and discounted present value
                                 (discounted from March 15, 2017) at the
                                 Bundesobligationen rate plus 50 bp together, in
                                 either case, with interest accrued to the
                                 redemption date.

REDEMPTION IF OBLIGATED TO PAY   Subject to restrictions under the Replacement
ADDITIONAL AMOUNTS:              Capital Covenant, redeemable in whole but not in
                                 part, at any time if the Issuer is obligated to
                                 pay Additional Amounts (other than as a result
                                 of an event that would, upon receipt of the
                                 required opinion, constitute a Tax Event) at
                                 par, together with interest accrued to the
                                 redemption date.

REPLACEMENT CAPITAL COVENANT:    A replacement capital covenant will apply until
                                 March 15, 2047. The dates referred to in the
                                 prospectus supplement on which the "applicable
                                 percentage" and the types of securities that
                                 constitute "qualifying capital securities" (as
                                 therein defined) will change are March 15, 2017
                                 and March 15, 2037.

REOFFER SPREAD TO                +97.3 bp
BUNDESOBLIGATIONEN:

BENCHMARK BUNDESOBLIGATIONEN:    3.750% due January 4, 2017

BENCHMARK BUNDESOBLIGATIONEN     3.928%
YIELD:

REOFFER YIELD:                   4.901%



                                       II-3




                              
ISIN:                            XS0291642154

JOINT STRUCTURING                Citigroup Global Markets Limited, Deutsche Bank
ADVISORS:                        AG, London Branch, and J.P. Morgan Securities
                                 Ltd.

JOINT BOOKRUNNING                ABN AMRO Bank N.V., Citigroup Global Markets
MANAGERS:                        Limited, Credit Suisse Securities (Europe)
                                 Limited, Deutsche Bank AG, London Branch, and
                                 J.P. Morgan Securities Ltd.

CO-MANAGERS:                     Banca IMI S.p.A., BNP Paribas, CALYON, and
                                 Societe Generale


THE ISSUER HAS FILED A REGISTRATION STATEMENT (INCLUDING A PROSPECTUS) WITH THE
SEC FOR THE OFFERING TO WHICH THIS COMMUNICATION RELATES. BEFORE YOU INVEST, YOU
SHOULD READ THE PROSPECTUS IN THAT REGISTRATION STATEMENT, THE PRELIMINARY
PROSPECTUS SUPPLEMENT AND OTHER DOCUMENTS THE ISSUER HAS FILED WITH THE SEC FOR
MORE COMPLETE INFORMATION ABOUT THE ISSUER AND THIS OFFERING. YOU MAY GET THESE
DOCUMENTS FOR FREE BY VISITING EDGAR ON THE SEC WEB SITE AT WWW.SEC.GOV.
ALTERNATIVELY, THE ISSUER, ANY UNDERWRITER OR ANY DEALER PARTICIPATING IN THE
OFFERING WILL ARRANGE TO SEND YOU THE PROSPECTUS IF YOU REQUEST IT BY CALLING
CITIGROUP GLOBAL MARKETS LIMITED COLLECT AT 44-20-7986-9000, DEUTSCHE BANK AG,
LONDON BRANCH, COLLECT AT 44-207-545-1138 AND J.P. MORGAN SECURITIES LTD.
COLLECT AT 44-207-779-2468.


                                      II-4


                                  SCHEDULE III

                   Form of Opinion of Sullivan & Cromwell LLP

                                                                  March __, 2007

Citigroup Global Markets Limited,
Deutsche Bank AG, London Branch,
J.P. Morgan Securities Ltd.,
   As Representatives of the several Underwriters
c/o [Name],
[Address].

Ladies and Gentlemen:

     In connection with the several purchases today by you and the other
Underwriters named in Schedule I to the Underwriting Agreement, dated March __,
2007 (the "UNDERWRITING AGREEMENT"), between American International Group, Inc.,
a Delaware corporation (the "COMPANY"), and you, as Representatives of the
several Underwriters named therein (the "UNDERWRITERS"), of (euro)_________
aggregate principal amount of the Company's _____% Series A-3 Junior
Subordinated Debentures (the "SECURITIES") issued pursuant to the Indenture,
dated as of March __, 2007, as supplemented by the Third Supplemental Indenture,
dated March __, 2007 (together, the "INDENTURE"), between the Company and The
Bank of New York, as Trustee (the "TRUSTEE"), we, as counsel for the Company,
have examined such corporate records, certificates and other documents, and such
questions of law, as we have considered necessary or appropriate for the
purposes of this opinion. Upon the basis of such examination, it is our opinion
that:

     (1) The Company has been duly incorporated and is an existing corporation
in good standing under the laws of the State of Delaware.

     (2) The Indenture has been duly authorized, executed and delivered by the
Company and duly qualified under the Trust Indenture Act of 1939; the Securities
have been duly authorized, executed, authenticated, issued and delivered; and
the Indenture and the Securities constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms, subject
to bankruptcy,


                                      III-1



insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.

     (3) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.

     In connection with the opinion in paragraph (2), we note that, as of the
date of this opinion, a judgment for money in an action based on the Securities
in a Federal or state court in the United States ordinarily would be enforced in
the United States only in United States dollars. The date used to determine the
rate of conversion of Euro into United States dollars will depend upon various
factors, including which court renders the judgment. Under Section 27 of the New
York Judiciary Law, a state court in the State of New York rendering a judgment
on a Security would be required to render such judgment in Euro, and such
judgment would be converted into United States dollars at the exchange rate
prevailing on the date of entry of the judgment.

     The foregoing opinion is limited to the Federal laws of the United States,
the laws of the State of New York and the General Corporation Law of the State
of Delaware, and we express no opinion as to the effect of the laws of any other
jurisdiction.

     We have also relied as to certain matters upon information obtained from
public officials, officers of the Company and other sources believed by us to be
responsible, and we have assumed that the Indenture has been duly authorized,
executed and delivered by the Trustee, that the Securities conform to the
specimen thereof examined by us, that the Trustee's certificates of
authentication of the Securities have been manually signed by one of the
Trustee's authorized officers, and that the signatures on all documents examined
by us are genuine, assumptions which we have not independently verified.

                                        Very truly yours,


                                        ----------------------------------------


                                      III-2



                    FORM OF LETTER OF SULLIVAN & CROMWELL LLP

                                                                  March __, 2007

Citigroup Global Markets Limited,
Deutsche Bank AG, London Branch,
J.P. Morgan Securities Ltd.,
   As Representatives of the several Underwriters
c/o [Name],
[Address].

Ladies and Gentlemen:

     This is with reference to the registration under the Securities Act of 1933
(the "Securities Act") and offering of (euro)__________ aggregate principal
amount of _____% Series A-3 Junior Subordinated Debentures (the "Securities") of
American International Group, Inc. (the "Company").

     The two Registration Statements relating to the Securities (File Nos.
333-106040 and 333-31024) were filed on different dates on Form S-3 in
accordance with procedures of the Securities and Exchange Commission (the
"Commission") permitting a delayed or continuous offering of securities pursuant
thereto and, if appropriate, a post-effective amendment, document incorporated
by reference therein or prospectus supplement that provides information relating
to the terms of the securities and the manner of their distribution.

     The Registration Statements were amended by a Post-Effective Amendment No.
1, declared effective by the Commission on July 24, 2006. References in this
letter to the Registration Statement refer to the latest Registration Statement
as amended by Post-Effective Amendment No. 1. The Securities have been offered
by the Prospectus dated July 24, 2006 (the "Basic Prospectus"), as supplemented
by the Prospectus Supplement, dated March __, 2007 (the "Prospectus
Supplement"). The Basic Prospectus, as supplemented by the Prospectus
Supplement, does not necessarily contain a current description of the Company's
business and affairs since, pursuant to Form S-3, it incorporates by reference
certain documents filed with the Commission that contain information as of
various dates.


                                      III-3



     As counsel to the Company, we reviewed the Registration Statement, the
Basic Prospectus, the Prospectus Supplement and the documents listed in Schedule
A hereto (those listed documents, taken together with the Basic Prospectus,
being referred to herein as the "Pricing Disclosure Package") and participated
in discussions with your representatives and those of the Company and its
accountants. Between the date of the Prospectus Supplement and the time of
delivery of this letter, we participated in further discussions with your
representatives and those of the Company, its accountants and its counsel
concerning certain matters relating to the Company and reviewed certificates of
certain officers of the Company, a letter addressed to you from the Company's
accountants and an opinion addressed to you from counsel to the Company. On the
basis of the information that we gained in the course of the performance of the
services referred to above, considered in the light of our understanding of the
applicable law (including the requirements of Form S-3 and the character of
prospectus contemplated thereby) and the experience we have gained through our
practice under the Securities Act, we confirm to you that, in our opinion, each
part of the Registration Statement, as of the effective date of Post-Effective
Amendment No. 1, and the Basic Prospectus, as supplemented by the Prospectus
Supplement, as of the date of the Prospectus Supplement, appeared on their face
to be appropriately responsive, in all material respects relevant to the
offering of the Securities, to the requirements of the Securities Act, the Trust
Indenture Act of 1939 and the applicable rules and regulations of the Commission
thereunder. Further, nothing that came to our attention in the course of such
review has caused us to believe that, insofar as relevant to the offering of the
Securities,

     (a) any part of the Registration Statement, when such part became
effective, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or

     (b) the Pricing Disclosure Package, as of [__:00] [A/P].M. on March __,
2007 (which you have informed us is prior to the time of the first sale of the
Securities by any Underwriter), [when considered together with any other
disclosure added in the Prospectus Supplement,] contained any untrue statement
of a material fact or omitted to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or


                                      III-4



     (c) the Basic Prospectus, as supplemented by the Prospectus Supplement, as
of the date of the Prospectus Supplement, contained any untrue statement of a
material fact or omitted to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.

     We also advise you that nothing that came to our attention in the course of
the procedures described in the second sentence of this paragraph has caused us
to believe that (a) the Basic Prospectus, as supplemented by the Prospectus
Supplement, or (b) the Pricing Disclosure Package, [when considered together
with any other disclosures added in the Prospectus Supplement,] as of the time
of delivery of this letter, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

     The limitations inherent in the independent verification of factual matters
and the character of determinations involved in the registration process are
such, however, that we do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Basic Prospectus, the Prospectus Supplement or the Pricing
Disclosure Package, except for those made under the captions "Description of
Junior Subordinated Debentures" in the Basic Prospectus and "Description of
Terms of the Series A-3 Junior Subordinated Debentures", "Certain United States
Federal Income Tax Consequences" and "Underwriting" in the Prospectus
Supplement, in each case insofar as they relate to provisions of the Securities,
the Indenture under which the Securities are to be issued or the Underwriting
Agreement relating to the Securities, or insofar as they relate to provisions of
U.S. Federal tax law therein described. Also, we do not express any opinion or
belief as to the financial statements or other financial data derived from
accounting records contained in the Registration Statements, the Basic
Prospectus, the Prospectus Supplement or the Pricing Disclosure Package, or as
to the report of management's assessment of the effectiveness of internal
control over financial reporting or the auditors' attestation report thereon,
each as included in the Registration Statement, the Basic Prospectus, the
Prospectus Supplement and the Pricing Disclosure


                                      III-5



Package, or as to the statement of the eligibility and qualification of the
Trustee under the Indenture under which the Securities are being issued.

     This letter is furnished by us, as counsel to the Company, to you, as
Representatives of the Underwriters, solely for the benefit of the Underwriters
in their capacity as such, and may not be relied upon by any other person. This
letter may not be quoted, referred to or furnished to any purchaser or
prospective purchaser of the Securities and may not be used in furtherance of
any offer or sale of the Securities.

                                        Very truly yours,


                                        ----------------------------------------


                                      III-6



                                   SCHEDULE A

[List documents that are included in the Pricing Disclosure Package, including
the Basic Prospectus as supplemented by the Preliminary Prospectus Supplement
and the final term sheet prepared pursuant to Section 5(a) of the Underwriting
Agreement.]


                                      III-7



                                   SCHEDULE IV

                     FORM OF OPINION OF KATHLEEN E. SHANNON

                                                                  March __, 2007

Citigroup Global Markets Limited,
Deutsche Bank AG, London Branch,
J.P. Morgan Securities Ltd.,
   As Representatives of the several Underwriters
c/o [Name],
[Address].

Ladies and Gentlemen:

     I am Senior Vice President, Secretary and Deputy General Counsel of
American International Group, Inc., a Delaware corporation (the "Company"), and,
as such, I am generally familiar with the corporate affairs of the Company.

     This opinion is rendered in connection with the several purchases today
by you and the other Underwriters named in Schedule I to the Underwriting
Agreement, dated March __, 2007 (the "Underwriting Agreement"), between
the Company and you, as Representatives of the several Underwriters named
therein (the "Underwriters"), of (euro)__________ aggregate principal
amount of the Company's _____% Series A-3 Junior Subordinated Debentures
(the "Securities") issued pursuant to the Junior Subordinated Indenture, dated
as of March __, 2007, as supplemented by the Third Supplemental Indenture, dated
March __, 2007 (together, the "Indenture"), between the Company and The Bank of
New York, as Trustee (the "Trustee").

     The two Registration Statements relating to the Securities (File Nos.
333-106040 and 333-31024) were filed under the Securities Act of 1933 (the
"Act") on different dates on Form S-3. The Registration Statements were amended
by a Post-Effective Amendment No. 1, declared effective by the Securities and
Exchange Commission (the "Commission") on July 24, 2006. References in this
letter to the Registration Statement refer to the latest Registration Statement
as amended by Post-Effective Amendment No. 1. The Securities have been offered


                                      IV-1



by the Prospectus dated July 24, 2006 (the "Basic Prospectus"), as supplemented
by the Prospectus Supplement, dated March __, 2007 (the "Prospectus
Supplement").

     In rendering my opinion, I, as Senior Vice President, Secretary and Deputy
General Counsel of the Company, have examined the Registration Statement, the
Basic Prospectus, the Prospectus Supplement and the documents listed in Schedule
A hereto (those listed documents, taken together with the Basic Prospectus as
amended or supplemented immediately prior to the Applicable Time (as defined
below) being referred to herein as the "Pricing Disclosure Package"), and I have
examined such corporate records, certificates and other documents, and have
reviewed such questions of law, as I have considered necessary or appropriate
for the purposes of this opinion. Upon the basis of such examination and review,
you are advised that, in my opinion:

(i) The Company has authorized capital as incorporated by reference in the Basic
Prospectus.

(ii) To the best of my knowledge and information, there are no contracts or
other documents required to be summarized or disclosed or filed as exhibits to
the Registration Statement, other than those summarized or disclosed in the
Registration Statement or filed as exhibits thereto, and there are no legal or
governmental proceedings pending or threatened of a character required to be
disclosed in the Registration Statement and the Basic Prospectus, as amended or
supplemented by the Prospectus Supplement, which are not disclosed.

(iii) The issue and sale of the Securities, and the compliance by the Company
with all of the provisions of the Securities, the Indenture and the Underwriting
Agreement, will not result in a breach of any of the terms or provisions of, or
constitute a default under, any material indenture, mortgage, deed of trust,
loan agreement, or other material agreement or instrument in effect on the date
hereof and known to me, to which the Company is a party or by which the Company
may be bound or to which any of the property or assets of the Company is subject
or violate any judgment, order or decree of any court or governmental body
applicable to the Company, except for such breaches, defaults and violations
that would not have a Material


                                      IV-2



Adverse Effect (as defined in the Underwriting Agreement) or affect the validity
of the Securities, nor will such action result in any violation of the
provisions of the Restated Certificate of Incorporation, as amended, or the
By-Laws of the Company in effect on the date hereof; and no consent, approval,
authorization, order, registration or qualification of or with any court or any
regulatory authority or other governmental body is required for the issue and
sale of the Securities or the consummation by the Company of the other
transactions contemplated by the Underwriting Agreement or the Indenture, except
such as have been obtained under the Act and the Trust Indenture Act of 1939, as
amended, and such consents, approvals, authorizations, orders, registrations or
qualifications the failure to obtain or make would not have a Material Adverse
Effect or affect the validity of the Securities and as may be required under
state securities or Blue Sky laws (including insurance laws of any state
relating to offers and sales of securities in such state) in connection with the
purchase and distribution of the Securities by the Underwriters, as contemplated
by the Underwriting Agreement.

(iv) Nothing which came to my attention has caused me to believe that, insofar
as relevant to the offering of the Securities,

     (a) any part of the Registration Statement, when such part became
     effective, contained any untrue statement of a material fact or omitted to
     state any material fact required to be stated therein or necessary to make
     the statements therein not misleading, or

     (b) the Pricing Disclosure Package, as of __:00 [A/P].M. on March __, 2007
     (the "Applicable Time") (which you have informed me is prior to the time of
     the first sale of the Securities by any Underwriter), when considered
     together with any other disclosure added in the Prospectus Supplement,
     contained any untrue statement of a material fact or omitted to state any
     material fact necessary in order to make the statements therein, in the
     light of the circumstances under which they were made, not misleading, or


                                      IV-3



     (c) the Basic Prospectus, as supplemented by the Prospectus Supplement, as
     of the date of the Prospectus Supplement, contained any untrue statement of
     a material fact or omitted to state any material fact necessary in order to
     make the statements therein, in the light of the circumstances under which
     they were made, not misleading.

(v) The documents incorporated by reference in the Basic Prospectus, as
supplemented by the Prospectus Supplement, as of the date they became effective
or were filed with the Commission, as the case may be, complied as to form in
all material respects with the Act and the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.

     In connection with the opinion in paragraph (ii), I note that, as of the
date of this opinion, a judgment for money in an action based on the Securities
in a Federal or state court in the United States ordinarily would be enforced in
the United States only in United States dollars. The date used to determine the
rate of conversion of Euro into United States dollars will depend upon various
factors, including which court renders the judgment. Under Section 27 of the New
York Judiciary Law, a state court in the State of New York rendering a judgment
on a Security would be required to render such judgment in Euro, and such
judgment would be converted into United States dollars at the exchange rate
prevailing on the date of entry of the judgment.

     In rendering the opinion in paragraph (iv), (A) I assume no responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement, the Basic Prospectus, the Prospectus Supplement or the
Pricing Disclosure Package, except for those made under the captions
"Description of Junior Subordinated Debentures" in the Basic Prospectus and
"Description of Terms of the Series A-3 Junior Subordinated Debentures" in the
Prospectus Supplement, in each case insofar as they relate to provisions of the
Securities and the Indenture under which the Securities are to be issued therein
described, and (B) I express no opinion or belief as to the financial statements
or other financial data derived from accounting records contained in the
Registration Statement, the Basic Prospectus, the Prospectus Supplement or the
Pricing Disclosure Package, or as to the report of management's assessment of
the effectiveness of internal control over financial reporting or the auditors'
attestation report thereon, each as included in the Registration Statement, the
Basic Prospectus, the


                                      IV-4



Prospectus Supplement and the Pricing Disclosure Package, or as to the statement
of the eligibility and qualification of the Trustee under the Indenture under
which the Securities are being issued.

     In rendering the opinion in paragraph (v), I express no opinion or belief
as to the financial statements or other financial or statistical data contained
in the Basic Prospectus or the Prospectus Supplement, or as to the report of
management's assessment of the effectiveness of internal control over financial
reporting or the auditors' attestation report thereon, each as included in the
Basic Prospectus and the Prospectus Supplement.

     This letter is furnished by me, as Senior Vice President, Secretary and
Deputy General Counsel of the Company, to you, as Representatives of the
Underwriters, solely for the benefit of the Underwriters in their capacity as
such, and may not be relied upon by any other person. This opinion may not be
quoted, referred to or furnished to any purchaser or prospective purchaser of
the Securities and may not be used in furtherance of any offer or sale of the
Securities.

                                        Very truly yours,


                                        ----------------------------------------


                                      IV-5



                                   SCHEDULE A

[List documents that are included in the Pricing Disclosure Package, including
the Basic Prospectus as supplemented by the Preliminary Prospectus Supplement
and the final term sheet prepared pursuant to Section 5(a) of the Underwriting
Agreement.]


                                      IV-6



                                   SCHEDULE V

         FORM OF LETTER OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

March __, 2007

American International Group, Inc.

and

Citigroup Global Markets Limited
Deutsche Bank AG, London Branch
J.P. Morgan Securities Ltd,
as representatives of the several underwriters

Ladies and Gentlemen:

We have audited:

1.   the consolidated financial statements of American International Group, Inc.
     (the "Company") and subsidiaries as of December 31, 2006 and 2005 and for
     each of the three years in the period ended December 31, 2006 included in
     the Company's annual report on Form 10-K for the year ended December 31,
     2006 (the "Form 10-K"),

2.   the related financial statement schedules included in the Form 10-K,

3.   management's assessment of the effectiveness of the Company's internal
     control over financial reporting as of December 31, 2006 included in the
     Form 10-K, and

4.   the effectiveness of the Company's internal control over financial
     reporting as of December 31, 2006.

The consolidated financial statements, financial statement schedules and
management's assessment referred to above are all incorporated by reference in
the registration statement (No. 333-106040) on Form S-3 filed by the Company
under the Securities Act of 1933 (the "Act"); our report (which contains an
adverse opinion on the effectiveness of internal control over financial
reporting) with respect to the audits referred to above is also incorporated by
reference in such registration statement. Such registration statement of which
the Prospectus dated July 24, 2006 forms a part, is supplemented by the
Preliminary Prospectus Supplement dated March __, 2007 for the offering of
(euro)__________ of _____% Series A-3 Junior Subordinated Debentures. Such
registration statement is herein referred to as the "Registration Statement."

In connection with the Registration Statement:


                                       V-1



1.   We are an independent registered public accounting firm with respect to the
     Company within the meaning of the Act and the applicable rules and
     regulations thereunder adopted by the Securities and Exchange Commission
     (the "SEC") and the Public Company Accounting Oversight Board (United
     States) (the "PCAOB").

2.   In our opinion, the consolidated financial statements and financial
     statement schedules audited by us and incorporated by reference in the
     Registration Statement comply as to form in all material respects with the
     applicable accounting requirements of the Act and the Securities Exchange
     Act of 1934 and the related rules and regulations adopted by the SEC.

3.   We have not audited any financial statements of the Company as of any date
     or for any period subsequent to December 31, 2006. Therefore, we are unable
     to and do not express any opinion on the Company's financial position,
     results of operations or cash flows as of any date or for any period
     subsequent to December 31, 2006. Also, we have not audited the Company's
     internal control over financial reporting as of any date subsequent to
     December 31, 2006. Therefore, we do not express any opinion on the
     Company's internal control over financial reporting as of any date
     subsequent to December 31, 2006.

4.   For purposes of this letter, we have read the minutes of the 2006 and 2007
     meetings of the stockholders, the Board of Directors and Committees of the
     Board of Directors of the Company as set forth in the minute books at March
     1, 2007, officials of the Company having advised us that the minutes of all
     such meetings through that date were set forth therein, except for the
     minutes of the meetings listed below which were not approved in final form,
     for which agendas were provided to us; officials of the Company have
     represented that such agendas include all substantive actions taken at such
     meetings:

          i)   the Board of Directors of AIG (the "Board"), January 17, 2007 and
               February 27, 2007 meetings;

          ii)  the Audit Committee of the Board, February 14, 2007 and February
               27, 2007 meetings;

          iii) the Compensation Committee of the Board, December 11, 2006
               meeting;

          iv)  the Finance Committee of the Board, February 15, 2007 meeting;

          v)   the Nominating and Corporate Governance Committee of the Board,
               January 16, 2007 meeting;

          vi)  the Public Policy and Social Responsibility Committee of the
               Board, January 16, 2007 meeting;


                                       V-2



          vii) the Regulatory, Compliance and Legal Committee of the Board,
               January 17, 2007 meeting.

     We have carried out other procedures to March 1, 2007 (our work did not
     extend to the period from March 2, 2007 to March __, 2007, inclusive) as
     follows.

5.   Company officials have advised us that no consolidated financial data as of
     any date or for any period subsequent to December 31, 2006 are available;
     accordingly, the procedures carried out by us with respect to changes in
     financial statement items after December 31, 2006 have, of necessity, been
     limited. We have inquired of certain officials of the Company who have
     responsibility for financial and accounting matters as to whether (a) at
     March 1, 2007 there was any change in the capital stock, increase in
     long-term debt, or decrease in consolidated shareholders' equity of the
     Company as compared with amounts shown in the December 31, 2006
     consolidated balance sheet incorporated by reference in the Registration
     Statement; or (b) for the period from January 1, 2007 to March 1, 2007,
     there were any decreases, as compared with the corresponding period in the
     preceding year, in consolidated net income.

     Those officials referred to above stated that due to the fact that there is
     no consolidated financial data available subsequent to December 31, 2006,
     they are not in a position to comment on whether there was any such change,
     increase or decrease.

6.   This letter is solely for the information of the addressees and to assist
     the underwriters in conducting and documenting their investigation of the
     affairs of the Company in connection with the offering of the securities
     covered by the Registration Statement, and is not to be used, circulated,
     quoted, or otherwise referred to for any other purpose, including but not
     limited to the registration, purchase, or sale of securities, nor is it to
     be filed with or referred to in whole or in part in the Registration
     Statement or any other document, except that reference may be made to it in
     the underwriting agreement or in any list of closing documents pertaining
     to the offering of the securities covered by the Registration Statement.

Yours very truly,


- -------------------------------------


                                       V-3

                                                                     Exhibit 4.2

================================================================================





                       AMERICAN INTERNATIONAL GROUP, INC.



                                 --------------




                          SECOND SUPPLEMENTAL INDENTURE


                           Dated as of March 15, 2007


                                 --------------


             (Supplemental to the Junior Subordinated Debt Indenture
                          Dated as of March 13, 2007)

                                 --------------


                              THE BANK OF NEW YORK,
                                   as Trustee









================================================================================





      SECOND SUPPLEMENTAL INDENTURE, dated as of March 15, 2007, between
American International Group, Inc., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company"), and The
Bank of New York, a New York banking corporation, as Trustee (herein called
"Trustee");



                                       R E C I T A L S:

      WHEREAS, the Company has heretofore executed and delivered to the Trustee
a Junior Subordinated Debt Indenture, dated as of March 13, 2007 (the
"Indenture"), providing for the issuance from time to time of the Company's
unsecured debentures, notes or other evidences of indebtedness (herein and
therein called the "Securities"), to be issued in one or more series as provided
in the Indenture;

      WHEREAS, Section 901 of the Indenture permits the Company and the Trustee
to enter into an indenture supplemental to the Indenture to establish the form
and terms of a series of Securities;

      WHEREAS, Section 201 of the Indenture permits the form of Securities of a
series to be established in an indenture supplemental to the Indenture;

      WHEREAS, Section 301 of the Indenture permits certain terms of a series of
Securities to be established pursuant to an indenture supplemental to the
Indenture;

      WHEREAS, pursuant to Sections 201 and 301 of the Indenture, the Company
desires to provide for the establishment of a new series of Securities under the
Indenture, the form and substance of such Securities and the terms, provisions
and conditions thereof to be set forth as provided in the Indenture and this
Second Supplemental Indenture;

      WHEREAS, all things necessary to make this Second Supplemental Indenture a
valid agreement of the Company, in accordance with its terms, have been done;

      NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:

      For and in consideration of the premises and the purchase of the
Securities of the series established by this Second Supplemental Indenture by
the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all such Holders, as follows:



                                   ARTICLE ONE

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

SECTION 1.1 RELATION TO INDENTURE

      This Second Supplemental Indenture constitutes a part of the Indenture
(the provisions of which, as modified by this Second Supplemental Indenture,
shall apply to the Debentures) in respect of the Debentures but shall not
modify, amend or otherwise affect the Indenture insofar as it relates to any
other series of Securities or modify, amend or otherwise affect in any manner
the terms and conditions of the Securities of any other series.

SECTION 1.2 DEFINITIONS

      For all purposes of this Second Supplemental Indenture, the capitalized
terms used herein (i) which are defined in this Section 1.2 have the respective
meanings assigned hereto in this Section 1.2 and (ii) which are defined in the
Indenture (and which are not defined in this Section 1.2) have the respective
meanings assigned thereto in the Indenture. For all purposes of this Second
Supplemental Indenture:

      1.2.1 Unless the context otherwise requires, any reference to an Article
or Section refers to an Article or Section, as the case may be, of this Second
Supplemental Indenture;

      1.2.2 The words "herein", "hereof" and "hereunder" and words of similar
import refer to this Second Supplemental Indenture as a whole and not to any
particular Article, Section or other subdivision; and

      1.2.3 (a) The terms defined in this Section 1.2.3 have the meanings
assigned to them in this Section and include the plural as well as the singular:

      "Additional Amounts" has the meaning set forth in Section 2.1(r).

      "APM Commencement Date" means, with respect to any Deferral Period, the
earlier of (i) the first Interest Payment Date following the commencement of
such Deferral Period on which the Company pays any current interest on the
Debentures and (ii) the fifth anniversary of the commencement of such Deferral
Period.

      "APM Common Stock" means an aggregate number of shares of Common Stock,
including any shares of Common Stock held in treasury, and any shares of Common
Stock sold pursuant to the Company's dividend reinvestment or similar plan or
sold pursuant to any Employee Benefit Plan, up to the Maximum Share Number.


                                      -2-


      "APM Qualifying Securities" means APM Common Stock, Qualifying Warrants
and Qualifying Non-Cumulative Preferred Stock.

      "Assurance Agreement" means the agreement of the Company, dated as of June
27, 2005, in favor of eligible employees and relating to specified obligations
of Starr International Company, Inc. (as such agreement may be amended,
supplemented, extended, modified or replaced from time to time).

      "Bankruptcy Event" means an Event of Default set forth in Sections 501(5)
or (6) of the Indenture.

      "Beneficial Owner" means a beneficial owner of the Debentures for U.S.
federal income tax purposes.

      "Business Combination" means a merger, consolidation, amalgamation,
binding share exchange or conveyance, transfer or lease of assets substantially
as an entirety to any other Person or a similar transaction.

      "Business Day" is any day, other than (i) a Saturday, Sunday or other day
on which banking institutions in The City of New York are authorized or required
by law or executive order to remain closed or (ii) a day that is not a London
Banking Day.

      "Calculation Agent" means AIG Financial Products Corp., or any other
Person appointed by the Company, acting as calculation agent for the Debentures.
Any successor or substitute Calculation Agent may be an Affiliate of the
Company. All calculations and determinations by the Calculation Agent shall be
final and binding on the Holders of the Debentures and the Company absent
manifest error.

      "Capital Stock" for any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) shares issued by that Person.

      "Commercially Reasonable Efforts" means, for purposes of selling
Qualifying Capital Securities, commercially reasonable efforts to complete the
offer and sale of Qualifying Capital Securities to third parties that are not
Subsidiaries of the Company in public offerings or private placements. The
Company shall not be considered to have made Commercially Reasonable Efforts to
effect a sale of Qualifying Capital Securities if it determines not to pursue or
complete such sale due to pricing, coupon, dividend rate or dilution
considerations.

      "Common Stock" means the common stock, par value $2.50 per share, of the
Company.

      "Continuing Director" means a director who was a director of the Company
at the time of the initial approval of the definitive agreement relating to a
Business Combination transaction by the Company's Board of Directors.


                                      -3-


      "Current Stock Market Price" of the APM Common Stock on any date shall
mean (i) the closing sale price per share (or if no closing sale price is
reported, the average of the bid and ask prices or, if more than one in either
case, the average of the average bid and the average ask prices) on that date as
reported in composite transactions by the New York Stock Exchange or, if the
Common Stock is not then listed on the New York Stock Exchange, as reported by
the principal U.S. securities exchange on which the Common Stock is traded, or
(ii) if the Common Stock is not listed on any U.S. securities exchange on the
relevant date, the average of the mid-point of the last bid and ask prices for
the Common Stock on the relevant date from each of at least three nationally
recognized independent investment banking firms selected by the Company for this
purpose.

      "Debentures" has the meaning set forth in Section 2.1(a).

      "Deferral Period" means each period beginning on an Interest Payment Date
with respect to which the Company either (A) elects pursuant to Section 2.1(g)
to defer all or part of any interest payment due on an Interest Payment Date or
(B) fails to pay all or any part of any interest payment due on an Interest
Payment Date within five Business Days after the Interest Payment Date and
ending on the earlier of (i) the tenth anniversary of such Interest Payment Date
and (ii) the next Interest Payment Date on which the Company has paid all
accrued and previously unpaid interest on the Debentures.

      "Eligible APM Proceeds" means, with respect to any Interest Payment Date,
the net proceeds (after underwriters' or placement agents' fees, commissions or
discounts and other expenses relating to the issuance or sale) that the Company
has received during the 180-days prior to the related Interest Payment Date from
the issuance or sale of APM Qualifying Securities to Persons that are not
Subsidiaries. This includes, without limitation, sales pursuant to any dividend
reinvestment or similar plan and sales made pursuant to any Employee Benefit
Plan.

      "Eligible Repayment Proceeds" means, with respect to any Repayment Date,
the Applicable Percentage of the net proceeds the Company has received from the
issuance of Qualifying Capital Securities that the Company has sold during a
180-day period ending on a notice date not more than 30 or less than 10 Business
Days prior to such Repayment Date.

      "Employee Benefit Plan" means any written or oral purchase, savings,
option, bonus, appreciation, profit sharing, thrift, incentive, pension or
similar plan or arrangement or any written or oral compensatory contract or
arrangement.

      "Enforcement Event" means any one of the following events:

      (1) failure by the Company to observe, satisfy or perform any of the
covenants or agreements contained in this Second Supplemental Indenture or the
Indenture (other than (i) any covenant or agreement in the Indenture expressly
declared inapplicable herein, (ii) a covenant or agreement in respect of the
Debentures a default in


                                      -4-


whose observance, satisfaction or performance is elsewhere specifically dealt
with in this Second Supplemental Indenture or the Indenture (including without
limitation Article X of the Indenture), or (iii) an event which is, or with the
passage of time and/or giving of notice would result in, an Event of Default) on
the part of the Company in respect of the Debentures that continues following a
period of 60 days after the date on which written notice of such failure,
requiring the Company to remedy the same and stating that it is a notice with
respect to an Enforcement Event hereunder, shall have been given to the Company
by the Trustee by registered mail, or to the Company and the Trustee by the
Holders of at least a majority in the aggregate principal amount of the
Debentures at the time Outstanding; or

      (2) unless otherwise provided for in Section 2.1(d), the Company's failure
to use Commercially Reasonable Efforts to raise sufficient Eligible Repayment
Proceeds as required by Section 2.1(d); or

      (3) the Company's failure (a) to use commercially reasonable efforts to
raise Eligible APM Proceeds, or (b) to pay deferred interest on the Debentures,
in either case as required by Section 2.1(h) or (i).

      "Event of Default" has the meaning set forth in Section 2.1(j).

      "Final Maturity Date" has the meaning set forth in Section 2.1(d)(iii).

      "Indebtedness" means all indebtedness and obligations (other than the
Debentures) of, or Guaranteed or assumed by, the Company that (i) are for
borrowed money or (ii) are evidenced by bonds, debentures, notes or other
similar instruments.

      "Interest Payment Date" means a Semi-Annual Interest Payment Date or a
Quarterly Interest Payment Date, as the case may be.

      "Interest Period" means the period from and including any Interest Payment
Date (or, in the case of the first Interest Payment Date, March 15, 2007) to but
excluding the next Interest Payment Date.

      "London Banking Day" means any day on which dealings in pounds Sterling
are transacted in the London interbank market.

      "Make-Whole Redemption Price" means the sum, as determined by the
Calculation Agent, of the present values of the remaining scheduled payments of
principal (assuming for this purpose that the Debentures are to be redeemed at
their principal amount on March 15, 2017) discounted from March 15, 2017, and
interest thereon that would have been payable to and including March 15, 2017
(not including any portion of any payment of interest accrued to the Redemption
Date) discounted from the relevant Interest Payment Date to the Redemption Date
on a semi-annual basis (assuming a 360 day year consisting of twelve 30 day
months) at the Sterling Gross Redemption Yield (determined by reference to the
middle market price) at 11:00 a.m.,


                                      -5-


London time, on the Reference Date of the Sterling Reference Bond plus (i) 0.50%
in the case of any redemption in whole upon the occurrence of a Rating Agency
Event or a Tax Event or (ii) 0.15% in all other cases.

      "Market Disruption Event" means, for purposes of sales of APM Qualifying
Securities pursuant to Section 2.1(h) or sales of Qualifying Capital Securities
pursuant to Section 2.1(d), as applicable (collectively, the "Permitted
Securities"), the occurrence or existence of any of the following events or sets
of circumstances:

      (a) trading in securities generally (or in the Common Stock specifically)
on the New York Stock Exchange or any other national securities exchange, or in
the over-the-counter market, on which the Company's Capital Stock is then listed
or traded shall have been suspended or its settlement generally shall have been
materially disrupted or minimum prices shall have been established on any such
exchange or market by the relevant regulatory body or governmental agency having
jurisdiction that materially disrupts or otherwise has a material adverse effect
on trading in, or the issuance and sale of, Permitted Securities; or

      (b) the Company would be required to obtain the consent or approval of its
stockholders or the consent or approval of, license from, or registration with,
a regulatory body (including, without limitation, any securities exchange) or
governmental authority to issue and sell Permitted Securities, and the Company
fails to obtain that consent or approval or to receive such license or effect
such registration notwithstanding its commercially reasonable efforts to obtain
that consent, approval, license or registration; or

      (c) an event occurs and is continuing as a result of which the offering
document for the offer and sale of Permitted Securities would, in the Company's
reasonable judgment, contain an untrue statement of a material fact or omit to
state a material fact required to be stated in that offering document or
necessary to make the statements in that offering document not misleading,
provided that one or more events described under this clause (c) shall not
constitute a Market Disruption Event with respect to a period of more than 90
days in any 180-day period; or

      (d) the Company reasonably believes that the offering document for the
offer and the sale of Permitted Securities would not be in compliance with a
rule or regulation of the Commission (for reasons other than those referred to
in clause (c) of this definition) and the Company is unable to comply with such
rule or regulation or such compliance is unduly burdensome, provided that one or
more events described under this clause (d) shall not constitute a Market
Disruption Event with respect to a period of more than 90 days in any 180-day
period; or

      (e) a banking moratorium shall have been declared by the federal or state
authorities of the United States that results in a disruption of any of the
markets on which the Company's securities, including any obligations of any
other Person Guaranteed by the Company, are trading; or


                                      -6-


      (f) a material disruption shall have occurred in commercial banking or
securities settlement or clearance services in the United States; or

      (g) the United States shall have become engaged in hostilities, there
shall have been an escalation in hostilities involving the United States, there
shall have been a declaration of a national emergency or war by the United
States or there shall have occurred any other national or international calamity
or crisis, such that market trading in the Company's Capital Stock has been
materially disrupted; or

      (h) there shall have occurred such a material adverse change in general
domestic or international economic, political or financial conditions, including
without limitation as a result of terrorist activities, or the effect of
international conditions on the financial markets in the United States, that
materially disrupts the capital markets such as to make it, in the Company's
judgment, impracticable or inadvisable to proceed with the offer and sale of
Permitted Securities.

      "Maximum Share Number" has the meaning set forth in Section 2.1(h).

      "Maximum Warrant Number" has the meaning set forth in Section 2.1(h).

      "Net Payment" means a payment by the Company or any Paying Agent on the
Debentures, including payment of principal and interest, after deduction for any
present or future withholding tax, assessment, or other governmental charge on
the Additional Amounts.

      "Non-U.S. Person" means any Person who, for U.S. federal income tax
purposes is (a) an individual that is a nonresident alien, (b) a corporation
organized or created under non-U.S. law, (c) a foreign partnership, one or more
members of which, for U.S. federal income tax purposes, is a corporation
organized or created under non-U.S. law, a nonresident alien individual or a
nonresident alien fiduciary of a non-U.S. estate or trust or (d) a nonresident
alien fiduciary of an estate or trust that is not subject to U.S. federal income
tax on a net income basis on income or gain from a Debenture.

      "Outstanding" has the meaning set forth in Section 2.1(d).

      "pari passu", as applied to the ranking of any obligation of a Person in
relation to any other obligation of such Person, means in any bankruptcy,
insolvency or receivership proceeding that each such obligation either (i) is
not subordinated or junior in right of payment to any other obligation or (ii)
is subordinate or junior in right of payment to the same obligations as is the
other, and is so subordinate or junior to the same extent, and is not
subordinate or junior in right of payment to each other or to any obligation as
to which the other is not so subordinate or junior.

      "Preferred Stock Issuance Cap" has the meaning set forth in Section
2.1(i)(1).


                                      -7-


      "Prospectus Supplement" means the prospectus supplement dated March 8,
2007 relating to the Debentures.

      "Qualifying Non-Cumulative Preferred Stock" means the Company's
non-cumulative perpetual preferred stock that (i) contains no remedies other
than Permitted Remedies and (ii)(a) is redeemable, but is subject to
Intent-Based Replacement Disclosure, and has a provision that prohibits the
Company from making any distributions thereon upon its failure to satisfy one or
more financial tests set forth therein or (b) is subject to a replacement
capital covenant substantially similar to the Replacement Capital Covenant.

      "Qualifying Warrants" means net share settled warrants to purchase Common
Stock that (i) have an exercise price per share greater than the Current Stock
Market Price as of the date of pricing thereof, (ii) the Company is not entitled
to redeem for cash and the holders of which are not entitled to require the
Company to repurchase for cash in any circumstances and (iii) do not entitle the
holders thereof to purchase a number of shares of Common Stock in excess of the
applicable Maximum Warrant Number.

      "Quarterly Interest Payment Date" has the meaning set forth in Section
2.1(e).

      "Quarterly Interest Period" means the Interest Period relating to any
Quarterly Interest Payment Date.

      "Rating Agency Event" means a change by any nationally recognized
statistical rating organization within the meaning of Rule 15c3-1 under the
Exchange Act (or any successor provision or, upon adoption, any rule for the
registration of nationally recognized statistical rating organizations adopted
by the Commission), that, as of March 8, 2007, publishes a rating for the
Company (a "Rating Agency") to its equity credit criteria for securities similar
to the Debentures, as such criteria is in effect on March 8, 2007 (the "Current
Criteria"), which change results in a lower equity credit being given to the
Debentures as of the date of such change than the equity credit that would have
been assigned to the Debentures as of the date of such change by such Rating
Agency pursuant to its Current Criteria.

      "Redemption Price" has the meaning set forth in Section 2.1(q).

      "Reference Date" means the date which is three Business Days prior to the
date fixed for redemption.

      "Regular Record Date" for the payment of any current interest payable on
any Interest Payment Date, the date specified in Section 2.1(f) and for the
payment of deferred interest, the date specified in Section 2.1(g)(ii).

      "Repayment Date" means the Scheduled Maturity Date and each Interest
Payment Date thereafter until the Company shall have repaid, redeemed, defeased
or otherwise acquired all of the Debentures.


                                      -8-


      "Replacement Capital Covenant" means the replacement capital covenant,
dated as of March 15, 2007, of the Company relating to the Debentures, as the
same may be amended or supplemented from time to time in accordance with the
provisions thereof.

      "Reuters Screen LIBOR01" means the display designated on Reuters Screen
LIBOR01 (or such other page or service as may replace the Reuters Screen LIBOR01
as selected by the Calculation Agent or such other page and service as may be
selected by the Calculation Agent from time to time).

      "Scheduled Maturity Date" has the meaning set forth in Section 2.1(d).

      "Semi-Annual Interest Payment Date" has the meaning set forth in Section
2.1(e).

      "Sterling Gross Redemption Yield" means, the gross redemption yield on the
Sterling Reference Bond (as calculated by the Calculation Agent on the basis set
out in the United Kingdom Debt Management Office in the paper "Formulae for
Calculating Gilt Prices from Yields" page 4, Section One: Price/Yield Formulae
"Conventional Gilts; Double-dated and Undated Gilts with Assumed (or Actual)
Redemption on a Quasi-Coupon Date" (published on June 8, 1998 and updated on
March 15, 2002 and as further updated or amended) on a semi-annual compounding
basis (converted on an annualized yield and rounded up (if necessary) to four
decimal places)).

      "Sterling Reference Bond" means the 4.00% Treasury Stock due September 7,
2016, or if such stock is no longer in issue such other United Kingdom
government stock with a maturity date as near as possible to March 15, 2017, as
the Calculation Agent may, with the advice of the Sterling Reference Market
Makers, determine to be appropriate by way of substitution for the 4.00%
Treasury Stock due September 7, 2016.

      "Sterling Reference Market Makers" means three brokers or market makers of
gilts selected by the Calculation Agent.

      "Stock and Warrant Issuance Cap" has the meaning set forth in Section
2.1(i)(1).

      "Tax Event" means that the Company has requested and received an Opinion
of Counsel (which counsel need not be satisfactory to the Trustee) experienced
in such matters to the effect that, as a result of any:

      (a) amendment to or change in the laws or regulations of the United States
or any political subdivision or taxing authority of or in the United States that
is enacted or becomes effective after March 8, 2007;

      (b) proposed change in those laws or regulations that is announced after
March 8, 2007;


                                      -9-


      (c) official administrative decision or judicial decision or
administrative action or other official pronouncement interpreting or applying
those laws or regulations that is announced after March 8, 2007; or

      (d) threatened challenge asserted in connection with an audit of the
Company, or a threatened challenge asserted in writing against any other
taxpayer that has raised capital through the issuance of securities that are
substantially similar to the Debentures;

there is more than an insubstantial risk that interest payable by the Company on
the Debentures is not, or will not be, deductible by the Company, in whole or in
part, for United States federal income tax purposes.

      "Three-month Sterling LIBOR" means, with respect to any Quarterly Interest
Period, the rate (expressed as a percentage per annum) for deposits in pounds
Sterling for a three-month period that appears on Reuters Screen LIBOR01 as of
11:00 a.m., London time, on the first day of such Quarterly Interest Period. If
Three-month Sterling LIBOR cannot be determined as described in the prior
sentence, the rate for such Interest Period will be determined on the basis of
the rates at which deposits in pounds Sterling are offered by four leading banks
selected by the Calculation Agent, at approximately 11:00 a.m., London time, on
the first day of such Interest Period, to prime banks in the London interbank
market for a period of three months commencing on the first day of such Interest
Period. These quotations will be based upon a principal amount that is
representative of a single transaction in pounds Sterling in such market at the
time. If two or more quotations are provided, Three-month Sterling LIBOR for the
Interest Period will be the arithmetic mean of the quotations. If fewer than two
quotations are provided, Three-month Sterling LIBOR will be the arithmetic mean
of the rates quoted by major banks in London, selected by the Calculation Agent,
at approximately 11:00 a.m., London time, on the first day of such Interest
Period. The rates quoted will be for loans in pounds Sterling for a three-month
period to leading European banks commencing on the first day of such Interest
Period. Rates quoted must be based on a principal amount that is representative
of a single transaction in pounds Sterling in such market at that time. If fewer
than three banks are quoting rates, Three-month Sterling LIBOR for the
applicable period will be the same as Three-month Sterling LIBOR as determined
for the previous Quarterly Interest Period, or, in the case of the Quarterly
Interest Period beginning on March 15, 2017, Three-month Sterling LIBOR will be
5.53%.

      "United Kingdom Obligation" means any security which is (i) a direct
obligation of the United Kingdom for the payment of which the full faith and
credit of the United Kingdom is pledged or (ii) an obligation of a Person
controlled or supervised by and acting as an agency of instrumentality of the
United Kingdom the payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United Kingdom, which, in either case (i) or
(ii), is not callable or redeemable at the option of the issuer thereof.


                                      -10-


      "U.S." means the United States of America, including each state of the
United States and the District of Columbia, its territories, its possessions,
and other areas within its jurisdiction.

      "Voting Stock" means equity securities which ordinarily have voting power
for the election of directors, whether at all times or only so long as no senior
class of equity securities has such voting power by reason of any contingency.

      (b) "Applicable Percentage", "Intent-Based Replacement Disclosure",
"Permitted Remedies" and "Qualifying Capital Securities" shall have the
respective meanings set forth in the Replacement Capital Covenant as in effect
on the date hereof and as it may be amended pursuant to its terms consistent
with Section 2.1(s).


                                   ARTICLE TWO

                 GENERAL TERMS AND CONDITIONS OF THE DEBENTURES

SECTION 2.1 TERMS OF DEBENTURES

      Pursuant to Sections 201 and 301 of the Indenture, there is hereby
established a series of Securities, the terms of which shall be as follows:

      (a) Designation. The Securities of this series shall be known and
designated as the "5.75% Series A-2 Junior Subordinated Debentures" of the
Company (the "Debentures"). The CUSIP number of the Debentures is 026874BF3. The
Bank of New York will act as the paying agent for the Debentures.


      (b) Aggregate Principal Amount. The maximum aggregate principal amount of
the Debentures that may be authenticated and delivered under the Indenture and
this Second Supplemental Indenture is (pounds)750,000,000 (except for Debentures
authenticated and delivered upon registration of transfer of, or exchange for,
or in lieu of, other Debentures pursuant to Section 304, 305, 306, 906 or 1107
of the Indenture or Section 3.5 of this Second Supplemental Indenture);
provided, however, that the Company may from time to time authenticate and
deliver under the Indenture and this Second Supplemental Indenture up to
(pounds)750,000,000 additional amount of Debentures, which Debentures may accrue
interest from a different date than the Debentures, as may be specified pursuant
to Section 301 of the Indenture, so long as the Company reasonably determines
that the additional Debentures so authenticated and delivered will be fungible
for United States federal income tax purposes. From time to time the Company may
execute and deliver, and upon Company Order the Trustee shall authenticate and
deliver, additional Debentures.

      (c) Form and Denominations. The Debentures will be issued only in fully
registered form, and the authorized denominations of the Debentures shall be
(pounds)50,000


                                      -11-


principal amount and even multiples thereof. The Debentures will initially be
issued in the form of one or more Global Securities substantially in the form of
Annex A attached hereto, with such modifications thereto as may be approved by
the authorized officer executing the same. The Debentures will be denominated in
pounds Sterling ("Sterling") and payments of principal, premium if any and
interest will be made in Sterling. If Sterling is unavailable to the Company due
to the imposition of exchange controls or other circumstances beyond its control
or Sterling is no longer used by the United Kingdom as its currency, then all
payments in respect of the Debentures will be made in U.S. dollars until
Sterling is again available to the Company or so used. The amount payable on any
date in Sterling will be converted into U.S. dollars on the basis of the most
recently available market exchange rate for Sterling as determined by the
Calculation Agent. Any payment in U.S. dollars pursuant to this Section 2.1(c)
will not be deemed a default or Enforcement Event under the Indenture.

      (d) Scheduled Maturity Date.

            (i) The principal amount of, and all accrued and unpaid interest on,
      the Outstanding Debentures shall be payable in full on March 15, 2037, or
      if such day is not a Business Day, the next Business Day (the "Scheduled
      Maturity Date"); provided that in the event the Company has delivered an
      Officers' Certificate to the Trustee pursuant to clause (vi) of this
      Section 2.1(d) in connection with the Scheduled Maturity Date, (A) the
      principal amount of Debentures payable on the Scheduled Maturity Date, if
      any, shall be the principal amount set forth in the notice of repayment
      accompanying such Officers' Certificate, (B) such specified principal
      amount of Debentures shall be repaid on the Scheduled Maturity Date
      pursuant to Article III, and (C) subject to clause (ii) of this Section
      2.1(d), the remaining Debentures shall remain Outstanding and shall be
      payable on the immediately succeeding Quarterly Interest Payment Date or
      such earlier date on which they are redeemed pursuant to Section 2.1(o) or
      shall become due and payable pursuant to Section 502 of the Indenture or
      clause (iii) of this Section 2.1(d). The Outstanding Debentures shall be
      due and payable on the Scheduled Maturity Date except to the extent so
      specified in an Officers' Certificate delivered to the Trustee not more
      than 30 and not less than 10 Business Days immediately preceding the
      Scheduled Maturity Date.

            (ii) In the event the Company has delivered an Officers' Certificate
      to the Trustee pursuant to clause (vi) of this Section 2.1(d) in
      connection with any Quarterly Interest Payment Date, the principal amount
      of Debentures payable on such Quarterly Interest Payment Date shall be the
      principal amount set forth in the notice of repayment, if any,
      accompanying such Officers' Certificate, such principal amount of
      Debentures shall be repaid on such Quarterly Interest Payment Date
      pursuant to Article III, and the remaining Debentures shall remain
      Outstanding and shall be payable on the immediately succeeding Quarterly
      Interest Payment Date or such earlier date on which they are redeemed
      pursuant to Section 2.1(o) or shall become due and payable pursuant to
      Section 502 of the


                                      -12-


      Indenture or clause (iii) of this Section 2.1(d). The Outstanding
      Debentures shall be due and payable on any Quarterly Interest Payment Date
      except to the extent so specified in an Officers' Certificate delivered to
      the Trustee not more than 30 and no less than 10 Business Days immediately
      preceding such Quarterly Interest Payment Date.

            (iii) Notwithstanding anything to the contrary set forth in this
      Second Supplemental Indenture, the principal of, and all accrued and
      unpaid interest on, all Outstanding Debentures shall be due and payable on
      March 15, 2067, or if such day is not a Business Day, the following
      Business Day (the "Final Maturity Date").

            (iv) Any repayment of principal and current interest on the
      Debentures pursuant to this Section 2.1(d) on any date prior to the Final
      Maturity Date shall not affect the Company's obligations under Section
      2.1(h) with respect to the payment of deferred interest on the Debentures.
      For the purpose of clarity, it is possible that the Company may repay the
      principal and current interest on a Debenture pursuant to this Section
      2.1(d) but still be obligated to pay deferred interest on the Debenture.
      For the purposes of the definition of "Outstanding" in the Indenture, a
      Debenture, as to which principal and current interest has been repaid,
      redeemed or otherwise satisfied by the Company, shall for all purposes of
      the Indenture and this Second Supplemental Indenture, other than for
      purposes of Article XI of the Indenture and Section 2.1(d) and Article III
      of this Second Supplemental Indenture, be deemed Outstanding so long as
      any deferred interest on such Debenture remains unpaid.

            (v) Until principal and current interest on all Outstanding
      Debentures are paid in full, the principal of all Outstanding Debentures
      is automatically accelerated as provided in Section 2.1(k) or a
      declaration of acceleration pursuant to Section 502 of the Indenture
      occurs, the Company shall use Commercially Reasonable Efforts, subject to
      a Market Disruption Event:

                  (A) to raise sufficient Eligible Repayment Proceeds during a
            180-day period ending on a date not more than 30 and not less than
            10 Business Days prior to the Scheduled Maturity Date to permit
            repayment of the principal and current interest on all Outstanding
            Debentures in full on the Scheduled Maturity Date; and

                  (B) if the Company is unable for any reason to raise
            sufficient Eligible Repayment Proceeds to permit repayment in full
            of the principal amount of and current interest on all the
            Outstanding Debentures on the Scheduled Maturity Date or any
            subsequent Quarterly Interest Payment Date, to raise sufficient
            Eligible Repayment Proceeds to permit repayment of the principal and
            current interest on all Outstanding Debentures in full


                                      -13-


            on the next Quarterly Interest Payment Date pursuant to clause (ii)
            of this Section 2.1(d).

            (vi) The Company shall, if it has not raised sufficient Eligible
      Repayment Proceeds in connection with any Repayment Date, deliver an
      Officers' Certificate to the Trustee no more than 30 and no less than 10
      Business Days in advance of such Repayment Date stating the amount of
      Eligible Repayment Proceeds, if any, raised pursuant to clause (v) above
      in connection with such Repayment Date. Each Officers' Certificate
      delivered pursuant to this clause (vi), unless no principal amount of
      Debentures is to be repaid on the applicable Repayment Date, shall be
      accompanied by a notice of repayment pursuant to Section 3.1 setting forth
      the principal amount of the Debentures to be repaid on such Repayment
      Date, which amount shall be determined after giving effect to clause
      (viii) of this Section 2.1(d).

            (vii) The Company shall be excused from its obligation to use
      Commercially Reasonable Efforts to sell Qualifying Capital Securities
      pursuant to clause (v) above if such Officers' Certificate further
      certifies that: (A) a Market Disruption Event was existing at any time
      during the period commencing 180 days prior to the date of such Officers'
      Certificate or, in the case of any Repayment Date after the Scheduled
      Maturity Date, the period commencing on the immediately preceding
      Quarterly Interest Payment Date and ending on the Business Day immediately
      preceding the date of such Officers' Certificate; and (B) either (1) the
      Market Disruption Event continued for the entire 180-day period or, in the
      case of any Repayment Date after the Scheduled Maturity Date, the period
      since the most recent Quarterly Interest Payment Date, as the case may be,
      or (2) the Market Disruption Event continued for only part of the relevant
      period, but the Company was unable after Commercially Reasonable Efforts
      to raise sufficient Eligible Repayment Proceeds during the rest of that
      period to permit repayment of the Debentures in full.

            (viii) Payments on the Debentures on any Repayment Date shall be
      applied, first, to the extent permitted by Section 2.1(i), to deferred
      interest to the extent of Eligible APM Proceeds raised pursuant to Section
      2.1(i), second, to current interest and, third, to the repayment of the
      principal of Debentures; provided that if the Company is obligated to sell
      Qualifying Capital Securities and repay any outstanding pari passu
      securities in addition to the Debentures, then on any date and for any
      period such payments shall be applied to the Debentures and those other
      pari passu securities having the same scheduled maturity date as the
      Debentures pro rata in accordance with their respective outstanding
      principal amounts and none of such payments shall be applied to any other
      pari passu securities having a later scheduled maturity date until the
      principal of and all accrued and unpaid interest on the Debentures has
      been paid in full, except to the extent permitted by clause (vii) of
      Section 2.1(g) and the first sentence of Section 2.1(h). If the Company
      has raised less than $5,000,000 of Eligible Repayment


                                      -14-


      Proceeds during the relevant 180-day or three-month period, the Company
      will not be required to repay any Debentures on the relevant Repayment
      Date, but it will repay the applicable principal amount of the Debentures
      on the next Quarterly Interest Payment Date as of which the Company has
      raised at least $5,000,000 of Eligible Repayment Proceeds.

      (e) Rate of Interest. The Debentures shall bear interest (i) from and
including March 15, 2007 to but excluding March 15, 2017 at the rate of 5.75%
per annum, computed on the basis of the number of days from and including the
date on which interest begins to accrue during the relevant Interest Period to
but excluding the scheduled date on which such interest is payable, divided by
the number of days in the relevant Interest Period (including the first day but
excluding the last day of such Interest Period), and (ii) beginning on and
including March 15, 2017, at an annual rate equal to Three-month Sterling LIBOR
plus 1.705%, computed on the basis of a 365-day year and the actual number of
days elapsed. All percentages resulting from any calculation of Three-month
Sterling LIBOR will be rounded upward or downward, as appropriate, to the next
higher or lower one hundred-thousandth of a percentage point. Subject to
Sections 2.1(g) and (h): (x) prior to and including March 15, 2017, interest on
the Debentures shall be payable semi-annually in arrears on March 15 and
September 15 of each year, beginning on September 15, 2007 (each such date, a
"Semi-annual Interest Payment Date"), and (y) after March 15, 2017, interest on
the Debentures shall be payable quarterly in arrears on March 15, June 15,
September 15 and December 15 of each year, beginning on June 15, 2017, or if any
such day is not a Business Day, the following Business Day, unless such
postponement would cause the day to fall in the next calendar month, in which
case it shall be brought forward to the preceding Business Day (each such date,
a "Quarterly Interest Payment Date"). In the event any Semi-annual Interest
Payment Date falls on a day that is not a Business Day, the interest payment due
on that date will be postponed to the next day that is a Business Day and no
interest shall accrue as a result of such postponement. Any installment of
interest (or portion thereof) deferred in accordance with Section 2.1(g) or
otherwise unpaid shall bear additional interest, to the extent permitted by law,
at the rate of interest then in effect from time to time on the Debentures, from
the relevant Interest Payment Date, compounded on each subsequent Interest
Payment Date, until paid in accordance with Section 2.1(h).

      (f) To Whom Interest is Payable. Interest (other than deferred interest
which shall be payable to the Persons specified pursuant to Section 2.1(g)(ii))
shall be payable to the Person in whose name the Debentures are registered at
the close of business on the Business Day next preceding the Interest Payment
Date, or in the event the Debentures cease to be held in the form of one or more
Global Securities, at the close of business on the date 15 days prior to that
Interest Payment Date, whether or not a Business Day.

      (g) Option to Defer Interest Payments.

            (i) The Company shall have the right, at any time and from time to
      time prior to the Final Maturity Date, to defer the payment of interest on
      the


                                      -15-


      Debentures for one or more consecutive Interest Periods that do not exceed
      10 years; provided that no Deferral Period shall extend beyond the Final
      Maturity Date or the earlier redemption of the Debentures. If an Event of
      Default has occurred and is continuing or the Company has given notice of
      its election to defer interest payments but the Deferral Period has not
      yet commenced or a Deferral Period is continuing, the Company shall not,
      and shall not permit any Subsidiary, subject to the exceptions specified
      in clause (vii) of this Section 2.1(g), to: (a) declare or pay any
      dividends or distributions on, or redeem, purchase, acquire or make a
      liquidation payment with respect to, any Capital Stock of the Company, (b)
      make any payment of principal of, or interest or premium, if any, on, or
      repay, purchase or redeem any debt securities of the Company that rank
      pari passu with or junior to the Debentures or (c) make any payments with
      respect to any Guarantee by the Company of the junior subordinated debt
      securities of any Subsidiary if such Guarantee ranks pari passu with, or
      junior in interest to, the Debentures.

            (ii) At the end of any Deferral Period, the Company shall pay all
      deferred interest on the Debentures (together with compounded interest
      thereon, if any, to the extent permitted by applicable law), to the Person
      in whose name the Debentures are registered at the close of business on
      the Business Day next preceding the Interest Payment Date at the end of
      such Deferral Period or, in the event the Debentures cease to be held in
      the form of one or more Global Securities, at the close of business on the
      date 15 days prior to the end of the Deferral Period, whether or not a
      Business Day.

            (iii) Upon termination of any Deferral Period and upon the payment
      of all deferred interest and any compounded interest then due on any
      Interest Payment Date, the Company may elect to begin a new Deferral
      Period pursuant to clause (i) of this Section 2.1(g).

            (iv) The Company may elect to pay deferred interest on any Interest
      Payment Date during any Deferral Period to the extent permitted by Section
      2.1(h).

            (v) The Company shall give written notice to the Trustee and the
      Holders of the Debentures of its election to begin any Deferral Period at
      least one Business Day prior to the Regular Record Date for that Interest
      Payment Date. Notwithstanding the previous sentence, the Company's failure
      to pay any interest due within five Business Days after any Interest
      Payment Date shall automatically and without any further action by any
      Person be deemed to commence a Deferral Period.

            (vi) If any Deferral Period lasts longer than one year, the Company
      shall not, and shall cause its Subsidiaries not to purchase, redeem or
      otherwise acquire any securities ranking junior to or pari passu with any
      APM Qualifying

                                      -16-


      Securities the proceeds of which were used to pay deferred interest during
      such Deferral Period until the first anniversary of the date on which all
      deferred interest has been paid, subject to the exceptions set forth in
      clause (vii) below. If the Company is involved in a Business Combination
      where immediately after the consummation of the Business Combination more
      than 50% of the surviving or resulting entity's Voting Stock is owned by
      the shareholders of the other party to the Business Combination or
      Continuing Directors cease for any reason to constitute a majority of the
      directors of the surviving or resulting entity, then neither the
      restrictions set forth in this clause (vi) nor the provisions of Section
      2.1(h) shall apply to any Deferral Period that is terminated on the next
      Interest Payment Date following the date of consummation of the Business
      Combination.

            (vii) The restrictions in clauses (i) and (vi) of this Section
      2.1(g) do not apply to (a) purchases, redemptions or other acquisitions of
      shares of the Company's Capital Stock in connection with (1) any Employee
      Benefit Plan or the Assurance Agreement or (2) a dividend reinvestment,
      stock purchase plan or other similar plan, (b) any exchange or conversion
      of any class or series of the Company's Capital Stock (or the Capital
      Stock of any Subsidiary) for any class or series of the Company's Capital
      Stock or of any class or series of Indebtedness of the Company for any
      class or series of the Company's Capital Stock, (c) the purchase of
      fractional interests in shares of the Capital Stock of the Company in
      accordance with the conversion or exchange provisions of the Company's
      Capital Stock or the security or instrument being converted or exchanged,
      (d) any declaration of a dividend in connection with any stockholders'
      right plan, or the issuance of rights, equity securities or other property
      under any stockholders' right plan, or the redemption or repurchase of
      rights in accordance with any stockholders' rights plan, (e) any dividend
      in the form of equity securities, warrants, options or other rights where
      the dividend stock or the stock issuable upon exercise of the warrants,
      options or other rights is the same stock as that on which the dividend is
      being paid or ranks pari passu with or junior to such equity securities,
      (f) any payment during a Deferral Period of current interest in respect of
      any debt securities of the Company that rank pari passu with the
      Debentures that is made pro rata to the amounts due on such pari passu
      securities and on the Debentures and any payments of deferred interest on
      such pari passu securities that, if not made, would cause the Company to
      breach the terms of the instrument governing such pari passu securities
      (provided that such payments are made in accordance with Section 2.1(h) to
      the extent it applies), (g) any payment of principal in respect of pari
      passu securities having an earlier scheduled maturity date than the
      Debentures, as required under a provision of such pari passu securities
      that is substantially the same as Section 2.1(d) or any such payment in
      respect of any such pari passu securities having the same scheduled
      maturity date as the Debentures that is made on a pro rata basis among one
      or more series of such securities and the Debentures or (h) any repayment
      or redemption of a security necessary to avoid a breach of the instrument
      governing that security.


                                      -17-


      (h) Payment of Deferred Interest. The Company shall not pay deferred
interest (including compounded interest thereon) on the Debentures on any
Interest Payment Date during any Deferral Period from any source other than
Eligible APM Proceeds unless (x) required by an applicable regulatory authority,
(y) permitted under clause (vi) of Section 2.1(g) or (z) an Event of Default has
occurred and is continuing. Notwithstanding the foregoing, the Company may pay
current interest during a Deferral Period from any available funds. To the
extent that the Company is able to raise some, but not all, Eligible APM
Proceeds to pay accrued and unpaid interest on the applicable Interest Payment
Date, such Eligible APM Proceeds shall be allocated first to deferred payments
of accrued and unpaid interest in chronological order based on the date each
payment was first deferred. If any Indebtedness of the Company that ranks pari
passu with the Debentures is outstanding in addition to the Debentures under
which the Company is obligated to sell APM Qualifying Securities and apply the
net proceeds to the payment of deferred interest or distributions, then on any
date and for any period the amount of Eligible APM Proceeds received by the
Company from such sales and available for payment of the deferred interest and
distributions shall be applied to the Debentures and such pari passu securities
on a pro rata basis up to, in the case of Common Stock, the Stock and Warrant
Issuance Cap and the Maximum Share Number, in the case of Qualifying Warrants,
the Stock and Warrant Issuance Cap and the Maximum Warrant Number and, in the
case of Qualifying Non-Cumulative Preferred Stock, the Preferred Stock Issuance
Cap (or comparable provisions in the instruments governing such pari passu
securities) in proportion to the total amounts that are due on the Debentures
and such pari passu securities. The Company may make such pro rata payments on
such pari passu securities so long as it shall have paid or deposited with the
paying agent for the Debentures or shall have segregated and holds in trust for
payment the pro rata proceeds applicable to the Debentures that have not been
paid. The "Maximum Share Number" will initially equal 100,000,000 and the
"Maximum Warrant Number" will initially equal 100,000,000; provided that, if the
number of issued and outstanding shares of Common Stock is changed into a
different number of shares or a different class by reason of any stock split,
reverse stock split, stock dividend, reclassification, recapitalization,
split-up, combination, exchange of shares or other similar transaction, then the
Maximum Share Number and the Maximum Warrant Number shall be correspondingly
adjusted in a manner reasonably determined by the Company. The Company may, at
its discretion and without the consent of the holders of the Debentures,
increase the Maximum Share Number or the Maximum Warrant Number or both
(including through the increase of the Company's authorized share capital, if
necessary) if the Company determines that such increase is necessary to allow
the Company to issue sufficient Common Stock and/or Qualifying Warrants to pay
deferred interest on the Debentures.

      (i) Alternative Payment Mechanism. Immediately following any APM
Commencement Date and until the termination of the related Deferral Period, the
Company will be required to use commercially reasonable efforts to sell APM
Qualifying Securities until the Company has raised an amount of Eligible APM
Proceeds at least equal to the aggregate amount of accrued and unpaid deferred
interest on the Debentures


                                      -18-


(including compounded interest thereon) and applied such Eligible APM Proceeds
on the next Interest Payment Date to the payment of deferred interest (including
compounded interest thereon) in accordance with Section 2.1(h); provided that:

            (1) the foregoing obligations shall not apply (i) during the first
      five years of any Deferral Period to the extent the number of shares of
      Common Stock issued and the number of shares of Common Stock subject to
      such Qualifying Warrants, together with the number of shares of Common
      Stock previously issued and the number of shares of Common Stock subject
      to Qualifying Warrants previously issued during such Deferral Period to
      pay interest on the Debentures pursuant to this Section 2.1(i), would, in
      the aggregate, exceed 2% of the total number of issued and outstanding
      shares of Common Stock as of the date of the Company's most recent
      publicly available consolidated financial statements on the date of
      determination (the "Stock and Warrant Issuance Cap") or (ii) to the
      issuance of Qualifying Non-Cumulative Preferred Stock at any time to the
      extent the Eligible APM Proceeds raised from such issuance, together with
      the Eligible APM Proceeds of all prior issuances of Qualifying
      Non-Cumulative Preferred Stock pursuant to this Section 2.1(i) applied to
      pay deferred interest on the Debentures, would exceed (pounds)187,500,000
      plus 25% of the aggregate principal amount of any additional Debentures at
      the time of their initial issuance pursuant to Section 2.1(b) (the
      "Preferred Stock Issuance Cap");

            (2) the foregoing obligations shall not apply in respect of any
      Interest Payment Date if the Company shall have provided to the Trustee
      (which the Trustee will promptly forward upon receipt to each Holder of
      the Debentures whose name appears in the Security Register) no more than
      30 and no less than 10 Business Days prior to such Interest Payment Date
      an Officers' Certificate stating that (i) a Market Disruption Event
      occurred after the immediately preceding Interest Payment Date and (ii)
      either (A) the Market Disruption Event continued for the entire period
      from the Business Day immediately following the preceding Interest Payment
      Date to the Business Day immediately preceding the date on which such
      Officers' Certificate is provided or (B) the Market Disruption Event
      continued for only part of such period but the Company was unable after
      commercially reasonable efforts to raise sufficient Eligible APM Proceeds
      during the rest of that period to pay all accrued and unpaid interest due
      on the Interest Payment Date with respect to which such Officers'
      Certificate is being delivered; and

            (3) to the extent that the Company has raised some but not all
      Eligible APM Proceeds necessary to pay all deferred interest on any
      Interest Payment Date, such Eligible APM Proceeds shall be applied in
      accordance with Section 2.1(h).

      Once the Company reaches the Stock and Warrant Issuance Cap for a Deferral
Period, the Company will not be required to issue more shares of Common Stock or


                                      -19-


Qualifying Warrants under this Section 2.1(i) during the first five years of
such Deferral Period even if the Stock and Warrant Issuance Cap subsequently
increases because of a subsequent increase in the number of outstanding shares
of Common Stock. The Stock and Warrant Issuance Cap will cease to apply after
the fifth anniversary of the commencement of any Deferral Period, at which point
the Company must pay any deferred interest, regardless of the time at which it
was deferred pursuant to Section 2.1(h), subject to the limitations in Section
2.1(g), the Preferred Stock Issuance Cap, the Maximum Share Number, the Maximum
Warrant Number and any Market Disruption Event. In addition, if the Stock and
Warrant Issuance Cap is reached during a Deferral Period and the Company
subsequently pays all deferred interest, the Stock and Warrant Issuance Cap will
cease to apply at the termination of such Deferral Period, reset to zero and
will not apply again unless and until the start of a new Deferral Period. The
Preferred Stock Issuance Cap shall not reset to zero even if the Company pays
all deferred interest for a Deferral Period, and the Eligible APM Proceeds from
sales of Qualifying Non-Cumulative Preferred Stock applied pursuant to Section
2.1(h) during such Deferral Period and all prior Deferral Periods cumulate as
Qualifying Non-Cumulative Preferred Stock is issued to pay deferred interest.
The Company will not be excused from its obligations under this Section 2.1(i)
if it determines not to pursue or complete the sale of APM Qualifying Securities
due to pricing, dividend rate or dilution considerations.

      (j) Events of Default. The Debentures shall not be entitled to the
benefits of the Events of Default in clauses (1) through (4) of Section 501 of
the Indenture. The Debentures shall be entitled to the benefits of the Events of
Default in clauses (5) and (6) of Section 501 of the Indenture. The following
events shall be Events of Default with respect to the Debentures (whatever the
reason for such Event of Default and whether it shall be occasioned by the
provisions of Article Fourteen of the Indenture or be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):

            (1) default in the payment of interest, including compounded
      interest, in full on any Debenture for a period of 30 days after the
      conclusion of a 10-year period following the commencement of any Deferral
      Period;

            (2) default in the payment of the principal of the Debentures at the
      Final Maturity Date or upon a call for redemption;

Except as provided in this paragraph (j), no breach or default by the Company of
any other covenant or obligation under the Indenture or the terms of the
Debentures shall constitute an Event of Default.

      (k) Acceleration of Maturity; Rescission of Amendment. The remedies
provided to the Trustee and Holders by Section 502 of the Indenture will apply
only to an Event of Default under clause (1) of Section 2.1(j). If an Event of
Default specified in


                                      -20-


Section 501(5) or 501(6) of the Indenture occurs, then in every such case the
principal amount of all the Debentures shall automatically become due and
payable immediately, without any declaration or other action on the part of the
Trustee or any Holder. An Event of Default in clause (2) of Section 2.1(j) shall
not entitle the Holders to the benefits of Section 502 of the Indenture.

      (l) Collection of Indebtedness and Suits From Enforcement by Trustee. The
Debentures shall not have the benefits of the first paragraph of Section 503 of
the Indenture.

        (m) Limitation on Suits. For purposes of the Debentures, Section 507 of
the Indenture is hereby amended (i) by adding "or Enforcement Event" after
"Event of Default" in clause (1) thereof, and (ii) by adding at the end of
clause (2) thereof: "or the Holders of no less than a majority in principal
amount of the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such Enforcement
Event in its own name as Trustee hereunder;".

      (n) Unconditional Right of Holders to Receive Principal, Premium and
Interest. For purposes of the Debentures, Section 508 of the Indenture is hereby
amended and restated in its entirety:

      "Notwithstanding any other provision in this Indenture or the Second
      Supplemental Indenture, the Holder of any Debenture shall have the right,
      which is absolute and unconditional, to receive payment of the principal
      of and any premium and (subject to Section 2.1(g)(ii) of the Second
      Supplemental Indenture and Section 307 of the Indenture) interest on such
      Debenture when due, it being understood (i) that, in the case of a
      Deferral Period, interest shall only become due and payable at the time
      and in the manner provided for in Sections 2.1(g) and (h) of the Second
      Supplemental Indenture, and interest shall, in the case of Section 2.1(i)
      of the Second Supplemental Indenture, only become due and payable in the
      amount determined in accordance with such Section, and (ii) that the
      extent to which Holders have a right to receive payment of principal on
      any Repayment Date is determined in accordance with Section 2.1(d) of the
      Second Supplemental Indenture. Any Holder's right to institute suit for
      the enforcement of any such payment, and such rights referred to in this
      Section 508 shall not be impaired without the consent of such Holder."

For the purposes of Section 316(b) of the Trust Indenture Act, it is understood
and agreed that no payment of principal or interest shall be deemed due and
payable under the provisions of Sections 2.1(d), 2.1(g)(ii) and 2.1(h) until the
Company has received Eligible Repayment Proceeds or Eligible APM Proceeds,
respectively, to pay such principal or interest.

      (o) Waiver of Past Defaults. Notwithstanding anything to the contrary in
Section 513 of the Indenture, for the purposes of the Debentures, a past default
that is an Event of Default under Section 501(5) or 501(6) of the Indenture
cannot be waived, with


                                      -21-


respect to the Debentures and its consequences, without the consent of each
Holder of the Debentures.

      (p) Notice of Defaults and Enforcement Events. For purposes of the
Debentures, Section 602 of the Indenture is hereby amended (i) by adding "and
Enforcement Events" after "Defaults" in the header thereof, and (ii) by adding
"or Enforcement Event" after "default" in the first and second line of such
Section.

      (q) Redemption. The Debentures shall be redeemable in accordance with
Article Eleven of the Indenture, provided that the Debentures are redeemable at
any time (i) in whole but not in part at the option of the Company prior to
March 15, 2017, (ii) in whole but not in part upon the occurrence of a Rating
Agency Event or a Tax Event, (iii) in whole or in part at the option of the
Company on any Interest Payment Date on or after March 15, 2017, or (iv) in
whole but not in part, at any time at the option of the Company, if the Company
becomes obligated to pay Additional Amounts pursuant to Section 2.1(r), other
than as a result of an event that would, upon receipt of the required opinion of
counsel, constitute a Tax Event, at a "Redemption Price" equal to (1) 100% of
their principal amount plus accrued and unpaid interest to the Redemption Date
or (2) in the case of any such redemption prior to March 15, 2017 pursuant to
clause (i) or (ii) above, if greater, the applicable Make-Whole Redemption Price
plus accrued and unpaid interest to the Redemption Date. For purposes of the
Debentures, the first sentence of Section 1104 of the Indenture is replaced in
its entirety with the following: "Notice of redemption shall be given by
first-class mail, postage prepaid, mailed not less than 10 nor more than 60 days
prior to the Redemption Date, to each Holder of Securities to be redeemed, at
his address appearing in the Security Register". For purposes of the Debentures,
the following is inserted in Section 1103 after "as" and before "the Trustee":
"may be required by any national securities exchange on which the Debentures may
be listed, or, if not listed,".

      (r) Additional Amounts. The Company will, subject to the exceptions and
limitations set forth below, pay additional amounts ("Additional Amounts") on
the Debentures, including payment of principal of and interest, with respect to
any Beneficial Owner of the Debentures that is a Non-U.S. Person to ensure that
each Net Payment by the Company or any Paying Agent to that Non-U.S. Person on
the Debentures will not be less, due to the payment of U.S. withholding tax,
than the amount otherwise then due and payable.

      Notwithstanding the foregoing, the Company's foregoing obligations to pay
Additional Amounts shall not apply:

      (i) if a payment on the Debentures is reduced as a result of any tax,
assessment or governmental charge that is imposed or withheld solely by reason
of the Beneficial Owner:

      A) having, having had or being considered as having had a relationship
      with the U.S. as a citizen or resident or otherwise;


                                      -22-


      B) being treated as present in, or engaged in, or being treated as having
      been present in or engaged in a trade or business in the U.S. or having or
      having had a permanent establishment in the U.S.;

      C) being or having been a personal holding company, a foreign private
      foundation or other foreign tax-exempt organization, a passive foreign
      investment company, a controlled foreign corporation with respect to the
      U.S., or a corporation that has accumulated earnings to avoid U.S. federal
      income tax;

      D) owning or having owned, actually or constructively, 10% or more of the
      total combined voting power of all classes of the Company's Capital Stock
      that is entitled to vote; or

      E) being a bank (i) purchasing Debentures in the ordinary course of its
      lending business or (ii) that is neither (A) buying the Debentures for
      investment purposes only nor (B) buying the Debentures for resale to a
      third party that either is not a bank or holding the Debentures for
      investment purposes only.

      (ii) to any holder that is a fiduciary, a partnership, a limited liability
company, another fiscally transparent entity or that is not the sole Beneficial
Owner of the Debentures or any portion of the Debentures, but only to the extent
that a beneficiary or settlor in relation to the fiduciary, or a Beneficial
Owner, partner or a member of the partnership, limited liability company or
other fiscally transparent entity, would not have been entitled to the payment
of an Additional Amount had such beneficiary, settlor, Beneficial Owner,
partner, or member received directly its beneficial or distributive share of the
payment;

      (iii) if a payment on the Debentures is reduced as a result of any tax,
assessment or governmental charge that is imposed or withheld by reason of the
failure of the Beneficial Owner or any other Person to comply with applicable
certification, identification, documentation or other information reporting
requirements, if compliance is required by statute or by regulation of the U.S.
or by an applicable income tax treaty to which the U.S. is a party as a
precondition to exemption from such tax, assessment or other governmental
charge;

      (iv) if a payment on the Debentures is reduced as a result of any tax,
assessment or governmental charge that is collected or imposed by any method
other than by withholding by the Company or a Paying Agent from a payment on
such Debentures;

      (v) if a payment on the Debentures is reduced as a result of any tax,
assessment or governmental charge that would not have been so imposed or
withheld but for the presentation by the Beneficial Owner of a Debenture for
payment on a date more than 30 days after the date on which such payment became
due and payable or the date on which payment thereof is duly provided for,
whichever occurs later;


                                      -23-


      (vi) if a payment on the Debentures is reduced as a result of any estate,
inheritance, gift, sales, excise, transfer, wealth or personal property tax or
any similar tax, assessment, withholding, deduction or other governmental
charge;

      (vii) if a payment on the Debentures is reduced as a result of any tax,
assessment or other governmental charge any withholding agent (within the
meaning of the applicable rules) must withhold from any payment of principal of
or interest on any Debentures, if such payment can be made without such
withholding by any other withholding agent;

      (viii) if a payment on the Debentures is reduced as a result of any tax,
assessment or other governmental charge that is required to be made pursuant to
European Council Directive 2003/48/EC or any law implementing or complying with,
or introduced to conform to, any such Directive;

      (ix) if a payment on the Debentures is reduced as a result of any
combination of the above clauses (i) through (viii) of this Section 2.1(r).

      Except as provided in this Section 2.1(r), the Company shall have no
obligation to make any payment with respect to any tax, assessment or
governmental charge imposed by any government or a political subdivision or
taxing authority.

      (s) Replacement Capital Covenant. The Company shall not modify the
Replacement Capital Covenant to (A) amend the definitions incorporated into this
Second Supplemental Indenture pursuant to Section 1.2.3(b) in a manner adverse
to the Holders or (B) impose additional restrictions on the type or amount of
Qualifying Capital Securities that the Company may include for purposes of
determining the extent to which repayment, redemption, defeasance or repurchase
of the Debentures is permitted, except with the consent of the holders of a
majority of the principal amount of Outstanding Debentures. Except as expressly
provided in the preceding sentence, the Company may modify the Replacement
Capital Covenant at any time and in any manner without the consent of the
Holders of the Debentures.

      (t) Limitation on Claims in the Event of Bankruptcy, Insolvency or
Receivership. To the extent permitted by law, each Holder, by such Holder's
acceptance of the Debentures, agrees that if a Bankruptcy Event shall occur
prior to the redemption, repayment or defeasance of such Debentures, such Holder
shall only have a claim for deferred and unpaid interest (including compounded
interest thereon) to the extent such interest (including compounded interest
thereon) relates to the earliest two years of the portion of the Deferral Period
for which interest has not so been paid.

      (u) Sinking Fund; Holder Repurchase Right. The Debentures shall not be
subject to any sinking fund or analogous provision or be redeemable at the
option of the Holders.


                                      -24-



      (v) Forms. The Debentures shall be substantially in the form of Annex A
attached hereto, with such modifications thereto as may be approved by the
authorized officer executing the same.

      (w) Subordination. The Debentures shall be subject to Article XIV of the
Indenture, subject to the following modifications:

            (i) For purposes of the Debentures, the "or" before clause (iii) of
the definition of Senior Debt in the Indenture is deleted, the following clauses
are added to the definition of Senior Debt in the Indenture after the word
"contracts," in clause (iii) for purposes of the Debentures:

      ", (iv) any subordinated or junior subordinated debt that by its terms is
      not expressly pari passu or subordinated to the Debentures, (v) any
      Guarantee of any indebtedness, obligation or security issued by any Person
      that is an Affiliate of the Company and such Person is viewed by the
      Company as a vehicle to finance its operations, and (vi) Indebtedness of
      the Company to its Subsidiaries"; and

            (ii) For purposes of the Debentures, the following provision is
added to the end of the definition of Senior Debt in the Indenture after the
word "Securities": "provided that (a) trade account payables and accrued
liabilities arising in the ordinary course of the Company's business, (b) the
Company's 6.25% Series A-1 Junior Subordinated Debentures and 4.875% Series A-3
Junior Subordinated Debentures and (c) any other indebtedness, Guarantee or
other obligation that is specifically designated as being subordinate, or not
superior, in right of payment to the Debentures, shall not be considered Senior
Debt".

            (iii) For purposes of the Debentures, the provisions of Section 1404
of the Indenture shall only apply in the case where (A) there has been an event
of default with respect to Senior Debt within the meaning of clause (i) of the
definition of Senior Debt, (B) the principal amount of such Senior Debt has been
accelerated, (C) the outstanding principal amount of Senior Debt at the time of
acceleration is at least $100,000,000 and (D) the event of default or
acceleration has not been cured, waived, or otherwise ceased to exist. In no
other case and to no other Senior Debt shall Section 1404 apply.

            (iv) The Debentures shall rank pari passu with the Company's 6.25%
Series A-1 Junior Subordinated Debentures and 4.875% Series A-3 Junior
Subordinated Debentures.

      (x) Registrar, Paying Agent, Authenticating Agent and Place of Payment.
The Company hereby appoints The Bank of New York as Security Registrar,
Authenticating Agent and Paying Agent with respect to the Debentures. The
Debentures may be surrendered for registration of transfer and for exchange at
the office or agency of the Company maintained for such purpose in the City of
New York, New York and at any other office or agency maintained by the Company
for such purpose. The Place of Payment for the Debentures shall be the Paying
Agent's office in New York, New York.


                                      -25-

      (y) Defeasance. Until March 15, 2017, the Debentures will be subject to
Sections 1302 and 1303 of the Indenture except that all references to U.S.
Government Obligations shall be replaced by "United Kingdom Obligations".


                                  ARTICLE THREE

                           REPAYMENT OF THE DEBENTURES

      3.1. REPAYMENT. The Company shall, not more than 30 nor less than 10
Business Days prior to each Repayment Date (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of the principal amount of
Debentures to be repaid on such date pursuant to Section 2.1(d).

      3.2. SELECTION OF SECURITIES TO BE REPAID. If less than all the Debentures
are to be repaid on any Repayment Date, the particular Debentures to be repaid
shall be selected not more than 30 days prior to such Repayment Date by the
Trustee, from the Outstanding Debentures not previously repaid or redeemed or as
to which notice of repayment or redemption has been given, by such other method
as the Trustee may deem fair and appropriate and which may provide for the
selection for repayment of a portion of the principal amount of any Debenture,
provided that the portion of the principal amount of any Debenture not repaid
shall be in an authorized denomination (which shall not be less than the minimum
authorized denomination).

      The Trustee shall promptly notify the Company in writing of the Debentures
selected for partial repayment and the principal amount thereof to be repaid.
For all purposes hereof, unless the context otherwise requires, all provisions
relating to the repayment of Debentures shall relate, in the case of any
Debenture repaid or to be repaid only in part, to the portion of the principal
amount of such Debenture which has been or is to be repaid.

      3.3. NOTICE OF REPAYMENT. Notice of repayment shall be given by
first-class mail, postage prepaid, mailed not later than the 15th calendar day,
and not earlier than the 10th calendar day, prior to the Repayment Date, to each
Holder of Debentures to be repaid, at the address of such Holder as it appears
in the Security Register.

      Each notice of repayment shall identify the Debentures to be repaid
(including CUSIP number, if a CUSIP number has been assigned to the Debentures)
and shall state:

      (a) the Repayment Date;

      (b) if less than all Outstanding Debentures are to be repaid, the
identification (and, in the case of partial repayment, the respective principal
amounts) of the particular Debentures to be repaid;


                                      -26-


      (c) that on the Repayment Date, the principal amount of the Debentures or
portions thereof to be repaid will become due and payable, and that interest
thereon, if any, shall cease to accrue on and after said date;

      (d) whether any deferred interest shall remain outstanding on any
Debentures to be repaid, and if so, the amount of such deferred interest and
that compound interest thereon shall continue to accrue on and after said date
until paid; and

      (e) the place or places where such Debentures are to be surrendered for
payment of the principal amount thereof.

      Notice of repayment shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company and shall
be irrevocable.

      3.4. DEPOSIT OF REPAYMENT AMOUNT. Prior to 10:00 a.m., New York City time,
on the Repayment Date specified in the notice of repayment given as provided in
Section 3.3, the Company will deposit with the Trustee or with one or more
Paying Agents (or if the Company is acting as its own Paying Agent, the Company
will segregate and hold in trust as provided in Section 1003 of the Indenture)
an amount of money sufficient to pay the principal amount of, and (except to the
extent the payment of such accrued interest shall be prohibited pursuant to
Section 2.1(h)) any accrued interest (including compounded interest) on, all the
Debentures which are to be repaid on that date.

      3.5. PAYMENT OF DEBENTURES SUBJECT TO REPAYMENT. If any notice of
repayment has been given as provided in Section 3.3, the Debentures or portion
of the Debentures with respect to which such notice has been given shall become
due and payable on the Repayment Date. On presentation and surrender of such
Debentures as provided in the notice of repayment, such Debentures or the
specified portions thereof shall be paid by the Company at their principal
amount, together with accrued interest (including any compounded interest) to
the Repayment Date (except to the extent the payment of such accrued interest
shall be prohibited pursuant to Section 2.1(h)); provided that, except in the
case of a repayment in full of all Outstanding Debentures, installments of
interest whose Stated Maturity is on or prior to the Repayment Date will be
payable to the Holders of such Debentures, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Regular
Record Dates according to their terms and the provisions of Section 307 of the
Indenture and Section 2.1(g)(ii) of this Second Supplemental Indenture.

      Section 1107 of the Indenture shall apply to any Debenture repaid in part
pursuant to this Article III.

      If any Debenture subject to repayment shall not be so repaid upon
surrender thereof, the principal of such Debenture shall, until paid, bear
interest from the applicable Repayment Date at the rate prescribed therefore in
the Debenture.


                                      -27-


                                  ARTICLE FOUR

                                  MISCELLANEOUS

SECTION 4.1 RELATIONSHIP TO EXISTING INDENTURE

      The Second Supplemental Indenture is a supplemental indenture within the
meaning of the Indenture. The Indenture, as supplemented and amended by this
Second Supplemental Indenture, is in all respects ratified, confirmed and
approved and, with respect to the Debentures, the Indenture, as supplemented and
amended by this Second Supplemental Indenture, shall be read, taken and
construed as one and the same instrument.

SECTION 4.2 MODIFICATION OF THE EXISTING INDENTURE

      Except as expressly modified by this Second Supplemental Indenture, the
provisions of the Indenture shall govern the terms and conditions of the
Debentures.

SECTION 4.3 GOVERNING LAW

      This instrument shall be governed by and construed in accordance with the
laws of the State of New York.

SECTION 4.4 COUNTERPARTS

      This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

SECTION 4.5 TRUSTEE MAKES NO REPRESENTATION

      The recitals contained herein are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
Second Supplemental Indenture (except for its execution thereof and its
certificates of authentication of the Debentures).


                                      -28-


      IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed and attested all as of the day and
year first above written.

                              AMERICAN INTERNATIONAL GROUP, INC.


                              By /s/ Robert A. Gender
                                ----------------------------------------
                                  Name:   Robert A. Gender
                                  Title:  Vice President and Treasurer

Attest:


    /s/ Kathleen E. Shannon
- ------------------------------


                              THE BANK OF NEW YORK,
                              as Trustee


                              By /s/ Julie Salovitch-Miller
                                ----------------------------------------
                                  Name:   Julie Salovitch-Miller
                                  Title:  Vice President




                                                                         ANNEX A

      THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.


                       AMERICAN INTERNATIONAL GROUP, INC.

Registered No.                                             ISIN:
L                                                     CUSIP No.:

      American International Group, Inc., a corporation duly organized and
existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to The Bank of New York Depository
(Nominees) Limited, or registered assigns, the principal sum of
pounds Sterling (              ) on March 15, 2067, or if such day is not a
Business Day, the following Business Day (the "Final Maturity Date"); provided
that the principal amount of, and all accrued and unpaid interest on, this
Security shall be payable in full on March 15, 2037, or if such day is not a
Business Day, the next Business Day (the "Scheduled Maturity Date"), or any
subsequent Interest Payment Date (as hereinafter defined) to the extent set
forth in the Indenture hereinafter referred to. As provided in the Indenture,
the principal of this Security is payable on the Scheduled Maturity Date only to
the extent the Company has raised sufficient Eligible Repayment Proceeds. The
Company's obligation to raise Eligible Repayment Proceeds is subject to certain
limitations and restrictions described in the Second Supplemental Indenture
hereinafter referred to. In connection with the issuance of this Security, the
Company has entered into a Replacement Capital Covenant that contains
restrictions on the Company's ability to repay the principal of this Security.

      This Security shall bear interest (i) from and including March 15, 2007 to
but excluding March 15, 2017 at the rate of 5.75% per annum semi-annually in
arrears on March 15 and September 15 in each year, commencing September 15, 2007
(computed on the basis of the number of days from and including the date on
which interest begins to accrue during the relevant Interest Period to but
excluding the scheduled date on which such interest is payable, divided by the
number of days in the relevant Interest Period (including the first day but
excluding the last day of such Interest Period)), and (ii) from and including
March 15, 2017, at an annual rate equal to Three-month Sterling LIBOR (as
defined in the Indenture) plus 1.705% (computed on the basis of a 365-day year
and the actual number of days elapsed), payable (subject to deferral as set
forth herein and in the Indenture) quarterly in arrears on March 15, June 15,
September 15 and December 15 in each year, commencing June 15, 2017, until the
principal hereof is paid or made available for payment (each such date referred
to in clause (i) or (ii), an "Interest



Payment Date"). In the event that any Interest Payment Date on or before March
15, 2017 would otherwise fall on a day that is not a Business Day, the interest
payment due on that date shall be postponed to the next day that is a Business
Day and no interest shall accrue as a result of that postponement. In the event
that any Interest Payment Date after March 15, 2017 would otherwise fall on a
day that is not a Business Day, that Interest Payment Date shall be postponed to
the next day that is a Business Day; however, if the postponement would cause
the day to fall in the next calendar month, the Interest Payment Date will
instead be brought forward to the immediately preceding Business Day. Any
installment of interest (or portion thereof) deferred in accordance with the
Indenture or otherwise unpaid on the relevant Interest Payment Date shall bear
interest, to the extent permitted by law, at the rate of interest then in effect
on this Security, from the relevant Interest Payment Date, compounded on each
subsequent Interest Payment Date, until paid in accordance with the Indenture.

      A "Business Day" shall mean any day other than (i) a Saturday, Sunday or
other day on which banking institutions in The City of New York are authorized
or required by law or executive order to remain closed or (ii) a day that is not
a London Banking Day.

      The interest (other than deferred interest) so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered (i) at the close of business on the
Business Day next preceding the Interest Payment Date if this Security is issued
in the form of a Global Security, or (ii) the close of business on the fifteenth
day (whether or not a Business Day) next preceding such Interest Payment Date if
this Security is not issued in the form of a Global Security. Any such interest
not so punctually paid or duly provided for (other than deferred interest) will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in the Indenture. Any deferred interest shall be payable to the holder of record
of this Security as provided below.

      The Company shall have the right, at any time and from time to time, prior
to the Final Maturity Date to defer the payment of interest on this Security for
one or more consecutive Interest Periods that do not exceed 10 years; provided
that no Deferral Period shall extend beyond the Final Maturity Date or the
earlier redemption of the Securities of this series. As provided in the
Indenture, the payment of deferred interest is subject to the Company's ability
to raise Eligible APM Proceeds. The Company's obligation to raise Eligible APM
Proceeds is subject to certain limitations, restrictions and exceptions
described in the Second Supplemental Indenture.


                                      A-2


      At the end of any Deferral Period, the Company shall pay all deferred
interest on this Security (together with compounded interest thereon, if any, to
the extent permitted by applicable law), to the Person in whose name this
Security is registered at the close of business on the Business Day next
preceding the Interest Payment Date at the end of such Deferral Period or, in
the event this Security ceases to be held in the form of a Global Security, at
the close of business on the date 15 days prior to the end of the Deferral
Period, whether or not a Business Day. Upon termination of any Deferral Period
and upon the payment of all deferred interest and any compounded interest then
due on any Interest Payment Date, the Company may elect to begin a new Deferral
Period, subject to the above requirements and those in the Indenture. The
Company may elect to pay deferred interest on any Interest Payment Date during
any Deferral Period to the extent permitted, and shall pay deferred interest
(including compounded interest thereon) to the extent required, by the
Indenture.

      To the extent permitted by law, each Holder of this Security, by such
Holder's acceptance of this Security agrees that if a Bankruptcy Event shall
occur prior to the redemption or repayment of this Security, such Holder shall
only have a claim for deferred and unpaid interest (including compounded
interest thereon) to the extent such interest (including compounded interest
thereon) relates to the earliest two years of the portion of the Deferral Period
for which interest has not so been paid.

      The Company shall give written notice to the Trustee and the Holders of
this Security of its election to begin any Deferral Period at least one Business
Day prior to the Regular Record Date for that Interest Payment Date, provided,
however, that the Company's failure to pay any interest due within five Business
Days after any Interest Payment Date shall automatically and without any further
action by any Person be deemed to commence a Deferral Period.

      Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, and will be made in
Sterling; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register. If Sterling is
unavailable to the Company due to the imposition of exchange controls or other
circumstances beyond its control or Sterling is no longer used by the United
Kingdom as its currency, then all payments in respect of this Security will be
made in U.S. dollars until Sterling is again available to the Company or so
used. The amount payable on any date in Sterling will be converted into U.S.
dollars on the basis of the most recently available market exchange rate for
Sterling as determined by the Calculation Agent. Any payment in U.S. dollars as
described above will not be deemed a default or Enforcement Event under the
Indenture.

      Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.


                                      A-3


      Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.


                                      A-4


      IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.



Dated:

                                                   AMERICAN INTERNATIONAL GROUP,
                                                   INC.

                                                   By:
                                                       Name:
                                                       Title:


Attest:
       Name:
       Title:

This is one of the Securities of the series designated therein referred to in
the within-mentioned Indenture.


Dated:

                                                   THE BANK OF NEW YORK,
                                                     as Trustee

                                                   By:
                                                       Name:
                                                       Title:




                               REVERSE OF SECURITY

      This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under a Junior Subordinated Debt Indenture, dated as of March 13, 2007
(herein called the "Base Indenture"), which term shall have the meaning assigned
to it in such instrument, as supplemented by a Second Supplemental Indenture,
dated as of March 15, 2007 (herein called the "Second Supplemental Indenture"
and, together with the Base Indenture, the "Indenture"), in each case, between
the Company and The Bank of New York, as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), and reference is
hereby made to the Indenture for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee, the holders of Senior Debt and the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated and delivered.
This Security is one of the series designated on the face hereof limited in
aggregate principal amount to (pounds) 750,000,000 (except for Securities
authenticated and delivered upon registration or transfer of, or exchange for,
or in lieu of, other Securities pursuant to Section 304, 305, 306, 906, or 1107
of the Base Indenture or Section 3.5 of the Second Supplemental Indenture);
provided, however, that the Company may from time to time authenticate and
deliver under the Indenture up to (pounds) 750,000,000 additional principal
amount of Securities which may accrue interest from a different date than this
Security, as may be specified pursuant to Section 301 of the Base Indenture, so
long as the company reasonably determines that the additional Securities so
authenticated and delivered will be fungible for United States federal income
tax purposes.

      All terms used in this Security that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

      The Securities of this series are subject to redemption upon not less than
10 days nor more than 60 days' prior notice by first class mail, postage
pre-paid, to each Holder of Securities to be redeemed, at any time (i) in whole
but not in part at the option of the Company prior to March 15, 2017, (ii) in
whole but not in part upon the occurrence of a Rating Agency Event or a Tax
Event, (iii) in whole or in part at the option of the Company on any Interest
Payment Date on or after March 15, 2017 or (iv) in whole but not in part at the
option of the Company if the Company becomes obligated to pay Additional
Amounts, other than as a result of an event that would, upon receipt of the
required opinion of counsel pursuant to the definition of Tax Event, constitute
a Tax Event, at a "Redemption Price" equal to (1) 100% of their principal amount
plus accrued and unpaid interest to the Redemption Date or (2) in the case of
any such redemption prior to March 15, 2017 pursuant to clause (i) or (ii)
above, if greater, the applicable Make-Whole Redemption Price plus accrued and
unpaid interest to the Redemption Date.

      In the event of a redemption of this Security in part only a new Security
or Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation thereof.


                                      A-6


      The Company will, subject to the exceptions and limitations set forth in
the Second Supplemental Indenture, pay Additional Amounts on this Security with
respect to any Beneficial Owner of all or any portion of this Security that is a
Non-U.S. Person to ensure that each Net Payment by the Company or Paying Agent
on such portion of this Security, including payment of principal and interest,
that it beneficially owns will not be less, due to any present or future tax,
assessment or governmental charge of the U.S. or a political subdivision or
taxing authority thereof or therein, imposed by withholding with respect to the
payment, than the amount that would have been payable in respect of such portion
of this Security had no withholding been required. For all purposes of this
Security, any Additional Amounts that are payable shall be treated as interest
on this Security.

      The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Debt, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such actions as
may be necessary or appropriate to effectuate the subordination so provided and
(c) appoints the Trustee as his or her attorney-in-fact for any and all such
purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice
of the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Debt, whether now outstanding or hereafter
created, incurred, assumed or Guaranteed, and waives reliance by each such
holder of Senior Debt upon said provisions.

      The Indenture contains provisions for defeasance of the entire
indebtedness of this Security at any time prior to March 15, 2017 upon
compliance with certain conditions set forth in the Indenture.

      The Securities of this series are entitled to the benefits of the Events
of Default described in Section 2.1(j) of the Second Supplemental Indenture and
the Enforcement Events as defined in the Second Supplemental Indenture. The
Holder of this Security and the Trustee shall be entitled to the remedies
provided by Section 502 of the Base Indenture only if an Event of Default
specified in clause (1) of Section 2.1(j) of the Second Supplemental Indenture
shall occur with respect to the Securities of this series. If an Event of
Default specified in Section 501(5) or Section 501(6) of the Base Indenture
shall occur with respect to the Securities of this series, then in every such
case the principal amount of all the Securities of this series shall become
automatically due and payable immediately, without any declaration or other
action on the part of the Trustee or any Holder. An Event of Default specified
in clause (2) of Section 2.1(j) of the Second Supplemental Indenture shall not
entitle the Holders to the benefits of Section 502 of the Base Indenture.

      The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of

                                      A-7

a majority in principal amount of the Securities at the time Outstanding of
each series to be affected. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of the Securities of
each series at the time Outstanding, on behalf of the Holders of all Securities
of such series, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.

      As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default or Enforcement Event
with respect to the Securities of this series, the Holders of not less than 25%
(or, in the case of an Enforcement Event, a majority) in principal amount of the
Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default or Enforcement Event, as the case may be, as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of Securities of this series at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates to the extent provided by Section 2.1(n) of the Second
Supplemental Indenture.

      As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

      The Securities of this series are issuable only in fully registered form
without coupons in denominations of (pounds) 50,000 and even multiples thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.


                                      A-8


      No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

      Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

      The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires beneficial
interest in, this Security agree that, for United States federal, state and
local tax purposes, it is intended that this Security constitute indebtedness.

      THE BASE INDENTURE, THE SECOND SUPPLEMENTAL INDENTURE AND THIS SECURITY
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.


                                      A-9

                                                                     Exhibit 4.4


================================================================================





                       AMERICAN INTERNATIONAL GROUP, INC.



                                 --------------




                          THIRD SUPPLEMENTAL INDENTURE


                           Dated as of March 15, 2007


                                 --------------


        (Supplemental to the Junior Subordinated Debt Indenture Dated as
                               of March 13, 2007)

                                 --------------


                              THE BANK OF NEW YORK,
                                   as Trustee









================================================================================



      THIRD SUPPLEMENTAL INDENTURE, dated as of March 15, 2007, between American
International Group, Inc., a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company"), and The Bank of New
York, a New York banking corporation, as Trustee (herein called "Trustee");



                                R E C I T A L S:

      WHEREAS, the Company has heretofore executed and delivered to the Trustee
a Junior Subordinated Debt Indenture, dated as of March 13, 2007 (the
"Indenture"), providing for the issuance from time to time of the Company's
unsecured debentures, notes or other evidences of indebtedness (herein and
therein called the "Securities"), to be issued in one or more series as provided
in the Indenture;

      WHEREAS, Section 901 of the Indenture permits the Company and the Trustee
to enter into an indenture supplemental to the Indenture to establish the form
and terms of a series of Securities;

      WHEREAS, Section 201 of the Indenture permits the form of Securities of a
series to be established in an indenture supplemental to the Indenture;

      WHEREAS, Section 301 of the Indenture permits certain terms of a series of
Securities to be established pursuant to an indenture supplemental to the
Indenture;

      WHEREAS, pursuant to Sections 201 and 301 of the Indenture, the Company
desires to provide for the establishment of a new series of Securities under the
Indenture, the form and substance of such Securities and the terms, provisions
and conditions thereof to be set forth as provided in the Indenture and this
Third Supplemental Indenture;

      WHEREAS, all things necessary to make this Third Supplemental Indenture a
valid agreement of the Company, in accordance with its terms, have been done;

      NOW, THEREFORE, THIS THIRD SUPPLEMENTAL INDENTURE WITNESSETH:

      For and in consideration of the premises and the purchase of the
Securities of the series established by this Third Supplemental Indenture by the
Holders thereof, it is mutually agreed, for the equal and proportionate benefit
of all such Holders, as follows:



                                   ARTICLE ONE

                        DEFINITIONS AND OTHER PROVISIONS
                             OF GENERAL APPLICATION

Section 1.1 Relation to Indenture

      This Third Supplemental Indenture constitutes a part of the Indenture (the
provisions of which, as modified by this Third Supplemental Indenture, shall
apply to the Debentures) in respect of the Debentures but shall not modify,
amend or otherwise affect the Indenture insofar as it relates to any other
series of Securities or modify, amend or otherwise affect in any manner the
terms and conditions of the Securities of any other series.

Section 1.2 Definitions

      For all purposes of this Third Supplemental Indenture, the capitalized
terms used herein (i) which are defined in this Section 1.2 have the respective
meanings assigned hereto in this Section 1.2 and (ii) which are defined in the
Indenture (and which are not defined in this Section 1.2) have the respective
meanings assigned thereto in the Indenture. For all purposes of this Third
Supplemental Indenture:

      1.2.1 Unless the context otherwise requires, any reference to an Article
or Section refers to an Article or Section, as the case may be, of this Third
Supplemental Indenture;

      1.2.2 The words "herein", "hereof" and "hereunder" and words of similar
import refer to this Third Supplemental Indenture as a whole and not to any
particular Article, Section or other subdivision; and

      1.2.3 (a) The terms defined in this Section 1.2.3 have the meanings
assigned to them in this Section and include the plural as well as the singular:

      "Additional Amounts" has the meaning set forth in Section 2.1(r).

      "Annual Interest Payment Date" has the meaning set forth in Section
2.1(e).

      "APM Commencement Date" means, with respect to any Deferral Period, the
earlier of (i) the first Interest Payment Date following the commencement of
such Deferral Period on which the Company pays any current interest on the
Debentures and (ii) the fifth anniversary of the commencement of such Deferral
Period.

      "APM Common Stock" means an aggregate number of shares of Common Stock,
including any shares of Common Stock held in treasury, and any shares of Common
Stock sold pursuant to the Company's dividend reinvestment or similar plan or
sold pursuant to any Employee Benefit Plan, up to the Maximum Share Number.


                                      -2-


      "APM Qualifying Securities" means APM Common Stock, Qualifying Warrants
and Qualifying Non-Cumulative Preferred Stock.

      "Assurance Agreement" means the agreement of the Company, dated as of June
27, 2005, in favor of eligible employees and relating to specified obligations
of Starr International Company, Inc. (as such agreement may be amended,
supplemented, extended, modified or replaced from time to time).

      "Bankruptcy Event" means an Event of Default set forth in Sections 501(5)
or (6) of the Indenture.

      "Beneficial Owner" means a beneficial owner of the Debentures for U.S.
federal income tax purposes.

      "Business Combination" means a merger, consolidation, amalgamation,
binding share exchange or conveyance, transfer or lease of assets substantially
as an entirety to any other Person or a similar transaction.

      "Business Day" is any day, other than (i) a Saturday, Sunday or other day
on which banking institutions in The City of New York are authorized or required
by law or executive order to remain closed or (ii) a day that is not a TARGET
settlement day.

      "Calculation Agent" means AIG Financial Products Corp., or any other
Person appointed by the Company, acting as calculation agent for the Debentures.
Any successor or substitute Calculation Agent may be an Affiliate of the
Company. All calculations and determinations by the Calculation Agent shall be
final and binding on the Holders of the Debentures and the Company absent
manifest error.

      "Capital Stock" for any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) shares issued by that Person.

      "Commercially Reasonable Efforts" means, for purposes of selling
Qualifying Capital Securities, commercially reasonable efforts to complete the
offer and sale of Qualifying Capital Securities to third parties that are not
Subsidiaries of the Company in public offerings or private placements. The
Company shall not be considered to have made Commercially Reasonable Efforts to
effect a sale of Qualifying Capital Securities if it determines not to pursue or
complete such sale due to pricing, coupon, dividend rate or dilution
considerations.

      "Common Stock" means the common stock, par value $2.50 per share, of the
Company.

      "Comparable Bundesobligationen Issue" means the 3.750% German
Bundesobligationen due January 4, 2017 or, if such security is no longer in
issue, the German Bundesobligationen security selected by an independent
investment bank



                                      -3-


selected by the Calculation Agent as having a maturity comparable to the term
remaining from the Redemption Date to March 15, 2017 that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity.

      "Continuing Director" means a director who was a director of the Company
at the time of the initial approval of the definitive agreement relating to a
Business Combination transaction by the Company's Board of Directors.

      "Current Stock Market Price" of the APM Common Stock on any date shall
mean (i) the closing sale price per share (or if no closing sale price is
reported, the average of the bid and ask prices or, if more than one in either
case, the average of the average bid and the average ask prices) on that date as
reported in composite transactions by the New York Stock Exchange or, if the
Common Stock is not then listed on the New York Stock Exchange, as reported by
the principal U.S. securities exchange on which the Common Stock is traded, or
(ii) if the Common Stock is not listed on any U.S. securities exchange on the
relevant date, the average of the mid-point of the last bid and ask prices for
the Common Stock on the relevant date from each of at least three nationally
recognized independent investment banking firms selected by the Company for this
purpose.

      "Debentures" has the meaning set forth in Section 2.1(a).

      "Deferral Period" means each period beginning on an Interest Payment Date
with respect to which the Company either (A) elects pursuant to Section 2.1(g)
to defer all or part of any interest payment due on an Interest Payment Date or
(B) fails to pay all or any part of any interest payment due on an Interest
Payment Date within five Business Days after the Interest Payment Date and
ending on the earlier of (i) the tenth anniversary of such Interest Payment Date
and (ii) the next Interest Payment Date on which the Company has paid all
accrued and previously unpaid interest on the Debentures.

      "Eligible APM Proceeds" means, with respect to any Interest Payment Date,
the net proceeds (after underwriters' or placement agents' fees, commissions or
discounts and other expenses relating to the issuance or sale) that the Company
has received during the 180-days prior to the related Interest Payment Date from
the issuance or sale of APM Qualifying Securities to Persons that are not
Subsidiaries. This includes, without limitation, sales pursuant to any dividend
reinvestment or similar plan and sales made pursuant to any Employee Benefit
Plan.

      "Eligible Repayment Proceeds" means, with respect to any Repayment Date,
the Applicable Percentage of the net proceeds the Company has received from the
issuance of Qualifying Capital Securities that the Company has sold during a
180-day period ending on a notice date not more than 30 or less than 10 Business
Days prior to such Repayment Date.


                                      -4-


      "Employee Benefit Plan" means any written or oral purchase, savings,
option, bonus, appreciation, profit sharing, thrift, incentive, pension or
similar plan or arrangement or any written or oral compensatory contract or
arrangement.

      "Enforcement Event" means any one of the following events:

      (1) failure by the Company to observe, satisfy or perform any of the
covenants or agreements contained in this Third Supplemental Indenture or the
Indenture (other than (i) any covenant or agreement in the Indenture expressly
declared inapplicable herein, (ii) a covenant or agreement in respect of the
Debentures a default in whose observance, satisfaction or performance is
elsewhere specifically dealt with in this Third Supplemental Indenture or the
Indenture (including without limitation Article X of the Indenture), or (iii) an
event which is, or with the passage of time and/or giving of notice would result
in, an Event of Default) on the part of the Company in respect of the Debentures
that continues following a period of 60 days after the date on which written
notice of such failure, requiring the Company to remedy the same and stating
that it is a notice with respect to an Enforcement Event hereunder, shall have
been given to the Company by the Trustee by registered mail, or to the Company
and the Trustee by the Holders of at least a majority in the aggregate principal
amount of the Debentures at the time Outstanding; or

      (2) unless otherwise provided for in Section 2.1(d), the Company's failure
to use Commercially Reasonable Efforts to raise sufficient Eligible Repayment
Proceeds as required by Section 2.1(d); or

      (3) the Company's failure (a) to use commercially reasonable efforts to
raise Eligible APM Proceeds, or (b) to pay deferred interest on the Debentures,
in either case as required by Section 2.1(h) or (i).

      "Event of Default" has the meaning set forth in Section 2.1(j).

      "Federal Republic of Germany Obligation" means any security which is (i) a
direct obligation of the Federal Republic of Germany for the payment of which
the full faith and credit of the Federal Republic of Germany is pledged or (ii)
an obligation of a Person controlled or supervised by and acting as an agency or
instrumentality of the Federal Republic of Germany the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the Federal
Republic of Germany, which, in either case (i) or (ii), is not callable or
redeemable at the option of the issuer thereof.

      "Final Maturity Date" has the meaning set forth in Section 2.1(d)(iii).

      "Indebtedness" means all indebtedness and obligations (other than the
Debentures) of, or Guaranteed or assumed by, the Company that (i) are for
borrowed money or (ii) are evidenced by bonds, debentures, notes or other
similar instruments.


                                      -5-


      "Interest Payment Date" means an Annual Interest Payment Date or a
Quarterly Interest Payment Date, as the case may be.

      "Interest Period" means the period from and including any Interest Payment
Date (or, in the case of the first Interest Payment Date, March 15, 2007) to but
excluding the next Interest Payment Date.

      "Make-Whole Redemption Price" means the sum, as determined by the
Calculation Agent, of the present values of the remaining scheduled payments of
principal (assuming for this purpose that the Debentures are to be redeemed at
their principal amount on March 15, 2017) discounted from March 15, 2017, and
interest thereon that would have been payable to and including March 15, 2017
(not including any portion of any payment of interest accrued to the Redemption
Date) discounted from the relevant Interest Payment Date to the Redemption Date
on an annual basis at the then current yield on the Comparable
Bundesobligationen Issue plus (i) 0.50% in the case of any redemption in whole
upon the occurrence of a Rating Agency Event or a Tax Event or (ii) 0.25% in all
other cases.

      "Market Disruption Event" means, for purposes of sales of APM Qualifying
Securities pursuant to Section 2.1(h) or sales of Qualifying Capital Securities
pursuant to Section 2.1(d), as applicable (collectively, the "Permitted
Securities"), the occurrence or existence of any of the following events or sets
of circumstances:

      (a) trading in securities generally (or in the Common Stock specifically)
on the New York Stock Exchange or any other national securities exchange, or in
the over-the-counter market, on which the Company's Capital Stock is then listed
or traded shall have been suspended or its settlement generally shall have been
materially disrupted or minimum prices shall have been established on any such
exchange or market by the relevant regulatory body or governmental agency having
jurisdiction that materially disrupts or otherwise has a material adverse effect
on trading in, or the issuance and sale of, Permitted Securities; or

      (b) the Company would be required to obtain the consent or approval of its
stockholders or the consent or approval of, license from, or registration with,
a regulatory body (including, without limitation, any securities exchange) or
governmental authority to issue and sell Permitted Securities, and the Company
fails to obtain that consent or approval or to receive such license or effect
such registration notwithstanding its commercially reasonable efforts to obtain
that consent, approval, license or registration; or

      (c) an event occurs and is continuing as a result of which the offering
document for the offer and sale of Permitted Securities would, in the Company's
reasonable judgment, contain an untrue statement of a material fact or omit to
state a material fact required to be stated in that offering document or
necessary to make the statements in that offering document not misleading,
provided that one or more events



                                      -6-


described under this clause (c) shall not constitute a Market Disruption Event
with respect to a period of more than 90 days in any 180-day period; or

      (d) the Company reasonably believes that the offering document for the
offer and the sale of Permitted Securities would not be in compliance with a
rule or regulation of the Commission (for reasons other than those referred to
in clause (c) of this definition) and the Company is unable to comply with such
rule or regulation or such compliance is unduly burdensome, provided that one or
more events described under this clause (d) shall not constitute a Market
Disruption Event with respect to a period of more than 90 days in any 180-day
period; or

      (e) a banking moratorium shall have been declared by the federal or state
authorities of the United States that results in a disruption of any of the
markets on which the Company's securities, including any obligations of any
other Person Guaranteed by the Company, are trading; or

      (f)   a material disruption shall have occurred in
commercial banking or securities settlement or clearance services
in the United States; or

      (g) the United States shall have become engaged in hostilities, there
shall have been an escalation in hostilities involving the United States, there
shall have been a declaration of a national emergency or war by the United
States or there shall have occurred any other national or international calamity
or crisis, such that market trading in the Company's Capital Stock has been
materially disrupted; or

      (h) there shall have occurred such a material adverse change in general
domestic or international economic, political or financial conditions, including
without limitation as a result of terrorist activities, or the effect of
international conditions on the financial markets in the United States, that
materially disrupts the capital markets such as to make it, in the Company's
judgment, impracticable or inadvisable to proceed with the offer and sale of
Permitted Securities.

      "Maximum Share Number" has the meaning set forth in Section 2.1(h).

      "Maximum Warrant Number" has the meaning set forth in Section 2.1(h).

      "Net Payment" means a payment by the Company or any Paying Agent on the
Debentures, including payment of principal and interest, after deduction for any
present or future withholding tax, assessment, or other governmental charge on
the Additional Amounts.

      "Non-U.S. Person" means any Person who, for U.S. federal income tax
purposes is (a) an individual that is a nonresident alien, (b) a corporation
organized or created under non-U.S. law, (c) a foreign partnership, one or more
members of which, for U.S. federal income tax purposes, is a corporation
organized or created under non-U.S. law, a nonresident alien individual or a
nonresident alien fiduciary of a non-U.S. estate or trust



                                      -7-


or (d) a nonresident alien fiduciary of an estate or trust that is not subject
to U.S. federal income tax on a net income basis on income or gain from a
Debenture.

      "Outstanding" has the meaning set forth in Section 2.1(d).

      "pari passu", as applied to the ranking of any obligation of a Person in
relation to any other obligation of such Person, means in any bankruptcy,
insolvency or receivership proceeding that each such obligation either (i) is
not subordinated or junior in right of payment to any other obligation or (ii)
is subordinate or junior in right of payment to the same obligations as is the
other, and is so subordinate or junior to the same extent, and is not
subordinate or junior in right of payment to each other or to any obligation as
to which the other is not so subordinate or junior.

      "Preferred Stock Issuance Cap" has the meaning set forth in Section
2.1(i)(1).

      "Prospectus Supplement" means the prospectus supplement dated March 8,
2007 relating to the Debentures.

      "Qualifying Non-Cumulative Preferred Stock" means the Company's
non-cumulative perpetual preferred stock that (i) contains no remedies other
than Permitted Remedies and (ii)(a) is redeemable, but is subject to
Intent-Based Replacement Disclosure, and has a provision that prohibits the
Company from making any distributions thereon upon its failure to satisfy one or
more financial tests set forth therein or (b) is subject to a replacement
capital covenant substantially similar to the Replacement Capital Covenant.

      "Qualifying Warrants" means net share settled warrants to purchase Common
Stock that (i) have an exercise price per share greater than the Current Stock
Market Price as of the date of pricing thereof, (ii) the Company is not entitled
to redeem for cash and the holders of which are not entitled to require the
Company to repurchase for cash in any circumstances and (iii) do not entitle the
holders thereof to purchase a number of shares of Common Stock in excess of the
applicable Maximum Warrant Number.

      "Quarterly Interest Payment Date" has the meaning set forth in Section
2.1(e).

      "Quarterly Interest Period" means the Interest Period relating to any
Quarterly Interest Payment Date.

      "Rating Agency Event" means a change by any nationally recognized
statistical rating organization within the meaning of Rule 15c3-1 under the
Exchange Act (or any successor provision or, upon adoption, any rule for the
registration of nationally recognized statistical rating organizations adopted
by the Commission), that, as of March 8, 2007, publishes a rating for the
Company (a "Rating Agency") to its equity credit criteria for securities similar
to the Debentures, as such criteria is in effect on March 8, 2007 (the "Current
Criteria"), which change results in a lower equity credit being given to the
Debentures as of the date of such change than the equity credit that



                                      -8-


would have been assigned to the Debentures as of the date of such change by such
Rating Agency pursuant to its Current Criteria.

      "Redemption Price" has the meaning set forth in Section 2.1(q).

      "Reference Date" means the date which is three Business Days prior to the
date fixed for redemption.

      "Regular Record Date" for the payment of any current interest payable on
any Interest Payment Date, the date specified in Section 2.1(f) and for the
payment of deferred interest, the date specified in Section 2.1(g)(ii).

      "Repayment Date" means the Scheduled Maturity Date and each Interest
Payment Date thereafter until the Company shall have repaid, redeemed, defeased
or otherwise acquired all of the Debentures.

      "Replacement Capital Covenant" means the replacement capital covenant,
dated as of March 15, 2007, of the Company relating to the Debentures, as the
same may be amended or supplemented from time to time in accordance with the
provisions thereof.

      "Reuters Screen EURIBOR01" means the display designated on Reuters Screen
EURIBOR01 (or such other page or service as may replace the Reuters Screen
EURIBOR01 as selected by the Calculation Agent or such other page and service as
may be selected by the Calculation Agent from time to time).

      "Scheduled Maturity Date" has the meaning set forth in Section 2.1(d).

      "Stock and Warrant Issuance Cap" has the meaning set forth in Section
2.1(i)(1).

      "Tax Event" means that the Company has requested and received an Opinion
of Counsel (which counsel need not be satisfactory to the Trustee) experienced
in such matters to the effect that, as a result of any:

      (a) amendment to or change in the laws or regulations of the United States
or any political subdivision or taxing authority of or in the United States that
is enacted or becomes effective after March 8, 2007;

      (b) proposed change in those laws or regulations that is announced
after March 8, 2007;

      (c) official administrative decision or judicial decision or
administrative action or other official pronouncement interpreting or applying
those laws or regulations that is announced after March 8, 2007; or


                                      -9-


      (d) threatened challenge asserted in connection with an audit of the
Company, or a threatened challenge asserted in writing against any other
taxpayer that has raised capital through the issuance of securities that are
substantially similar to the Debentures;

there is more than an insubstantial risk that interest payable by the Company on
the Debentures is not, or will not be, deductible by the Company, in whole or in
part, for United States federal income tax purposes.

      "TARGET settlement day" means a day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System is open.

      "Three-month EURIBOR" means, with respect to any Quarterly Interest
Period, the rate (expressed as a percentage per annum) for deposits in euro for
a three-month period that appears on Reuters Screen EURIBOR01 as of 11:00 a.m.,
Brussels time, on the second TARGET settlement day immediately preceding the
first day of such Quarterly Interest Period. If the Reuters Screen EURIBOR01
does not include such a rate or is unavailable on such date, the Calculation
Agent will request the principal London office of each of four major banks in
the Euro-zone inter-bank market, as selected by the Calculation Agent (after
consultation with the Company), to provide such bank's offered quotation
(expressed as a percentage per annum) as of approximately 11:00 am., Brussels
time, on such date, to prime banks in the Eurozone inter-bank market for
deposits in an amount in euro that is representative for a single transaction in
such market and for a three-month period beginning on the day that is two TARGET
settlement days after such date. If at least two such offered quotations are so
provided, the rate for the Quarterly Interest Period will be the arithmetic mean
of such quotations. If fewer than two such quotations are so provided, the
Calculation Agent will request each of three major banks in London, as selected
by the Calculation Agent, to provide such bank's rate (expressed as a percentage
per annum), as of approximately 11:00 a.m., London time, on such date. Rates
quoted will be for loans in euro to leading European banks for a three-month
period beginning on the day that is two TARGET settlement days after such date
based on a principal amount that is representative of a single transaction in
that market at that time. If at least two such rates are so provided, the rate
for the Quarterly Interest Period will be the arithmetic mean of such rates. If
fewer than two such rates are so provided then the rate for the Quarterly
Interest Period will be the rate in effect with respect to the immediately
preceding Quarterly Interest Period, or, in the case of the Quarterly Interest
Period beginning on March 15, 2017, Three-month EURIBOR will be 3.879%.

      "U.S." means the United States of America, including each state of the
United States and the District of Columbia, its territories, its possessions,
and other areas within its jurisdiction.

      "Voting Stock" means equity securities which ordinarily have voting power
for the election of directors, whether at all times or only so long as no senior
class of equity securities has such voting power by reason of any contingency.


                                      -10-


      (b) "Applicable Percentage", "Intent-Based Replacement Disclosure",
"Permitted Remedies" and "Qualifying Capital Securities" shall have the
respective meanings set forth in the Replacement Capital Covenant as in effect
on the date hereof and as it may be amended pursuant to its terms consistent
with Section 2.1(s).


                                   ARTICLE TWO

                 GENERAL TERMS AND CONDITIONS OF THE DEBENTURES

Section 2.1 Terms of Debentures

      Pursuant to Sections 201 and 301 of the Indenture, there is hereby
established a series of Securities, the terms of which shall be as follows:

      (a) Designation. The Securities of this series shall be known and
designated as the "4.875% Series A-3 Junior Subordinated Debentures" of the
Company (the "Debentures"). The CUSIP number of the Debentures is 026874BG1. The
Bank of New York will act as the paying agent for the Debentures.


       (b) Aggregate Principal Amount. The maximum aggregate principal amount of
the Debentures that may be authenticated and delivered under the Indenture and
this Third Supplemental Indenture is (euro)1,000,000,000 (except for Debentures
authenticated and delivered upon registration of transfer of, or exchange for,
or in lieu of, other Debentures pursuant to Section 304, 305, 306, 906 or 1107
of the Indenture or Section 3.5 of this Third Supplemental Indenture); provided,
however, that the Company may from time to time authenticate and deliver under
the Indenture and this Third Supplemental Indenture up to (euro)1,000,000,000
additional amount of Debentures, which Debentures may accrue interest from a
different date than the Debentures, as may be specified pursuant to Section 301
of the Indenture, so long as the Company reasonably determines that the
additional Debentures so authenticated and delivered will be fungible for United
States federal income tax purposes. From time to time the Company may execute
and deliver, and upon Company Order the Trustee shall authenticate and deliver,
additional Debentures.

      (c) Form and Denominations. The Debentures will be issued only in fully
registered form, and the authorized denominations of the Debentures shall be
(euro)50,000 principal amount and even multiples thereof. The Debentures will
initially be issued in the form of one or more Global Securities substantially
in the form of Annex A attached hereto, with such modifications thereto as may
be approved by the authorized officer executing the same. The Debentures will be
denominated in euro and payments of principal, premium if any and interest will
be made in euro. If the euro is unavailable to the Company due to the imposition
of exchange controls or other circumstances beyond its control or the euro is no
longer used by the member states of the European Monetary Union that have
adopted the euro as their currency or for the settlement of transactions by



                                      -11-


public institutions of or within the international banking community, then all
payments in respect of such Debentures will be made in U.S. dollars until the
euro is again available to the Company or so used. The amount payable on any
date in euro will be converted into U.S. dollars on the basis of the most
recently available market exchange rate for the euro as determined by the
Calculation Agent. Any payment in U.S. dollars pursuant to this Section 2.1(c)
will not be deemed a default or Enforcement Event under the Indenture.

      (d)   Scheduled Maturity Date.

            (i) The principal amount of, and all accrued and unpaid interest on,
      the Outstanding Debentures shall be payable in full on March 15, 2037, or
      if such day is not a Business Day, the next Business Day (the "Scheduled
      Maturity Date"); provided that in the event the Company has delivered an
      Officers' Certificate to the Trustee pursuant to clause (vi) of this
      Section 2.1(d) in connection with the Scheduled Maturity Date, (A) the
      principal amount of Debentures payable on the Scheduled Maturity Date, if
      any, shall be the principal amount set forth in the notice of repayment
      accompanying such Officers' Certificate, (B) such specified principal
      amount of Debentures shall be repaid on the Scheduled Maturity Date
      pursuant to Article III, and (C) subject to clause (ii) of this Section
      2.1(d), the remaining Debentures shall remain Outstanding and shall be
      payable on the immediately succeeding Quarterly Interest Payment Date or
      such earlier date on which they are redeemed pursuant to Section 2.1(o) or
      shall become due and payable pursuant to Section 502 of the Indenture or
      clause (iii) of this Section 2.1(d). The Outstanding Debentures shall be
      due and payable on the Scheduled Maturity Date except to the extent so
      specified in an Officers' Certificate delivered to the Trustee not more
      than 30 and not less than 10 Business Days immediately preceding the
      Scheduled Maturity Date.

            (ii) In the event the Company has delivered an Officers' Certificate
      to the Trustee pursuant to clause (vi) of this Section 2.1(d) in
      connection with any Quarterly Interest Payment Date, the principal amount
      of Debentures payable on such Quarterly Interest Payment Date shall be the
      principal amount set forth in the notice of repayment, if any,
      accompanying such Officers' Certificate, such principal amount of
      Debentures shall be repaid on such Quarterly Interest Payment Date
      pursuant to Article III, and the remaining Debentures shall remain
      Outstanding and shall be payable on the immediately succeeding Quarterly
      Interest Payment Date or such earlier date on which they are redeemed
      pursuant to Section 2.1(o) or shall become due and payable pursuant to
      Section 502 of the Indenture or clause (iii) of this Section 2.1(d). The
      Outstanding Debentures shall be due and payable on any Quarterly Interest
      Payment Date except to the extent so specified in an Officers' Certificate
      delivered to the Trustee not more than 30 and no less than 10 Business
      Days immediately preceding such Quarterly Interest Payment Date.


                                      -12-


            (iii) Notwithstanding anything to the contrary set forth in this
      Third Supplemental Indenture, the principal of, and all accrued and unpaid
      interest on, all Outstanding Debentures shall be due and payable on March
      15, 2067, or if such day is not a Business Day, the following Business Day
      (the "Final Maturity Date").

            (iv) Any repayment of principal and current interest on the
      Debentures pursuant to this Section 2.1(d) on any date prior to the Final
      Maturity Date shall not affect the Company's obligations under Section
      2.1(h) with respect to the payment of deferred interest on the Debentures.
      For the purpose of clarity, it is possible that the Company may repay the
      principal and current interest on a Debenture pursuant to this Section
      2.1(d) but still be obligated to pay deferred interest on the Debenture.
      For the purposes of the definition of "Outstanding" in the Indenture, a
      Debenture, as to which principal and current interest has been repaid,
      redeemed or otherwise satisfied by the Company, shall for all purposes of
      the Indenture and this Third Supplemental Indenture, other than for
      purposes of Article XI of the Indenture and Section 2.1(d) and Article III
      of this Third Supplemental Indenture, be deemed Outstanding so long as any
      deferred interest on such Debenture remains unpaid.

            (v) Until principal and current interest on all Outstanding
      Debentures are paid in full, the principal of all Outstanding Debentures
      is automatically accelerated as provided in Section 2.1(k) or a
      declaration of acceleration pursuant to Section 502 of the Indenture
      occurs, the Company shall use Commercially Reasonable Efforts, subject to
      a Market Disruption Event:

                  (A) to raise sufficient Eligible Repayment Proceeds during a
            180-day period ending on a date not more than 30 and not less than
            10 Business Days prior to the Scheduled Maturity Date to permit
            repayment of the principal and current interest on all Outstanding
            Debentures in full on the Scheduled Maturity Date; and

                  (B) if the Company is unable for any reason to raise
            sufficient Eligible Repayment Proceeds to permit repayment in full
            of the principal amount of and current interest on all the
            Outstanding Debentures on the Scheduled Maturity Date or any
            subsequent Quarterly Interest Payment Date, to raise sufficient
            Eligible Repayment Proceeds to permit repayment of the principal and
            current interest on all Outstanding Debentures in full on the next
            Quarterly Interest Payment Date pursuant to clause (ii) of this
            Section 2.1(d).

            (vi) The Company shall, if it has not raised sufficient Eligible
      Repayment Proceeds in connection with any Repayment Date, deliver an
      Officers' Certificate to the Trustee no more than 30 and no less than 10
      Business Days in advance of such Repayment Date stating the amount of
      Eligible



                                      -13-


      Repayment Proceeds, if any, raised pursuant to clause (v) above in
      connection with such Repayment Date. Each Officers' Certificate delivered
      pursuant to this clause (vi), unless no principal amount of Debentures is
      to be repaid on the applicable Repayment Date, shall be accompanied by a
      notice of repayment pursuant to Section 3.1 setting forth the principal
      amount of the Debentures to be repaid on such Repayment Date, which amount
      shall be determined after giving effect to clause (viii) of this Section
      2.1(d).

            (vii) The Company shall be excused from its obligation to use
      Commercially Reasonable Efforts to sell Qualifying Capital Securities
      pursuant to clause (v) above if such Officers' Certificate further
      certifies that: (A) a Market Disruption Event was existing at any time
      during the period commencing 180 days prior to the date of such Officers'
      Certificate or, in the case of any Repayment Date after the Scheduled
      Maturity Date, the period commencing on the immediately preceding
      Quarterly Interest Payment Date and ending on the Business Day immediately
      preceding the date of such Officers' Certificate; and (B) either (1) the
      Market Disruption Event continued for the entire 180-day period or, in the
      case of any Repayment Date after the Scheduled Maturity Date, the period
      since the most recent Quarterly Interest Payment Date, as the case may be,
      or (2) the Market Disruption Event continued for only part of the relevant
      period, but the Company was unable after Commercially Reasonable Efforts
      to raise sufficient Eligible Repayment Proceeds during the rest of that
      period to permit repayment of the Debentures in full.

            (viii) Payments on the Debentures on any Repayment Date shall be
      applied, first, to the extent permitted by Section 2.1(i), to deferred
      interest to the extent of Eligible APM Proceeds raised pursuant to Section
      2.1(i), second, to current interest and, third, to the repayment of the
      principal of Debentures; provided that if the Company is obligated to sell
      Qualifying Capital Securities and repay any outstanding pari passu
      securities in addition to the Debentures, then on any date and for any
      period such payments shall be applied to the Debentures and those other
      pari passu securities having the same scheduled maturity date as the
      Debentures pro rata in accordance with their respective outstanding
      principal amounts and none of such payments shall be applied to any other
      pari passu securities having a later scheduled maturity date until the
      principal of and all accrued and unpaid interest on the Debentures has
      been paid in full, except to the extent permitted by clause (vii) of
      Section 2.1(g) and the first sentence of Section 2.1(h). If the Company
      has raised less than $5,000,000 of Eligible Repayment Proceeds during the
      relevant 180-day or three-month period, the Company will not be required
      to repay any Debentures on the relevant Repayment Date, but it will repay
      the applicable principal amount of the Debentures on the next Quarterly
      Interest Payment Date as of which the Company has raised at least
      $5,000,000 of Eligible Repayment Proceeds.


                                      -14-


      (e) Rate of Interest. The Debentures shall bear interest (i) from and
including March 15, 2007 to but excluding March 15, 2017 at the rate of 4.875%
per annum, computed on the basis of the number of days from and including the
date on which interest begins to accrue during the relevant Interest Period to
but excluding the scheduled date on which such interest is payable, divided by
the number of days in the relevant Interest Period (including the first day but
excluding the last day of such Interest Period), and (ii) beginning on and
including March 15, 2017, at an annual rate equal to Three-month EURIBOR plus
1.73%, computed on the basis of a 360-day year and the actual number of days
elapsed. All percentages resulting from any calculation of Three-month EURIBOR
will be rounded upward or downward, as appropriate, to the next higher or lower
one hundred-thousandth of a percentage point. Subject to Sections 2.1(g) and
(h): (x) prior to and including March 15, 2017, interest on the Debentures shall
be payable annually in arrears on March 15 of each year, beginning on March 15,
2008 (each such date, an "Annual Interest Payment Date"), and (y) after March
15, 2017, interest on the Debentures shall be payable quarterly in arrears on
March 15, June 15, September 15 and December 15 of each year, beginning on June
15, 2017, or if any such day is not a Business Day, the following Business Day,
unless such postponement would cause the day to fall in the next calendar month,
in which case it shall be brought forward to the preceding Business Day (each
such date, a "Quarterly Interest Payment Date"). In the event any Annual
Interest Payment Date falls on a day that is not a Business Day, the interest
payment due on that date will be postponed to the next day that is a Business
Day and no interest shall accrue as a result of such postponement. Any
installment of interest (or portion thereof) deferred in accordance with Section
2.1(g) or otherwise unpaid shall bear additional interest, to the extent
permitted by law, at the rate of interest then in effect from time to time on
the Debentures, from the relevant Interest Payment Date, compounded on each
subsequent Interest Payment Date, until paid in accordance with Section 2.1(h).

      (f) To Whom Interest is Payable. Interest (other than deferred interest
which shall be payable to the Persons specified pursuant to Section 2.1(g)(ii))
shall be payable to the Person in whose name the Debentures are registered on
the day (whether or not a Business Day) next preceding the Interest Payment
Date, or in the event the Debentures cease to be held in the form of one or more
Global Securities, at the close of business on the date 15 days prior to that
Interest Payment Date, whether or not a Business Day.

      (g)   Option to Defer Interest Payments.

            (i) The Company shall have the right, at any time and from time to
      time prior to the Final Maturity Date, to defer the payment of interest on
      the Debentures for one or more consecutive Interest Periods that do not
      exceed 10 years; provided that no Deferral Period shall extend beyond the
      Final Maturity Date or the earlier redemption of the Debentures. If an
      Event of Default has occurred and is continuing or the Company has given
      notice of its election to defer interest payments but the Deferral Period
      has not yet commenced or a Deferral Period is continuing, the Company
      shall not, and shall not permit any



                                      -15-


      Subsidiary, subject to the exceptions specified in clause (vii) of this
      Section 2.1(g), to: (a) declare or pay any dividends or distributions on,
      or redeem, purchase, acquire or make a liquidation payment with respect
      to, any Capital Stock of the Company, (b) make any payment of principal
      of, or interest or premium, if any, on, or repay, purchase or redeem any
      debt securities of the Company that rank pari passu with or junior to the
      Debentures or (c) make any payments with respect to any Guarantee by the
      Company of the junior subordinated debt securities of any Subsidiary if
      such Guarantee ranks pari passu with, or junior in interest to, the
      Debentures.

            (ii) At the end of any Deferral Period, the Company shall pay all
      deferred interest on the Debentures (together with compounded interest
      thereon, if any, to the extent permitted by applicable law), to the Person
      in whose name the Debentures are registered at the close of business on
      the Business Day next preceding the Interest Payment Date at the end of
      such Deferral Period or, in the event the Debentures cease to be held in
      the form of one or more Global Securities, at the close of business on the
      date 15 days prior to the end of the Deferral Period, whether or not a
      Business Day.

            (iii) Upon termination of any Deferral Period and upon the payment
      of all deferred interest and any compounded interest then due on any
      Interest Payment Date, the Company may elect to begin a new Deferral
      Period pursuant to clause (i) of this Section 2.1(g).

            (iv) The Company may elect to pay deferred interest on any Interest
      Payment Date during any Deferral Period to the extent permitted by Section
      2.1(h).

            (v) The Company shall give written notice to the Trustee and the
      Holders of the Debentures of its election to begin any Deferral Period at
      least one Business Day prior to the Regular Record Date for that Interest
      Payment Date. Notwithstanding the previous sentence, the Company's failure
      to pay any interest due within five Business Days after any Interest
      Payment Date shall automatically and without any further action by any
      Person be deemed to commence a Deferral Period.

            (vi) If any Deferral Period lasts longer than one year, the Company
      shall not, and shall cause its Subsidiaries not to purchase, redeem or
      otherwise acquire any securities ranking junior to or pari passu with any
      APM Qualifying Securities the proceeds of which were used to pay deferred
      interest during such Deferral Period until the first anniversary of the
      date on which all deferred interest has been paid, subject to the
      exceptions set forth in clause (vii) below. If the Company is involved in
      a Business Combination where immediately after the consummation of the
      Business Combination more than 50% of the surviving or resulting entity's
      Voting Stock is owned by the shareholders of the other party to



                                      -16-


      the Business Combination or Continuing Directors cease for any reason to
      constitute a majority of the directors of the surviving or resulting
      entity, then neither the restrictions set forth in this clause (vi) nor
      the provisions of Section 2.1(h) shall apply to any Deferral Period that
      is terminated on the next Interest Payment Date following the date of
      consummation of the Business Combination.

            (vii) The restrictions in clauses (i) and (vi) of this Section
      2.1(g) do not apply to (a) purchases, redemptions or other acquisitions of
      shares of the Company's Capital Stock in connection with (1) any Employee
      Benefit Plan or the Assurance Agreement or (2) a dividend reinvestment,
      stock purchase plan or other similar plan, (b) any exchange or conversion
      of any class or series of the Company's Capital Stock (or the Capital
      Stock of any Subsidiary) for any class or series of the Company's Capital
      Stock or of any class or series of Indebtedness of the Company for any
      class or series of the Company's Capital Stock, (c) the purchase of
      fractional interests in shares of the Capital Stock of the Company in
      accordance with the conversion or exchange provisions of the Company's
      Capital Stock or the security or instrument being converted or exchanged,
      (d) any declaration of a dividend in connection with any stockholders'
      right plan, or the issuance of rights, equity securities or other property
      under any stockholders' right plan, or the redemption or repurchase of
      rights in accordance with any stockholders' rights plan, (e) any dividend
      in the form of equity securities, warrants, options or other rights where
      the dividend stock or the stock issuable upon exercise of the warrants,
      options or other rights is the same stock as that on which the dividend is
      being paid or ranks pari passu with or junior to such equity securities,
      (f) any payment during a Deferral Period of current interest in respect of
      any debt securities of the Company that rank pari passu with the
      Debentures that is made pro rata to the amounts due on such pari passu
      securities and on the Debentures and any payments of deferred interest on
      such pari passu securities that, if not made, would cause the Company to
      breach the terms of the instrument governing such pari passu securities
      (provided that such payments are made in accordance with Section 2.1(h) to
      the extent it applies), (g) any payment of principal in respect of pari
      passu securities having an earlier scheduled maturity date than the
      Debentures, as required under a provision of such pari passu securities
      that is substantially the same as Section 2.1(d) or any such payment in
      respect of any such pari passu securities having the same scheduled
      maturity date as the Debentures that is made on a pro rata basis among one
      or more series of such securities and the Debentures or (h) any repayment
      or redemption of a security necessary to avoid a breach of the instrument
      governing that security.

      (h) Payment of Deferred Interest. The Company shall not pay deferred
interest (including compounded interest thereon) on the Debentures on any
Interest Payment Date during any Deferral Period from any source other than
Eligible APM Proceeds unless (x) required by an applicable regulatory authority,
(y) permitted under clause (vi) of Section 2.1(g) or (z) an Event of Default has
occurred and is continuing. Notwithstanding the foregoing, the Company may pay
current interest during a Deferral



                                      -17-


Period from any available funds. To the extent that the Company is able to raise
some, but not all, Eligible APM Proceeds to pay accrued and unpaid interest on
the applicable Interest Payment Date, such Eligible APM Proceeds shall be
allocated first to deferred payments of accrued and unpaid interest in
chronological order based on the date each payment was first deferred. If any
Indebtedness of the Company that ranks pari passu with the Debentures is
outstanding in addition to the Debentures under which the Company is obligated
to sell APM Qualifying Securities and apply the net proceeds to the payment of
deferred interest or distributions, then on any date and for any period the
amount of Eligible APM Proceeds received by the Company from such sales and
available for payment of the deferred interest and distributions shall be
applied to the Debentures and such pari passu securities on a pro rata basis up
to, in the case of Common Stock, the Stock and Warrant Issuance Cap and the
Maximum Share Number, in the case of Qualifying Warrants, the Stock and Warrant
Issuance Cap and the Maximum Warrant Number and, in the case of Qualifying
Non-Cumulative Preferred Stock, the Preferred Stock Issuance Cap (or comparable
provisions in the instruments governing such pari passu securities) in
proportion to the total amounts that are due on the Debentures and such pari
passu securities. The Company may make such pro rata payments on such pari passu
securities so long as it shall have paid or deposited with the paying agent for
the Debentures or shall have segregated and holds in trust for payment the pro
rata proceeds applicable to the Debentures that have not been paid. The "Maximum
Share Number" will initially equal 100,000,000 and the "Maximum Warrant Number"
will initially equal 100,000,000; provided that, if the number of issued and
outstanding shares of Common Stock is changed into a different number of shares
or a different class by reason of any stock split, reverse stock split, stock
dividend, reclassification, recapitalization, split-up, combination, exchange of
shares or other similar transaction, then the Maximum Share Number and the
Maximum Warrant Number shall be correspondingly adjusted in a manner reasonably
determined by the Company. The Company may, at its discretion and without the
consent of the holders of the Debentures, increase the Maximum Share Number or
the Maximum Warrant Number or both (including through the increase of the
Company's authorized share capital, if necessary) if the Company determines that
such increase is necessary to allow the Company to issue sufficient Common Stock
and/or Qualifying Warrants to pay deferred interest on the Debentures.

      (i) Alternative Payment Mechanism. Immediately following any APM
Commencement Date and until the termination of the related Deferral Period, the
Company will be required to use commercially reasonable efforts to sell APM
Qualifying Securities until the Company has raised an amount of Eligible APM
Proceeds at least equal to the aggregate amount of accrued and unpaid deferred
interest on the Debentures (including compounded interest thereon) and applied
such Eligible APM Proceeds on the next Interest Payment Date to the payment of
deferred interest (including compounded interest thereon) in accordance with
Section 2.1(h); provided that:

            (1) the foregoing obligations shall not apply (i) during the first
      five years of any Deferral Period to the extent the number of shares of
      Common Stock



                                      -18-


      issued and the number of shares of Common Stock subject to such Qualifying
      Warrants, together with the number of shares of Common Stock previously
      issued and the number of shares of Common Stock subject to Qualifying
      Warrants previously issued during such Deferral Period to pay interest on
      the Debentures pursuant to this Section 2.1(i), would, in the aggregate,
      exceed 2% of the total number of issued and outstanding shares of Common
      Stock as of the date of the Company's most recent publicly available
      consolidated financial statements on the date of determination (the "Stock
      and Warrant Issuance Cap") or (ii) to the issuance of Qualifying
      Non-Cumulative Preferred Stock at any time to the extent the Eligible APM
      Proceeds raised from such issuance, together with the Eligible APM
      Proceeds of all prior issuances of Qualifying Non-Cumulative Preferred
      Stock pursuant to this Section 2.1(i) applied to pay deferred interest on
      the Debentures, would exceed (euro)250,000,000 plus 25% of the aggregate
      principal amount of any additional Debentures at the time of their initial
      issuance pursuant to Section 2.1(b) (the "Preferred Stock Issuance Cap");

            (2) the foregoing obligations shall not apply in respect of any
      Interest Payment Date if the Company shall have provided to the Trustee
      (which the Trustee will promptly forward upon receipt to each Holder of
      the Debentures whose name appears in the Security Register) no more than
      30 and no less than 10 Business Days prior to such Interest Payment Date
      an Officers' Certificate stating that (i) a Market Disruption Event
      occurred after the immediately preceding Interest Payment Date and (ii)
      either (A) the Market Disruption Event continued for the entire period
      from the Business Day immediately following the preceding Interest Payment
      Date to the Business Day immediately preceding the date on which such
      Officers' Certificate is provided or (B) the Market Disruption Event
      continued for only part of such period but the Company was unable after
      commercially reasonable efforts to raise sufficient Eligible APM Proceeds
      during the rest of that period to pay all accrued and unpaid interest due
      on the Interest Payment Date with respect to which such Officers'
      Certificate is being delivered; and

            (3) to the extent that the Company has raised some but not all
      Eligible APM Proceeds necessary to pay all deferred interest on any
      Interest Payment Date, such Eligible APM Proceeds shall be applied in
      accordance with Section 2.1(h).

      Once the Company reaches the Stock and Warrant Issuance Cap for a Deferral
Period, the Company will not be required to issue more shares of Common Stock or
Qualifying Warrants under this Section 2.1(i) during the first five years of
such Deferral Period even if the Stock and Warrant Issuance Cap subsequently
increases because of a subsequent increase in the number of outstanding shares
of Common Stock. The Stock and Warrant Issuance Cap will cease to apply after
the fifth anniversary of the commencement of any Deferral Period, at which point
the Company must pay any deferred interest, regardless of the time at which it
was deferred pursuant to



                                      -19-


Section 2.1(h), subject to the limitations in Section 2.1(g), the Preferred
Stock Issuance Cap, the Maximum Share Number, the Maximum Warrant Number and any
Market Disruption Event. In addition, if the Stock and Warrant Issuance Cap is
reached during a Deferral Period and the Company subsequently pays all deferred
interest, the Stock and Warrant Issuance Cap will cease to apply at the
termination of such Deferral Period, reset to zero and will not apply again
unless and until the start of a new Deferral Period. The Preferred Stock
Issuance Cap shall not reset to zero even if the Company pays all deferred
interest for a Deferral Period, and the Eligible APM Proceeds from sales of
Qualifying Non-Cumulative Preferred Stock applied pursuant to Section 2.1(h)
during such Deferral Period and all prior Deferral Periods cumulate as
Qualifying Non-Cumulative Preferred Stock is issued to pay deferred interest.
The Company will not be excused from its obligations under this Section 2.1(i)
if it determines not to pursue or complete the sale of APM Qualifying Securities
due to pricing, dividend rate or dilution considerations.

      (j) Events of Default. The Debentures shall not be entitled to the
benefits of the Events of Default in clauses (1) through (4) of Section 501 of
the Indenture. The Debentures shall be entitled to the benefits of the Events of
Default in clauses (5) and (6) of Section 501 of the Indenture. The following
events shall be Events of Default with respect to the Debentures (whatever the
reason for such Event of Default and whether it shall be occasioned by the
provisions of Article Fourteen of the Indenture or be voluntary or involuntary
or be effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):

            (1) default in the payment of interest, including compounded
      interest, in full on any Debenture for a period of 30 days after the
      conclusion of a 10-year period following the commencement of any Deferral
      Period;

            (2)   default in the payment of the principal of the
      Debentures at the Final Maturity Date or upon a call for
      redemption;

Except as provided in this paragraph (j), no breach or default by the Company of
any other covenant or obligation under the Indenture or the terms of the
Debentures shall constitute an Event of Default.

      (k) Acceleration of Maturity; Rescission of Amendment. The remedies
provided to the Trustee and Holders by Section 502 of the Indenture will apply
only to an Event of Default under clause (1) of Section 2.1(j). If an Event of
Default specified in Section 501(5) or 501(6) of the Indenture occurs, then in
every such case the principal amount of all the Debentures shall automatically
become due and payable immediately, without any declaration or other action on
the part of the Trustee or any Holder. An Event of Default in clause (2) of
Section 2.1(j) shall not entitle the Holders to the benefits of Section 502 of
the Indenture.


                                      -20-


      (l) Collection of Indebtedness and Suits From Enforcement by Trustee. The
Debentures shall not have the benefits of the first paragraph of Section 503 of
the Indenture.

      (m) Limitation on Suits. For purposes of the Debentures, Section 507 of
the Indenture is hereby amended (i) by adding "or Enforcement Event" after
"Event of Default" in clause (1) thereof, and (ii) by adding at the end of
clause (2) thereof: "or the Holders of no less than a majority in principal
amount of the Outstanding Securities of that series shall have made written
request to the Trustee to institute proceedings in respect of such Enforcement
Event in its own name as Trustee hereunder."

      (n) Unconditional Right of Holders to Receive Principal, Premium and
Interest. For purposes of the Debentures, Section 508 of the Indenture is hereby
amended and restated in its entirety:

      "Notwithstanding any other provision in this Indenture or the Third
      Supplemental Indenture, the Holder of any Debenture shall have the right,
      which is absolute and unconditional, to receive payment of the principal
      of and any premium and (subject to Section 2.1(g)(ii) of the Third
      Supplemental Indenture and Section 307 of the Indenture) interest on such
      Debenture when due, it being understood (i) that, in the case of a
      Deferral Period, interest shall only become due and payable at the time
      and in the manner provided for in Sections 2.1(g) and (h) of the Third
      Supplemental Indenture, and interest shall, in the case of Section 2.1(i)
      of the Third Supplemental Indenture, only become due and payable in the
      amount determined in accordance with such Section, and (ii) that the
      extent to which Holders have a right to receive payment of principal on
      any Repayment Date is determined in accordance with Section 2.1(d) of the
      Third Supplemental Indenture. Any Holder's right to institute suit for the
      enforcement of any such payment, and such rights referred to in this
      Section 508 shall not be impaired without the consent of such Holder."

For the purposes of Section 316(b) of the Trust Indenture Act, it is understood
and agreed that no payment of principal or interest shall be deemed due and
payable under the provisions of Sections 2.1(d), 2.1(g)(ii) and 2.1(h) until the
Company has received Eligible Repayment Proceeds or Eligible APM Proceeds,
respectively, to pay such principal or interest.

      (o) Waiver of Past Defaults. Notwithstanding anything to the contrary in
Section 513 of the Indenture, for the purposes of the Debentures, a past default
that is an Event of Default under Section 501(5) or 501(6) of the Indenture
cannot be waived, with respect to the Debentures and its consequences, without
the consent of each Holder of the Debentures.

      (p) Notice of Defaults and Enforcement Events. For purposes of the
Debentures, Section 602 of the Indenture is hereby amended (i) by adding "and


                                      -21-


Enforcement Events" after "Defaults" in the header thereof, and (ii) by adding
"or Enforcement Event" after "default" in the first and second line of such
Section.

      (q) Redemption. The Debentures shall be redeemable in accordance with
Article Eleven of the Indenture, provided that the Debentures are redeemable at
any time (i) in whole but not in part at the option of the Company prior to
March 15, 2017, (ii) in whole but not in part upon the occurrence of a Rating
Agency Event or a Tax Event, (iii) in whole or in part at the option of the
Company on any Interest Payment Date on or after March 15, 2017, or (iv) in
whole but not in part, at any time at the option of the Company, if the Company
becomes obligated to pay Additional Amounts pursuant to Section 2.1(r), other
than as a result of an event that would, upon receipt of the required opinion of
counsel, constitute a Tax Event, at a "Redemption Price" equal to (1) 100% of
their principal amount plus accrued and unpaid interest to the Redemption Date
or (2) in the case of any such redemption prior to March 15, 2017 pursuant to
clause (i) or (ii) above, if greater, the applicable Make-Whole Redemption Price
plus accrued and unpaid interest to the Redemption Date. For purposes of the
Debentures, the first sentence of Section 1104 of the Indenture is replaced in
its entirety with the following: "Notice of redemption shall be given by
first-class mail, postage prepaid, mailed not less than 10 nor more than 60 days
prior to the Redemption Date, to each Holder of Securities to be redeemed, at
his address appearing in the Security Register." For purposes of the Debentures,
the following is inserted in Section 1103 after "as" and before "the Trustee":
"may be required by any national securities exchange on which the Debentures may
be listed, or, if not listed,".

      (r) Additional Amounts. The Company will, subject to the exceptions and
limitations set forth below, pay additional amounts ("Additional Amounts") on
the Debentures, including payment of principal of and interest, with respect to
any Beneficial Owner of the Debentures that is a Non-U.S. Person to ensure that
each Net Payment by the Company or any Paying Agent to that Non-U.S. Person on
the Debentures will not be less, due to the payment of U.S. withholding tax,
than the amount otherwise then due and payable.

      Notwithstanding the foregoing, the Company's foregoing obligations to pay
Additional Amounts shall not apply:

      (i) if a payment on the Debentures is reduced as a result of any tax,
assessment or governmental charge that is imposed or withheld solely by reason
of the Beneficial Owner:

      A) having, having had or being considered as having had a relationship
      with the U.S. as a citizen or resident or otherwise;

      B) being treated as present in, or engaged in, or being treated as having
      been present in or engaged in a trade or business in the U.S. or having or
      having had a permanent establishment in the U.S.;


                                      -22-



      C) being or having been a personal holding company, a foreign private
      foundation or other foreign tax-exempt organization, a passive foreign
      investment company, a controlled foreign corporation with respect to the
      U.S., or a corporation that has accumulated earnings to avoid U.S. federal
      income tax;

      D) owning or having owned, actually or constructively, 10% or more of the
      total combined voting power of all classes of the Company's Capital Stock
      that is entitled to vote; or

      E) being a bank (i) purchasing Debentures in the ordinary course of its
      lending business or (ii) that is neither (A) buying the Debentures for
      investment purposes only nor (B) buying the Debentures for resale to a
      third-party that either is not a bank or holding the Debentures for
      investment purposes only.

      (ii) to any holder that is a fiduciary, a partnership, a limited liability
company, another fiscally transparent entity or that is not the sole Beneficial
Owner of the Debentures or any portion of the Debentures, but only to the extent
that a beneficiary or settlor in relation to the fiduciary, or a Beneficial
Owner, partner or a member of the partnership, limited liability company or
other fiscally transparent entity, would not have been entitled to the payment
of an Additional Amount had such beneficiary, settlor, Beneficial Owner,
partner, or member received directly its beneficial or distributive share of the
payment;

      (iii) if a payment on the Debentures is reduced as a result of any tax,
assessment or governmental charge that is imposed or withheld by reason of the
failure of the Beneficial Owner or any other Person to comply with applicable
certification, identification, documentation or other information reporting
requirements, if compliance is required by statute or by regulation of the U.S.
or by an applicable income tax treaty to which the U.S. is a party as a
precondition to exemption from such tax, assessment or other governmental
charge;

      (iv) if a payment on the Debentures is reduced as a result of any tax,
assessment or governmental charge that is collected or imposed by any method
other than by withholding by the Company or a Paying Agent from a payment on
such Debentures;

      (v) if a payment on the Debentures is reduced as a result of any tax,
assessment or governmental charge that would not have been so imposed or
withheld but for the presentation by the Beneficial Owner of a Debenture for
payment on a date more than 30 days after the date on which such payment became
due and payable or the date on which payment thereof is duly provided for,
whichever occurs later;

      (vi) if a payment on the Debentures is reduced as a result of any estate,
inheritance, gift, sales, excise, transfer, wealth or personal property tax or
any similar tax, assessment, withholding, deduction or other governmental
charge;


                                      -23-


      (vii) if a payment on the Debentures is reduced as a result of any tax,
assessment or other governmental charge any withholding agent (within the
meaning of the applicable rules) must withhold from any payment of principal of
or interest on any Debentures, if such payment can be made without such
withholding by any other withholding agent;

      (viii) if a payment on the Debentures is reduced as a result of any tax,
assessment or other governmental charge that is required to be made pursuant to
European Council Directive 2003/48/EC or any law implementing or complying with,
or introduced to conform to, any such Directive;

      (ix) if a payment on the Debentures is reduced as a result of any
combination of the above clauses (i) through (viii) of this Section 2.1(r).

      Except as provided in this Section 2.1(r), the Company shall have no
obligation to make any payment with respect to any tax, assessment or
governmental charge imposed by any government or a political subdivision or
taxing authority.

      (s) Replacement Capital Covenant. The Company shall not modify the
Replacement Capital Covenant to (A) amend the definitions incorporated into this
Third Supplemental Indenture pursuant to Section 1.2.3(b) in a manner adverse to
the Holders or (B) impose additional restrictions on the type or amount of
Qualifying Capital Securities that the Company may include for purposes of
determining the extent to which repayment, redemption, defeasance or repurchase
of the Debentures is permitted, except with the consent of the holders of a
majority of the principal amount of Outstanding Debentures. Except as expressly
provided in the preceding sentence, the Company may modify the Replacement
Capital Covenant at any time and in any manner without the consent of the
Holders of the Debentures.

      (t) Limitation on Claims in the Event of Bankruptcy, Insolvency or
Receivership. To the extent permitted by law, each Holder, by such Holder's
acceptance of the Debentures, agrees that if a Bankruptcy Event shall occur
prior to the redemption, repayment or defeasance of such Debentures, such Holder
shall only have a claim for deferred and unpaid interest (including compounded
interest thereon) to the extent such interest (including compounded interest
thereon) relates to the earliest two years of the portion of the Deferral Period
for which interest has not so been paid.

      (u) Sinking Fund; Holder Repurchase Right. The Debentures shall not be
subject to any sinking fund or analogous provision or be redeemable at the
option of the Holders.

        (v) Forms. The Debentures shall be substantially in the form of Annex A
attached hereto, with such modifications thereto as may be approved by the
authorized officer executing the same.


                                      -24-



      (w) Subordination. The Debentures shall be subject to Article XIV of the
Indenture, subject to the following modifications:

            (i) For purposes of the Debentures, the "or" before clause (iii) of
the definition of Senior Debt in the Indenture is deleted, the following clauses
are added to the definition of Senior Debt in the Indenture after the word
"contracts," in clause (iii) for purposes of the Debentures:

      ", (iv) any subordinated or junior subordinated debt that by its terms is
      not expressly pari passu or subordinated to the Debentures, (v) any
      Guarantee of any indebtedness, obligation or security issued by any Person
      that is an Affiliate of the Company and such Person is viewed by the
      Company as a vehicle to finance its operations, and (vi) Indebtedness of
      the Company to its Subsidiaries"; and

            (ii) For purposes of the Debentures, the following provision is
added to the end of the definition of Senior Debt in the Indenture after the
word "Securities": "provided that (a) trade account payables and accrued
liabilities arising in the ordinary course of the Company's business, (b) the
Company's 6.25% Series A-1 Junior Subordinated Debentures and 5.75% Series A-2
Junior Subordinated Debentures and (c) any other indebtedness, Guarantee or
other obligation that is specifically designated as being subordinate, or not
superior, in right of payment to the Debentures, shall not be considered Senior
Debt".

            (iii) For purposes of the Debentures, the provisions of Section 1404
of the Indenture shall only apply in the case where (A) there has been an event
of default with respect to Senior Debt within the meaning of clause (i) of the
definition of Senior Debt, (B) the principal amount of such Senior Debt has been
accelerated, (C) the outstanding principal amount of Senior Debt at the time of
acceleration is at least $100,000,000 and (D) the event of default or
acceleration has not been cured, waived, or otherwise ceased to exist. In no
other case and to no other Senior Debt shall Section 1404 apply.

            (iv) The Debentures shall rank pari passu with the Company's 6.25%
Series A-1 Junior Subordinated Debentures and 5.75% Series A-2 Junior
Subordinated Debentures.

      (x) Registrar, Paying Agent, Authenticating Agent and Place of Payment.
The Company hereby appoints The Bank of New York as Security Registrar,
Authenticating Agent and Paying Agent with respect to the Debentures. The
Debentures may be surrendered for registration of transfer and for exchange at
the office or agency of the Company maintained for such purpose in the City of
New York, New York and at any other office or agency maintained by the Company
for such purpose. The Place of Payment for the Debentures shall be the Paying
Agent's office in New York, New York.

      (y) Defeasance. Until March 15, 2017, the Debentures will be subject to
Sections 1302 and 1303 of the Indenture except that all references to "U.S.
Government Obligations" shall be replaced by "Federal Republic of Germany
Obligations".


                                      -25-


                                 ARTICLE THREE

                          REPAYMENT OF THE DEBENTURES

      3.1. REPAYMENT. The Company shall, not more than 30 nor less than 10
Business Days prior to each Repayment Date (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of the principal amount of
Debentures to be repaid on such date pursuant to Section 2.1(d).

      3.2. SELECTION OF SECURITIES TO BE REPAID. If less than all the Debentures
are to be repaid on any Repayment Date, the particular Debentures to be repaid
shall be selected not more than 30 days prior to such Repayment Date by the
Trustee, from the Outstanding Debentures not previously repaid or redeemed or as
to which notice of repayment or redemption has been given, by such other method
as the Trustee may deem fair and appropriate and which may provide for the
selection for repayment of a portion of the principal amount of any Debenture,
provided that the portion of the principal amount of any Debenture not repaid
shall be in an authorized denomination (which shall not be less than the minimum
authorized denomination).

      The Trustee shall promptly notify the Company in writing of the Debentures
selected for partial repayment and the principal amount thereof to be repaid.
For all purposes hereof, unless the context otherwise requires, all provisions
relating to the repayment of Debentures shall relate, in the case of any
Debenture repaid or to be repaid only in part, to the portion of the principal
amount of such Debenture which has been or is to be repaid.

      3.3. NOTICE OF REPAYMENT. Notice of repayment shall be given by
first-class mail, postage prepaid, mailed not later than the 15th calendar day,
and not earlier than the 10th calendar day, prior to the Repayment Date, to each
Holder of Debentures to be repaid, at the address of such Holder as it appears
in the Security Register.

      Each notice of repayment shall identify the Debentures to be repaid
(including CUSIP number, if a CUSIP number has been assigned to the Debentures)
and shall state:

      (a) the Repayment Date;

      (b) if less than all Outstanding Debentures are to be repaid, the
identification (and, in the case of partial repayment, the respective principal
amounts) of the particular Debentures to be repaid;

      (c) that on the Repayment Date, the principal amount of the Debentures or
portions thereof to be repaid will become due and payable, and that interest
thereon, if any, shall cease to accrue on and after said date;


                                      -26-



      (d) whether any deferred interest shall remain outstanding on any
Debentures to be repaid, and if so, the amount of such deferred interest and
that compound interest thereon shall continue to accrue on and after said date
until paid; and

      (e) the place or places where such Debentures are to be surrendered for
payment of the principal amount thereof.

      Notice of repayment shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company and shall
be irrevocable.

      3.4. DEPOSIT OF REPAYMENT AMOUNT. Prior to 10:00 a.m., New York City time,
on the Repayment Date specified in the notice of repayment given as provided in
Section 3.3, the Company will deposit with the Trustee or with one or more
Paying Agents (or if the Company is acting as its own Paying Agent, the Company
will segregate and hold in trust as provided in Section 1003 of the Indenture)
an amount of money sufficient to pay the principal amount of, and (except to the
extent the payment of such accrued interest shall be prohibited pursuant to
Section 2.1(h)) any accrued interest (including compounded interest) on, all the
Debentures which are to be repaid on that date.

      3.5. PAYMENT OF DEBENTURES SUBJECT TO REPAYMENT. If any notice of
repayment has been given as provided in Section 3.3, the Debentures or portion
of the Debentures with respect to which such notice has been given shall become
due and payable on the Repayment Date. On presentation and surrender of such
Debentures as provided in the notice of repayment, such Debentures or the
specified portions thereof shall be paid by the Company at their principal
amount, together with accrued interest (including any compounded interest) to
the Repayment Date (except to the extent the payment of such accrued interest
shall be prohibited pursuant to Section 2.1(h)); provided that, except in the
case of a repayment in full of all Outstanding Debentures, installments of
interest whose Stated Maturity is on or prior to the Repayment Date will be
payable to the Holders of such Debentures, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Regular
Record Dates according to their terms and the provisions of Section 307 of the
Indenture and Section 2.1(g)(ii) of this Third Supplemental Indenture.

      Section 1107 of the Indenture shall apply to any Debenture repaid in part
pursuant to this Article III.

      If any Debenture subject to repayment shall not be so repaid upon
surrender thereof, the principal of such Debenture shall, until paid, bear
interest from the applicable Repayment Date at the rate prescribed therefore in
the Debenture.


                                      -27-


                                  ARTICLE FOUR

                                  MISCELLANEOUS

SECTION 4.1 RELATIONSHIP TO EXISTING INDENTURE

      The Third Supplemental Indenture is a supplemental indenture within the
meaning of the Indenture. The Indenture, as supplemented and amended by this
Third Supplemental Indenture, is in all respects ratified, confirmed and
approved and, with respect to the Debentures, the Indenture, as supplemented and
amended by this Third Supplemental Indenture, shall be read, taken and construed
as one and the same instrument.

SECTION 4.2 MODIFICATION OF THE EXISTING INDENTURE

      Except as expressly modified by this Third Supplemental Indenture, the
provisions of the Indenture shall govern the terms and conditions of the
Debentures.

SECTION 4.3 GOVERNING LAW

      This instrument shall be governed by and construed in accordance with the
laws of the State of New York.

SECTION 4.4 COUNTERPARTS

      This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

SECTION 4.5 TRUSTEE MAKES NO REPRESENTATION

      The recitals contained herein are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
Third Supplemental Indenture (except for its execution thereof and its
certificates of authentication of the Debentures).


                                      -28-


        IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed and attested all as of the day and
year first above written.

                                AMERICAN INTERNATIONAL GROUP, INC.


                                By /s/ Robert A. Gender
                                  ----------------------------------------------
                                     Name:     Robert A. Gender
                                     Title:    Vice President and Treasurer

Attest:


    /s/ Kathleen E. Shannon
- ------------------------------


                                THE BANK OF NEW YORK,
                                as Trustee


                                By /s/ Julie Salovitch-Miller
                                  ----------------------------------------------
                                     Name:     Julie Salovitch-Miller
                                     Title:    Vice President




                                                                         ANNEX A

      THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.



                       AMERICAN INTERNATIONAL GROUP, INC.

Registered No.                                                   ISIN:
E                                                           CUSIP No.:

      American International Group, Inc., a corporation duly organized and
existing under the laws of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to The Bank of New York Depository
(Nominees) Limited, or registered assigns, the principal sum of    euros (     )
on March 15, 2067, or if such day is not a Business Day, the following Business
Day (the "Final Maturity Date"); provided that the principal amount of, and all
accrued and unpaid interest on, this Security shall be payable in full on March
15, 2037, or if such day is not a Business Day, the next Business Day (the
"Scheduled Maturity Date"), or any subsequent Interest Payment Date (as
hereinafter defined) to the extent set forth in the Indenture hereinafter
referred to. As provided in the Indenture, the principal of this Security is
payable on the Scheduled Maturity Date only to the extent the Company has raised
sufficient Eligible Repayment Proceeds. The Company's obligation to raise
Eligible Repayment Proceeds is subject to certain limitations and restrictions
described in the Third Supplemental Indenture hereinafter referred to. In
connection with the issuance of this Security, the Company has entered into a
Replacement Capital Covenant that contains restrictions on the Company's ability
to repay the principal of this Security.

      This Security shall bear interest (i) from and including March 15, 2007 to
but excluding March 15, 2017 at the rate of 4.875% per annum annually in arrears
on March 15 in each year, commencing March 15, 2008 (computed on the basis of
the number of days from and including the date on which interest begins to
accrue during the relevant Interest Period to but excluding the scheduled date
on which such interest is payable, divided by the number of days in the relevant
Interest Period (including the first day but excluding the last day of such
Interest Period)), and (ii) from and including March 15, 2017, at an annual rate
equal to Three-month EURIBOR (as defined in the Indenture) plus 1.73% (computed
on the basis of a 360-day year and the actual number of days elapsed), payable
(subject to deferral as set forth herein and in the Indenture) quarterly in
arrears on March 15, June 15, September 15 and December 15 in each year,
commencing June 15, 2017, until the principal hereof is paid or made available
for payment (each such date referred to in clause (i) or (ii), an "Interest
Payment Date"). In




the event that any Interest Payment Date on or before March 15, 2017 would
otherwise fall on a day that is not a Business Day, the interest payment due on
that date shall be postponed to the next day that is a Business Day and no
interest shall accrue as a result of that postponement. In the event that any
Interest Payment Date after March 15, 2017 would otherwise fall on a day that is
not a Business Day, that Interest Payment Date shall be postponed to the next
day that is a Business Day; however, if the postponement would cause the day to
fall in the next calendar month, the Interest Payment Date will instead be
brought forward to the immediately preceding Business Day. Any installment of
interest (or portion thereof) deferred in accordance with the Indenture or
otherwise unpaid on the relevant Interest Payment Date shall bear interest, to
the extent permitted by law, at the rate of interest then in effect on this
Security, from the relevant Interest Payment Date, compounded on each subsequent
Interest Payment Date, until paid in accordance with the Indenture.

      A "Business Day" shall mean any day other than (i) a Saturday, Sunday or
other day on which banking institutions in The City of New York are authorized
or required by law or executive order to remain closed or (ii) a day that is not
a TARGET settlement day.

      The interest (other than deferred interest) so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered (i) on the day (whether or not a Business
Day) next preceding the Interest Payment Date if this Security is issued in the
form of a Global Security, or (ii) the close of business on the fifteenth day
(whether or not a Business Day) next preceding such Interest Payment Date if
this Security is not issued in the form of a Global Security. Any such interest
not so punctually paid or duly provided for (other than deferred interest) will
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in the Indenture. Any deferred interest shall be payable to the holder of record
of this Security as provided below.

      The Company shall have the right, at any time and from time to time, prior
to the Final Maturity Date to defer the payment of interest on this Security for
one or more consecutive Interest Periods that do not exceed 10 years; provided
that no Deferral Period shall extend beyond the Final Maturity Date or the
earlier redemption of the Securities of this series. As provided in the
Indenture, the payment of deferred interest is subject to the Company's ability
to raise Eligible APM Proceeds. The Company's obligation to raise Eligible APM
Proceeds is subject to certain limitations, restrictions and exceptions
described in the Third Supplemental Indenture.


                                      A-2


      At the end of any Deferral Period, the Company shall pay all deferred
interest on this Security (together with compounded interest thereon, if any, to
the extent permitted by applicable law), to the Person in whose name this
Security is registered at the close of business on the Business Day next
preceding the Interest Payment Date at the end of such Deferral Period or, in
the event this Security ceases to be held in the form of a Global Security, at
the close of business on the date 15 days prior to the end of the Deferral
Period, whether or not a Business Day. Upon termination of any Deferral Period
and upon the payment of all deferred interest and any compounded interest then
due on any Interest Payment Date, the Company may elect to begin a new Deferral
Period, subject to the above requirements and those in the Indenture. The
Company may elect to pay deferred interest on any Interest Payment Date during
any Deferral Period to the extent permitted, and shall pay deferred interest
(including compounded interest thereon) to the extent required, by the
Indenture.

      To the extent permitted by law, each Holder of this Security, by such
Holder's acceptance of this Security agrees that if a Bankruptcy Event shall
occur prior to the redemption or repayment of this Security, such Holder shall
only have a claim for deferred and unpaid interest (including compounded
interest thereon) to the extent such interest (including compounded interest
thereon) relates to the earliest two years of the portion of the Deferral Period
for which interest has not so been paid.

      The Company shall give written notice to the Trustee and the Holders of
this Security of its election to begin any Deferral Period at least one Business
Day prior to the Regular Record Date for that Interest Payment Date, provided,
however, that the Company's failure to pay any interest due within five Business
Days after any Interest Payment Date shall automatically and without any further
action by any Person be deemed to commence a Deferral Period.

      Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, and will be made in
euros; provided, however, that at the option of the Company payment of interest
may be made by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register. If the euro is unavailable
to the Company due to the imposition of exchange controls or other circumstances
beyond its control or the euro is no longer used by the member states of the
European Monetary Union that have adopted the euro as their currency or for the
settlement of transactions by public institutions of or within the international
banking community, then all payments in respect of this Security will be made in
U.S. dollars until the euro is again available to the Company or so used. The
amount payable on any date in euros will be converted into U.S. dollars on the
basis of the most recently available market exchange rate for euros as
determined by the Calculation Agent. Any payment in U.S. dollars as described
above will not be deemed a default or Enforcement Event under the Indenture.

      Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.


                                      A-3


      Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.


                                      A-4


      IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.



Dated:

                                        AMERICAN INTERNATIONAL GROUP, INC.



                                        By:
                                        ----------------------------------------
                                                 Name:
                                                 Title:


                                        Attest:
                                        ----------------------------------------
                                                  Name:
                                                  Title:

This is one of the Securities of the series designated therein referred to in
the within-mentioned Indenture.


Dated:
                                        THE BANK OF NEW YORK,
                                            as Trustee



                                        By:
                                        ----------------------------------------
                                                 Name:
                                                 Title:




                               REVERSE OF SECURITY

      This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under a Junior Subordinated Debt Indenture, dated as of March 13, 2007
(herein called the "Base Indenture"), which term shall have the meaning assigned
to it in such instrument, as supplemented by a Third Supplemental Indenture,
dated as of March 15, 2007 (herein called the "Third Supplemental Indenture"
and, together with the Base Indenture, the "Indenture"), in each case, between
the Company and The Bank of New York, as Trustee (herein called the "Trustee",
which term includes any successor trustee under the Indenture), and reference is
hereby made to the Indenture for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee, the holders of Senior Debt and the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated and delivered.
This Security is one of the series designated on the face hereof limited in
aggregate principal amount to (euro)1,000,000,000 (except for Securities
authenticated and delivered upon registration or transfer of, or exchange for,
or in lieu of, other Securities pursuant to Section 304, 305, 306, 906, or 1107
of the Base Indenture or Section 3.5 of the Third Supplemental Indenture);
provided, however, that the Company may from time to time authenticate and
deliver under the Indenture up to (euro)1,000,000,000 additional principal
amount of Securities which may accrue interest from a different date than this
Security, as may be specified pursuant to Section 301 of the Base Indenture, so
long as the company reasonably determines that the additional Securities so
authenticated and delivered will be fungible for United States federal income
tax purposes.

        All terms used in this Security that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

      The Securities of this series are subject to redemption upon not less than
10 days nor more than 60 days' prior notice by first class mail, postage
pre-paid, to each Holder of Securities to be redeemed, at any time (i) in whole
but not in part at the option of the Company prior to March 15, 2017, (ii) in
whole but not in part upon the occurrence of a Rating Agency Event or a Tax
Event, (iii) in whole or in part at the option of the Company on any Interest
Payment Date on or after March 15, 2017 or (iv) in whole but not in part at the
option of the Company if the Company becomes obligated to pay Additional
Amounts, other than as a result of an event that would, upon receipt of the
required opinion of counsel pursuant to the definition of Tax Event, constitute
a Tax Event, at a "Redemption Price" equal to (1) 100% of their principal amount
plus accrued and unpaid interest to the Redemption Date or (2) in the case of
any such redemption prior to March 15, 2017 pursuant to clause (i) or (ii)
above, if greater, the applicable Make-Whole Redemption Price plus accrued and
unpaid interest to the Redemption Date.

      In the event of a redemption of this Security in part only a new Security
or Securities of this series and of like tenor for the unredeemed portion hereof
will be issued in the name of the Holder hereof upon the cancellation thereof.


                                      A-6


The Company will, subject to the exceptions and limitations set forth in the
Third Supplemental Indenture, pay Additional Amounts on this Security with
respect to any Beneficial Owner of all or any portion of this Security that is a
Non-U.S. Person to ensure that each Net Payment by the Company or Paying Agent
on such portion of this Security        , including payment of principal and
interest, that it beneficially owns will not be less, due to any present or
future tax, assessment or governmental charge of the U.S. or a political
subdivision or taxing authority thereof or therein, imposed by withholding with
respect to the payment, than the amount that would have been payable in respect
of such portion of this Security had no withholding been required. For all
purposes of this Security, any Additional Amounts that are payable shall be
treated as interest on this Security.

      The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Debt, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such actions as
may be necessary or appropriate to effectuate the subordination so provided and
(c) appoints the Trustee as his or her attorney-in-fact for any and all such
purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice
of the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Debt, whether now outstanding or hereafter
created, incurred, assumed or Guaranteed, and waives reliance by each such
holder of Senior Debt upon said provisions.

      The Indenture contains provisions for defeasance of the entire
indebtedness of this Security at any time prior to March 15, 2017 upon
compliance with certain conditions set forth in the Indenture.

      The Securities of this series are entitled to the benefits of the Events
of Default described in Section 2.1(j) of the Third Supplemental Indenture and
the Enforcement Events as defined in the Third Supplemental Indenture. The
Holder of this Security and the Trustee shall be entitled to the remedies
provided by Section 502 of the Base Indenture only if an Event of Default
specified in clause (1) of Section 2.1(j) of the Third Supplemental Indenture
shall occur with respect to the Securities of this series. If an Event of
Default specified in Section 501(5) or Section 501(6) of the Base Indenture
shall occur with respect to the Securities of this series, then in every such
case the principal amount of all the Securities of this series shall become
automatically due and payable immediately, without any declaration or other
action on the part of the Trustee or any Holder. An Event of Default specified
in clause (2) of Section 2.1(j) of the Third Supplemental Indenture shall not
entitle the Holders to the benefits of Section 502 of the Base Indenture.

      The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of


                                      A-7


a majority in principal amount of the Securities at the time Outstanding of each
series to be affected. The Indenture also contains provisions permitting the
Holders of specified percentages in principal amount of the Securities of each
series at the time Outstanding, on behalf of the Holders of all Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Security.

      As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default or Enforcement Event
with respect to the Securities of this series, the Holders of not less than 25%
(or, in the case of an Enforcement Event, a majority) in principal amount of the
Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default or Enforcement Event, as the case may be, as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of Securities of this series at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates to the extent provided by Section 2.1(n) of the Third
Supplemental Indenture.

      As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

      The Securities of this series are issuable only in fully registered form
without coupons in denominations of (euro)50,000 and even multiples thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.


                                      A-8



      No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.

      Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

      The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires beneficial
interest in, this Security agree that, for United States federal, state and
local tax purposes, it is intended that this Security constitute indebtedness.

      THE BASE INDENTURE, THE THIRD SUPPLEMENTAL INDENTURE AND THIS SECURITY
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.



                                      A-9

                                                                     Exhibit 5.1


                     [LETTERHEAD OF SULLIVAN & CROMWELL LLP]











                                                                  March 15, 2007


American International Group, Inc.
70 Pine Street,
New York, New York 10270

Ladies and Gentlemen:

     In connection with the several purchases today by the Underwriters named in
Schedule I to the Underwriting Agreement, dated March 8, 2007 (the "Underwriting
Agreement"), between American International Group, Inc., a Delaware corporation
(the "Company"), and Citigroup Global Markets Limited, Deutsche Bank AG, London
Branch, and J.P. Morgan Securities Ltd., as Representatives of the several
Underwriters named therein (the "Underwriters"), of (Pound)750,000,000 aggregate
principal amount of the Company's 5.75% Series A-2 Junior Subordinated
Debentures (the "Securities") issued pursuant to the Junior Subordinated Debt
Indenture, dated as of March 13, 2007, as supplemented by the Second
Supplemental Indenture, dated as of March 15, 2007 (together, the "Indenture"),
between the Company and The Bank of New York,




                                                                             -2-

as Trustee (the "Trustee"), we, as counsel for the Company, have examined such
corporate records, certificates and other documents, and such questions of law,
as we have considered necessary or appropriate for the purposes of this opinion.
Upon the basis of such examination, it is our opinion that:

                  (1) The Company has been duly incorporated and is an existing
         corporation in good standing under the laws of the State of Delaware.

                  (2) The Securities constitute valid and legally binding
         obligations of the Company, subject to bankruptcy, insolvency,
         fraudulent transfer, reorganization, moratorium and similar laws of
         general applicability relating to or affecting creditors' rights and to
         general equity principles.





                                                                             -3-

     The foregoing opinion is limited to the Federal laws of the United States,
the laws of the State of New York and the General Corporation Law of the State
of Delaware, and we express no opinion as to the effect of the laws of any other
jurisdiction.

     We have relied as to certain matters upon information obtained from public
officials, officers of the Company and other sources believed by us to be
responsible, and we have assumed that the Indenture has been duly authorized,
executed and delivered by the Trustee, that the Securities conform to the
specimen thereof examined by us, that the Trustee's certificate of
authentication of the Securities has been manually signed by one of the
Trustee's authorized officers, and that the signatures on all documents examined
by us are genuine, assumptions which we have not independently verified.

     We hereby consent to the filing of this opinion as an exhibit to this
Current Report on Form 8-K. In giving such consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933.



                                Very truly yours,



                               /s/ Sullivan & Cromwell LLP

                                                                     Exhibit 5.2


                     [LETTERHEAD OF SULLIVAN & CROMWELL LLP]











                                                                  March 15, 2007


American International Group, Inc.
70 Pine Street,
New York, New York 10270

Ladies and Gentlemen:

     In connection with the several purchases today by the Underwriters named in
Schedule I to the Underwriting Agreement, dated March 8, 2007 (the "Underwriting
Agreement"), between American International Group, Inc., a Delaware corporation
(the "Company"), and Citigroup Global Markets Limited, Deutsche Bank AG, London
Branch, and J.P. Morgan Securities Ltd., as Representatives of the several
Underwriters named therein (the "Underwriters"), of (euro)1,000,000,000
aggregate principal amount of the Company's 4.875% Series A-3 Junior
Subordinated Debentures (the "Securities") issued pursuant to the Junior
Subordinated Debt Indenture, dated as of March 13, 2007, as supplemented by the
Third Supplemental Indenture, dated as of March 15, 2007 (together, the
"Indenture"), between the Company and The Bank of New York,


                                                                             -2-

as Trustee (the "Trustee"), we, as counsel for the Company, have examined such
corporate records, certificates and other documents, and such questions of law,
as we have considered necessary or appropriate for the purposes of this opinion.
Upon the basis of such examination, it is our opinion that:

                  (1) The Company has been duly incorporated and is an existing
         corporation in good standing under the laws of the State of Delaware.

                  (2) The Securities constitute valid and legally binding
         obligations of the Company, subject to bankruptcy, insolvency,
         fraudulent transfer, reorganization, moratorium and similar laws of
         general applicability relating to or affecting creditors' rights and to
         general equity principles.


                                                                             -3-

     The foregoing opinion is limited to the Federal laws of the United States,
the laws of the State of New York and the General Corporation Law of the State
of Delaware, and we express no opinion as to the effect of the laws of any other
jurisdiction.

     We have relied as to certain matters upon information obtained from public
officials, officers of the Company and other sources believed by us to be
responsible, and we have assumed that the Indenture has been duly authorized,
executed and delivered by the Trustee, that the Securities conform to the
specimen thereof examined by us, that the Trustee's certificate of
authentication of the Securities has been manually signed by one of the
Trustee's authorized officers, and that the signatures on all documents examined
by us are genuine, assumptions which we have not independently verified.

     We hereby consent to the filing of this opinion as an exhibit to this
Current Report on Form 8-K. In giving such consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933.



                                Very truly yours,



                               /s/ Sullivan & Cromwell LLP

                                                March 15, 2007


American International Group, Inc.
70 Pine Street
New York, NY 10270

Ladies and Gentlemen:

            As special tax counsel to American International Group, Inc. in
connection with the issuance of 5.75% Series A-2 Junior Subordinated Debentures,
as described in the prospectus supplement, dated March 8, 2007, (the "Prospectus
Supplement"), we hereby confirm to you our opinion as set forth under the
heading "Certain United States Federal Income Tax Consequences" in the
Prospectus Supplement, subject to the limitations set forth therein.

            We hereby consent to the filing of this opinion as an exhibit to the
Prospectus Supplement and to the reference to us under the heading "Certain
Federal Income Tax Consequences" in the Prospectus Supplement. In giving such
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933.

                                         Very truly yours,


                                         /s/ SULLIVAN & CROMWELL LLP

                                                March 15, 2007


American International Group, Inc.
70 Pine Street
New York, NY 10270

Ladies and Gentlemen:

            As special tax counsel to American International Group, Inc. in
connection with the issuance of 4.875% Series A-3 Junior Subordinated
Debentures, as described in the prospectus supplement, dated March 8, 2007, (the
"Prospectus Supplement"), we hereby confirm to you our opinion as set forth
under the heading "Certain United States Federal Income Tax Consequences" in the
Prospectus Supplement, subject to the limitations set forth therein.

            We hereby consent to the filing of this opinion as an exhibit to the
Prospectus Supplement and to the reference to us under the heading "Certain
Federal Income Tax Consequences" in the Prospectus Supplement. In giving such
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933.

                                         Very truly yours,


                                         /s/ SULLIVAN & CROMWELL LLP

          REPLACEMENT CAPITAL COVENANT, dated as of March 15, 2007 (this
"Replacement Capital Covenant"), by American International Group, Inc., a
Delaware corporation (together with its successors and assigns, including any
entity surviving or resulting from a merger, consolidation, binding share
exchange, sale, lease or transfer of all or substantially all of the assets or
other business combination, the "Corporation"), in favor of and for the benefit
of each Covered Debtholder (as defined below).

                                    RECITALS

          A. On the date hereof, the Corporation is issuing (pounds) 750,000,000
aggregate principal amount of its Series A-2 Junior Subordinated Debentures due
March 15, 2067 (the "Debentures").

          B. This Replacement Capital Covenant is the "Replacement Capital
Covenant" referred to in the Prospectus Supplement, dated March 8, 2007 (the
"Prospectus Supplement"), relating to the Debentures.

          C. The Corporation is entering into and disclosing the content of this
Replacement Capital Covenant in the manner provided below with the intent that
the covenants provided for in this Replacement Capital Covenant be enforceable
by each Covered Debtholder and that the Corporation be estopped from
disregarding the covenants in this Replacement Capital Covenant, in each case to
the fullest extent permitted by applicable law.

          D. The Corporation acknowledges that reliance by each Covered
Debtholder upon the covenants in this Replacement Capital Covenant is reasonable
and foreseeable by the Corporation and that, were the Corporation to disregard
its covenants in this Replacement Capital Covenant, each Covered Debtholder
would have sustained an injury as a result of its reliance on such covenants.

          NOW, THEREFORE, the Corporation hereby covenants and agrees as follows
in favor of and for the benefit of each Covered Debtholder.

          SECTION 1. Definitions. Capitalized terms used in this Replacement
Capital Covenant (including the Recitals) have the meanings set forth in
Schedule I hereto.

          SECTION 2. Limitations on Redemption and Repurchase of Debentures. The
Corporation hereby promises and covenants to and for the benefit of each Covered
Debtholder that the Corporation shall not repay, redeem, defease or purchase,
and no Subsidiary of the Corporation shall purchase, all or any part of the
Debentures prior to March 15, 2047, except to the extent that the principal
amount repaid or defeased or the applicable redemption or purchase price does
not exceed the sum of the following amounts:

          (i) the Applicable Percentage of the aggregate amount of (a) the net
     cash proceeds the Corporation and its Subsidiaries have received from the
     sale of Common Stock and rights to acquire Common Stock to Persons other
     than the Corporation and its Subsidiaries, (b) the Market Value of any
     Common Stock (or rights to acquire Common Stock) the Corporation and its
     Subsidiaries have delivered as consideration for property or assets in an
     arms length transaction and (c) the Market Value of any Common Stock that
     the Corporation and its Subsidiaries have issued to persons other than the
     Corporation and its Subsidiaries in connection with the conversion of any
     convertible or exchangeable securities, other than securities for which the
     Corporation or any of its Subsidiaries has received equity credit from any
     NRSRO, in each case



     since the most recent Measurement Date (without double counting proceeds
     received in any prior Measurement Period); plus

          (ii) the Applicable Percentage of the aggregate amount of net cash
     proceeds the Corporation and its Subsidiaries have received within a
     Measurement Period (without double counting proceeds received in any prior
     Measurement Period) from the sale of Mandatorily Convertible Preferred
     Stock and Debt Exchangeable for Equity to Persons other than the
     Corporation and its Subsidiaries; plus

          (iii) the Applicable Percentage of the aggregate amount of net cash
     proceeds that the Corporation and its Subsidiaries have received within a
     Measurement Period (without double counting proceeds received in any prior
     Measurement Period) from the sale of Qualifying Capital Securities to
     persons other than the Corporation and its Subsidiaries:

provided that the limitations in this Section 2 shall not restrict the
repayment, redemption or other acquisition of any Debentures that the
Corporation has previously defeased in accordance with this Replacement Capital
Covenant.

          SECTION 3. Covered Debt. (a) The Corporation represents and warrants
that the Initial Covered Debt is Eligible Senior Debt.

          (b) On or during the 30-day period immediately preceding any
Redesignation Date with respect to the Covered Debt then in effect, the
Corporation shall identify the series of Eligible Debt that will become the
Covered Debt on and after such Redesignation Date in accordance with the
following procedures:

          (i) the Corporation shall identify each series of its then outstanding
     unsecured, long-term indebtedness for money borrowed that is Eligible Debt;

          (ii) if only one series of the Corporation's then outstanding
     unsecured, long-term indebtedness for money borrowed is Eligible Debt, such
     series shall become the Covered Debt commencing on the related
     Redesignation Date;

          (iii) if the Corporation has more than one outstanding series of
     unsecured, long-term indebtedness for money borrowed that is Eligible Debt,
     then the Corporation shall identify the series that has the latest
     occurring final maturity date as of the date the Corporation is applying
     the procedures in this Section 3(b) and such series shall become the
     Covered Debt on the related Redesignation Date;

          (iv) the series of outstanding long-term indebtedness for money
     borrowed that is determined to be Covered Debt pursuant to clause (ii) or
     (iii) above shall be the Covered Debt for purposes of this Replacement
     Capital Covenant for the period commencing on the related Redesignation
     Date and continuing to but not including the Redesignation Date as of which
     a new series of outstanding unsecured, long-term indebtedness is next
     determined to be the Covered Debt pursuant to the procedures set forth in
     this Section 3(b); and

          (v) in connection with such identification of a new series of Covered
     Debt, the Corporation shall, as provided for in Section 3(c), give a notice
     and file with the Commission a Current Report on Form 8-K under the
     Securities Exchange Act including or incorporating by


                                        2



     reference this Replacement Capital Covenant as an exhibit within the time
     frame provided for in such section.

          (c) Notice. In order to give effect to the intent of the Corporation
described in Recital C, the Corporation covenants that (i) simultaneously with
the execution of this Replacement Capital Covenant or as soon as practicable
after the date hereof, it shall (x) give notice to the Holders of the Initial
Covered Debt, in the manner provided in the indenture relating to the Initial
Covered Debt, of this Replacement Capital Covenant and the rights granted to
such Holders hereunder and (y) file a copy of this Replacement Capital Covenant
with the Commission as an exhibit to a Current Report on Form 8-K under the
Securities Exchange Act; (ii) so long as the Corporation is a reporting company
under the Securities Exchange Act, the Corporation will include in each Annual
Report on Form 10-K filed with the Commission under the Securities Exchange Act
a description of the covenant set forth in Section 2 and identify the series of
long-term indebtedness for borrowed money that is Covered Debt as of the date
such Form 10-K is filed with the Commission; (iii) if a series of the
Corporation's long-term indebtedness for money borrowed (1) becomes Covered Debt
or (2) ceases to be Covered Debt, the Corporation will give notice of such
occurrence within 30 days to the holders of such long-term indebtedness for
money borrowed in the manner provided for in the indenture, fiscal agency
agreement or other instrument under which such long-term indebtedness for money
borrowed was issued and report such change in a Current Report on Form 8-K,
which must include or and incorporate by reference this Replacement Capital
Covenant, and in the Corporation's next Quarterly Report on Form 10 Q or Annual
Report on Form 10-K, as applicable; (iv) if, and only if, the Corporation ceases
to be a reporting company under the Securities Exchange Act, the Corporation
will post on its website the information otherwise required to be included in
Securities Exchange Act filings pursuant to clauses (ii) and (iii) of this
Section 3(c); and (v) promptly upon request by any Holder of Covered Debt, the
Corporation will provide such Holder with an executed copy of this Replacement
Capital Covenant.

          SECTION 4. Termination, Amendment and Waiver. (a) The obligations of
the Corporation pursuant to this Replacement Capital Covenant shall remain in
full force and effect until the earliest date (the "Termination Date") to occur
of (i) March 15, 2047, (ii) the date, if any, on which the Holders of a majority
of the then outstanding principal amount of the then-effective series of Covered
Debt consent or agree in writing to the termination of this Replacement Capital
Covenant and the obligations of the Corporation hereunder and (iii) the date on
which the Corporation ceases to have any series of outstanding Eligible Senior
Debt or Eligible Subordinated Debt (in each case without giving effect to the
rating requirement in clause (b) of the definition of each such term). Moreover,
if an event of default under the Supplemental Indenture resulting in an
acceleration of the Debentures occurs, this Replacement Capital Covenant shall,
without any further action, immediately terminate upon such acceleration. From
and after the Termination Date, the obligations of the Corporation pursuant to
this Replacement Capital Covenant shall be of no further force and effect.

          (b) This Replacement Capital Covenant may be amended or supplemented
from time to time by a written instrument signed by the Corporation with the
consent of the Holders of a majority of the then outstanding principal amount of
the then-effective series of Covered Debt, provided that this Replacement
Capital Covenant may be amended or supplemented from time to time by a written
instrument signed only by the Corporation (and without the consent of the
Holders of the then-effective series of Covered Debt) if any of the following
apply (it being understood that any such amendment or supplement may fall into
one or more of the following): (i) the effect of such amendment or supplement is
solely to impose additional restrictions on, or eliminate certain of, the types
of securities qualifying as Replacement Capital Securities and an officer of the
Corporation has delivered to the Holders of the then-effective series of Covered
Debt in the manner provided for in the indenture, fiscal agency agreement or


                                        3



other instrument with respect to such Covered Debt a written certificate to that
effect, (ii) such amendment or supplement is not materially adverse to the
rights of the Covered Debtholders hereunder and an officer of the Corporation
has delivered to the Holders of the then-effective series of Covered Debt in the
manner provided for in the indenture, fiscal agency agreement or other
instrument with respect to such Covered Debt a written certificate stating that,
in his or her determination, such amendment or supplement is not materially
adverse to the Covered Debtholders, or (iii) such amendment or supplement
eliminates Common Stock and/or Mandatorily Convertible Preferred Stock as
Replacement Capital Securities if, in the case of this clause (iii), the
Corporation has been advised in writing by a nationally recognized independent
accounting firm that there is more than an insubstantial risk that the failure
to do so would result in a reduction in the Corporation's earnings per share as
calculated for financial reporting purposes.

          (c) For purposes of Sections 4(a) and 4(b), the Holders whose consent
or agreement is required to terminate, amend or supplement the obligations of
the Corporation under this Replacement Capital Covenant shall be the Holders of
the then-effective Covered Debt as of a record date established by the
Corporation that is not more than 30 days prior to the date on which the
Corporation proposes that such termination, amendment or supplement becomes
effective.

          SECTION 5. Miscellaneous. (a) This Replacement Capital Covenant shall
be governed by and construed in accordance with the laws of the State of New
York.

          (b) This Replacement Capital Covenant shall be binding upon the
Corporation and its successors and assigns and shall inure to the benefit of the
Covered Debtholders as they exist from time-to-time (it being understood and
agreed by the Corporation that any Person who is a Covered Debtholder at the
time such Person acquires, holds or sells Covered Debt shall retain its status
as a Covered Debtholder for so long as the series of long-term indebtedness for
borrowed money owned by such Person is Covered Debt and, if such Person
initiates a claim or proceeding to enforce its rights under this Replacement
Capital Covenant after the Corporation has violated its covenants in Section 2
and before the series of long-term indebtedness for money borrowed held by such
Person is no longer Covered Debt, such Person's rights under this Replacement
Capital Covenant shall not terminate by reason of such series of long-term
indebtedness for money borrowed no longer being Covered Debt). Other than the
Covered Debtholders as provided in the previous sentence, no other Person shall
have any rights under this Replacement Capital Covenant or be deemed a third
party beneficiary of this Replacement Capital Covenant. In particular, no holder
of the Debentures is a third party beneficiary of this Replacement Capital
Covenant, it being understood that such holders may have rights under the
Subordinated Indenture.

          (c) All demands, notices, requests and other communications to the
Corporation under this Replacement Capital Covenant shall be deemed to have been
duly given and made if in writing and (i) if served by personal delivery upon
the Corporation, on the day so delivered (or, if such day is not a Business Day,
the next succeeding Business Day) or (ii) if delivered by registered post or
certified mail, return receipt requested, or sent to the Corporation by a
national or international courier service, on the date of receipt by the
Corporation (or, if such date of receipt is not a Business Day, the next
succeeding Business Day), and in each case to the Corporation at the address set
forth below, or at such other address as the Corporation may thereafter notify
to Covered Debtholders or post on its website as the address for notices under
this Replacement Capital Covenant:

          American International Group, Inc.
          70 Pine Street
          New York, New York 10270
          Attention: Secretary


                                        4



          IN WITNESS WHEREOF, the Corporation has caused this Replacement
Capital Covenant to be executed by its duly authorized officer, as of the day
and year first above written.

                                        AMERICAN INTERNATIONAL GROUP, INC.


                                        By: /s/ Robert A. Gender
                                            ------------------------------------
                                        Name:   Robert A. Gender
                                              ----------------------------------
                                        Title:  Vice President and Treasurer
                                               ---------------------------------



                                                                         ANNEX I

                                   DEFINITIONS

          "Alternative Payment Mechanism" means, with respect to any securities
or combination of securities (together in this definition, "securities"),
provisions in the related transaction documents that require the Corporation to
issue (or use commercially reasonable efforts to issue) one or more types of APM
Qualifying Securities raising eligible proceeds at least equal to the deferred
Distributions on such securities and apply the proceeds to pay unpaid
Distributions on such securities, commencing on the earlier of (x) the first
Distribution Date after commencement of a deferral period on which the
Corporation pays current Distributions on such securities and (y) the fifth
anniversary of the commencement of such deferral period, and that

          (a) define "eligible proceeds" to mean, for purposes of such
     Alternative Payment Mechanism, the net proceeds (after underwriters' or
     placement agents' fees, commissions or discounts and other expenses
     relating to the issuance or sale of the relevant securities, where
     applicable) that the Corporation has received during the 180 days prior to
     the related Distribution Date from the issuance of APM Qualifying
     Securities to persons that are not Subsidiaries of the Corporation up to
     the Preferred Cap in the case of APM Qualifying Securities that are
     Qualifying Non-Cumulative Preferred Stock;

          (b) permit the Corporation to pay current Distributions on any
     Distribution Date out of any source of funds but (x) require the
     Corporation to pay deferred Distributions only out of eligible proceeds and
     (y) prohibit the Corporation from paying deferred Distributions out of any
     source of funds other than eligible proceeds, unless otherwise required at
     the time by any applicable regulatory authority or if an event of default
     has occurred and is continuing;

          (c) if deferral of Distributions continues for more than one year,
     require the Corporation not to redeem or repurchase any of its securities
     ranking junior to or pari passu with any APM Qualifying Securities the
     proceeds of which were used to settle deferred interest during the relevant
     deferral period until at least one year after all deferred Distributions
     have been paid, except where non-payment would cause the Corporation to
     breach the terms of the relevant instrument;

          (d) limit the obligation of the Corporation to issue (or use
     commercially reasonable efforts to issue) APM Qualifying Securities up to:

               (i) in the case of APM Qualifying Securities that are Common
          Stock or rights to purchase Common Stock, during the first five years
          of any deferral period (x) an amount from the issuance thereof
          pursuant to the Alternative Payment Mechanism equal to 2% of the
          Corporation's most recently published market capitalization or (y) a
          number of shares of Common Stock or rights to purchase a number of
          shares of Common Stock not in excess of 2% of the number of shares of
          outstanding Common Stock set forth in the Corporation's most recently
          published financial statements (the amount in clause (x) or (y) is
          referred to as the "Common Cap"); and

               (ii) in the case of APM Qualifying Securities that are Qualifying
          Non-Cumulative Perpetual Preferred Stock, an amount from the issuance
          thereof pursuant to the related Alternative Payment Mechanism
          (including at any point in time from all prior issuances thereof
          pursuant to such Alternative Payment Mechanism) equal to 25% of the
          liquidation or principal amount of the securities that are the subject
          of the related Alternative Payment Mechanism (the "Preferred Cap");



          (e) permit the Corporation, at its option, to impose a limitation on
     the issuance of APM Qualifying Securities consisting of Common Stock and
     rights to purchase Common Stock, in each case to a maximum issuance cap to
     be set at the Corporation's discretion and otherwise substantially similar
     to the "maximum share number" and "maximum warrant number", respectively,
     each as defined in the Prospectus Supplement, provided that such maximum
     issuance cap will be subject to the Corporation's agreement to use
     commercially reasonable efforts to increase the maximum issuance cap when
     reached and (i) simultaneously satisfy its future fixed or contingent
     obligations under other securities and derivative instruments that provide
     for settlement or payment in shares of Common Stock or (ii) if the
     Corporation cannot increase the maximum issuance cap as contemplated in the
     preceding clause, by requesting its board of directors to adopt a
     resolution for shareholder vote at the next occurring annual shareholders
     meeting to increase the number of shares of the Corporation's authorized
     common stock for purposes of satisfying the Corporation's obligations to
     pay deferred distributions;

          (f) in the case of securities other than Non-Cumulative Perpetual
     Preferred Stock, include a Bankruptcy Claim Limitation Provision; and

          (g) permit the Corporation, at its option, to provide that if the
     Corporation is involved in a merger, consolidation, amalgamation, binding
     share exchange or conveyance, transfer or lease of assets substantially as
     an entirety to any other person or a similar transaction (a "business
     combination") where immediately after the consummation of the business
     combination more than 50% of the surviving or resulting entity's voting
     stock is owned by the shareholders of the other party to the business
     combination or continuing directors cease for any reason to constitute a
     majority of the directors of the surviving or resulting entity, then
     clauses (a), (b) and (c) above will not apply to any deferral period that
     is terminated on the next interest payment date following the date of
     consummation of the business combination. "Continuing director" means a
     director who was a director of the Corporation at the time the definitive
     agreement relating to the transaction was approved by the Corporation's
     board of directors;

provided (and it being understood) that:

          (1) the Corporation shall not be obligated to issue (or use
     commercially reasonable efforts to issue) APM Qualifying Securities for so
     long as a Market Disruption Event has occurred and is continuing;

          (2) if, due to a Market Disruption Event or otherwise, the Corporation
     is able to raise and apply some, but not all, of the eligible proceeds
     necessary to pay all deferred Distributions on any Distribution Date, the
     Corporation will apply any available eligible proceeds to pay accrued and
     unpaid Distributions on the applicable Distribution Date in chronological
     order subject to the Common Cap, the Preferred Cap, and any maximum
     issuance cap referred to above, as applicable; and

          (3) if the Corporation has outstanding more than one class or series
     of securities under which it is obligated to sell a type of APM Qualifying
     Securities and apply some part of the proceeds to the payment of deferred
     Distributions, then on any date and for any period the amount of net
     proceeds received by the Corporation from those sales and available for
     payment of deferred Distributions on such securities shall be applied to
     such securities on a pro rata basis up to the Common Cap, the Preferred Cap
     and any maximum issuance cap referred to above, as applicable, in
     proportion to the total amounts that are due on such securities.


                                       I-2



          "APM Qualifying Securities" means, with respect to an Alternative
Payment Mechanism, one or more of the following (as designated in the
transaction documents for the Qualifying Capital Securities that include an
Alternative Payment Mechanism):

          (i) Common Stock; or

          (ii) rights to purchase Common Stock; and

          (iii) Qualifying Non-Cumulative Preferred Stock;

provided that if the APM Qualifying Securities for any Alternative Payment
Mechanism include both Common Stock and rights to purchase Common Stock, such
Alternative Payment Mechanism may permit, but need not require, the Corporation
to issue rights to purchase Common Stock.

          "Applicable Percentage" means:

          (i) in the case of any Common Stock or rights to acquire Common Stock,
     a percentage equivalent of 1 divided by (a) 75% with respect to any
     repayment, redemption or purchase prior to March 15, 2017, (b) 50% with
     respect to any repayment, redemption or purchase on or after March 15, 2017
     and prior to March 15, 2037 and (c) 25% with respect to any repayment,
     redemption or purchase on or after March 15, 2037 (for example, prior to
     March 15, 2017, the Applicable Percentage in the case of such securities
     will be 133.33%);

          (ii) in the case of any Mandatorily Convertible Preferred Stock, a
     percentage equivalent of 1 divided by (a) 75% with respect to any
     repayment, redemption or purchase prior to March 15, 2017, (b) 50% with
     respect to any repayment, redemption or purchase on or after March 15, 2017
     and prior to March 15, 2037 and (c) 25% with respect to any repayment,
     redemption or purchase on or after March 15, 2037 (for example, prior to
     March 15, 2017, the Applicable Percentage in the case of such securities
     will be 133.33%);

          (iii) in the case of any Debt Exchangeable for Equity or any
     Qualifying Capital Securities described in clause (i) of the definition of
     that term, a percentage equivalent of 0.75 divided by (a) 75% with respect
     to any repayment, redemption or purchase prior to March 15, 2017, (b) 50%
     with respect to any repayment, redemption or purchase on or after March 15,
     2017 and prior to March 15, 2037 and (c) 25% with respect to any repayment,
     redemption or purchase on or after March 15, 2037 (for example, on or after
     March 15, 2037 and prior to March 15, 2037, the Applicable Percentage in
     the case of such securities will be 150%);

          (iv) in the case of any Qualifying Capital Securities described in
     clause (ii) of the definition of that term, a percentage equivalent of 0.50
     divided by (a) 50% with respect to any repayment, redemption or purchase on
     or after March 15, 2017 and prior to March 15, 2037 and (b) 25% with
     respect to any repayment, redemption or purchase on or after March 15, 2037
     (for example, after March 15, 2037, the Applicable Percentage in the case
     of such securities will be 200%); and

          (v) in the case of any Qualifying Capital Securities described in
     clause (iii) of the definition of that term, 100%.

          "Assurance Agreement" means the Assurance Agreement, by the
Corporation in favor of eligible employees dated as of June 27, 2005, relating
to certain obligations of Starr International


                                       I-3



Company, Inc. (as such agreement may be amended, supplemented, extended,
modified or replaced from time to time).

          "Bankruptcy Claim Limitation Provision" means, with respect to any
securities or combination of securities that have an Alternative Payment
Mechanism or a Mandatory Trigger Provision (together in this definition,
"securities"), provisions that, upon any liquidation, dissolution, winding up or
reorganization or in connection with any insolvency, receivership or proceeding
under any bankruptcy law with respect to the issuer, limit the claim of the
holders of such securities to Distributions that accumulate during (A) any
deferral period, in the case of securities that have an Alternative Payment
Mechanism or (B) any period in which the Corporation fails to satisfy one or
more financial tests set forth in the terms of such securities or related
transaction agreements, in the case of securities having a Mandatory Trigger
Provision, to:

          (i) in the case of securities having an Alternative Payment Mechanism
     or Mandatory Trigger Provision with respect to which the APM Qualifying
     Securities do not include Qualifying Non-Cumulative Preferred Stock, 25% of
     the stated or principal amount of such securities then outstanding; and

          (ii) in the case of any other securities, the sum of (x) the amount of
     accumulated and unpaid Distributions (including compounded amounts) that
     relate to the earliest two years of the portion of the deferral period for
     which Distributions have not been paid and (y) an amount equal to the
     excess, if any, of the Preferred Cap over the aggregate amount of net
     proceeds from the sale of Qualifying Non-Cumulative Preferred Stock that
     the issuer has applied to pay such Distributions pursuant to the
     Alternative Payment Mechanism or the Mandatory Trigger Provision, provided
     that the holders of such securities are deemed to agree that, to the extent
     the remaining claim exceeds the amount set forth in subclause (x), the
     amount they receive in respect of such excess shall not exceed the amount
     they would have received had such claim ranked pari passu with the
     interests of the holders, if any, of Qualifying Non-Cumulative Preferred
     Stock.

          "Business Day" means each day other than (a) a Saturday or Sunday or
(b) a day on which banking institutions in New York, New York are authorized or
required by law or executive order to remain closed or, on or after March 15,
2017, a day that is not a London business day. A "London business day" is any
day on which dealings in U.S. dollars are transacted in the London interbank
market.

          "Commission" means the United States Securities and Exchange
Commission or any successor agency.

          "Common Cap" has the meaning specified in the definition of
Alternative Payment Mechanism.

          "Common Stock" means any equity securities (including equity
securities held as treasury shares) or rights to acquire equity securities of
the Corporation that have no preference in the payment of dividends or amounts
payable upon the liquidation, dissolution or winding up of the Corporation
(including a security that tracks the performance of, or relates to the results
of, a business, unit or division of the Corporation), and any securities that
have no preference in the payment of dividends or amounts payable upon
liquidation, dissolution or winding up and are issued in exchange therefor in
connection with a merger, consolidation, binding share exchange, business
combination, recapitalization or other similar event.


                                       I-4



          "Corporation" has the meaning specified in the introduction to this
instrument.

          "Covered Debt" means (a) at the date of this Replacement Capital
Covenant and continuing to but not including the first Redesignation Date, the
Initial Covered Debt and (b) thereafter, commencing with each Redesignation Date
and continuing to but not including the next succeeding Redesignation Date, the
Eligible Debt identified pursuant to Section 3(b) as the Covered Debt for such
period.

          "Covered Debtholder" means each Person (whether a Holder or a
beneficial owner holding through a participant in a clearing agency) that buys,
holds or sells long-term indebtedness for money borrowed of the Corporation
during the period that such long-term indebtedness for money borrowed is Covered
Debt, provided that, except as provided in Section 5(b), a Person who has sold
all of its right, title and interest in Covered Debt shall cease to be a Covered
Debtholder at the time of such sale if, at such time, the Corporation has not
breached or repudiated, or threatened to breach or repudiate, its obligations
hereunder.

          "Debentures" has the meaning specified in Recital A.

          "Debt Exchangeable for Equity" means a security or combination of
securities (together in this definition, "securities") that:

          (i) gives the holder a beneficial interest in (a) debt securities of
     the Corporation that include a provision requiring it to issue (or use
     commercially reasonable efforts to issue) one or more types of APM
     Qualifying Securities raising proceeds at least equal to the deferred
     distributions on such subordinated debt securities commencing not later
     than two years after the Corporation first defers distributions on such
     securities and that are the most junior subordinated debt of the
     Corporation (or rank pari passu with the most junior subordinated debt of
     the Corporation) and (b) a fractional interest in a stock purchase contract
     for Qualifying Non-Cumulative Preferred Stock;

          (ii) provides that the holders directly or indirectly grant to the
     Corporation a security interest in such debt securities and their proceeds
     (including any substitute collateral permitted under the transaction
     documents) to secure the holders' direct or indirect obligation to purchase
     stock pursuant to such stock purchase contracts;

          (iii) includes a remarketing feature pursuant to which such debt
     securities of the Corporation are remarketed to new holders commencing
     within five years from the date of issuance of the security or earlier in
     the event of an early settlement event based on (a) the capital ratios of
     the Corporation or (b) the dissolution of the Corporation;

          (iv) provides for the proceeds raised in the remarketing to be used to
     purchase Qualifying Non-Cumulative Preferred Stock under the stock purchase
     contracts and, if there has not been a successful remarketing by the first
     Distribution Date that is six years after the date of issuance of such debt
     securities of the Corporation, provides that the stock purchase contracts
     will be settled by the Corporation exercising its remedies as a secured
     party with respect to such debt securities or other collateral directly or
     indirectly pledged by holders in the Debt Exchangeable for Equity;


                                      I-5


          (v) includes a Qualifying Replacement Capital Covenant, provided that
     such replacement capital covenant will apply to such securities and to the
     Qualifying Non-Cumulative Preferred Stock and will not include Debt
     Exchangeable for Equity as a replacement security for such securities or
     the Qualifying Non-Cumulative Preferred Stock; and

          (vi) after the issuance of such Qualifying Non-Cumulative Preferred
     Stock, provides the holder of the security with a beneficial interest in
     such Qualifying Non-Cumulative Preferred Stock.

          "Distribution Date" means, as to any securities or combination of
securities, the dates on which Distributions on such securities are scheduled to
be made.

          "Distribution Period" means, as to any securities or combination of
securities, each period from and including a Distribution Date for such
securities to but not including the next succeeding Distribution Date for such
securities.

          "Distributions" means, as to a security or combination of securities,
dividends, interest or other income distributions to the holders or beneficial
owners thereof that are not Subsidiaries of the Corporation.

          "Eligible Debt" means, at any time, Eligible Subordinated Debt or, if
no Eligible Subordinated Debt is then outstanding, Eligible Senior Debt.

          "Eligible Senior Debt" means, at any time in respect of any issuer,
each series of outstanding long-term indebtedness for money borrowed of such
issuer that (a) upon a bankruptcy, liquidation, dissolution or winding up of the
issuer, ranks most senior among the issuer's then outstanding classes of
unsecured indebtedness for money borrowed, (b) is then assigned a rating by at
least one NRSRO (provided that this clause (b) shall apply on a Redesignation
Date only if on such date the issuer has outstanding senior long-term
indebtedness for money borrowed that satisfies the requirements of clauses (a),
(c) and (d) that is then assigned a rating by at least one NRSRO), (c) has an
outstanding principal amount of not less than $250,000,000, and (d) was issued
through or with the assistance of a commercial or investment banking firm or
firms acting as underwriters, initial purchasers or placement or distribution
agents. For purposes of this definition as applied to securities with a CUSIP
number, each issuance of long-term indebtedness for money borrowed that has (or,
if such indebtedness is held by a trust or other intermediate entity established
directly or indirectly by the issuer, the securities of such intermediate entity
that have) a separate CUSIP number shall be deemed to be a series of the
issuer's long-term indebtedness for money borrowed that is separate from each
other series of such indebtedness.

          "Eligible Subordinated Debt" means, at any time in respect of any
issuer, each series of the issuer's then-outstanding long-term indebtedness for
money borrowed that (a) upon a bankruptcy, liquidation, dissolution or winding
up of the issuer, ranks subordinate to the issuer's then outstanding series of
unsecured indebtedness for money borrowed that ranks most senior, (b) is then
assigned a rating by at least one NRSRO (provided that this clause (b) shall
apply on a Redesignation Date only if on such date the issuer has outstanding
subordinated long-term indebtedness for money borrowed that satisfies the
requirements in clauses (a), (c) and (d) that is then assigned a rating by at
least one NRSRO), (c) has an outstanding principal amount of not less than
$250,000,000, and (d) was issued through or with the assistance of a commercial
or investment banking firm or firms acting as underwriters, initial purchasers
or placement or distribution agents. For purposes of this definition as applied
to securities with a CUSIP number, each issuance of long-term indebtedness for
money borrowed that has (or, if such indebtedness is


                                      I-6



held by a trust or other intermediate entity established directly or indirectly
by the issuer, the securities of such intermediate entity that have) a separate
CUSIP number shall be deemed to be a series of the issuer's long-term
indebtedness for money borrowed that is separate from each other series of such
indebtedness.

          "Employee Benefit Plan" means any written or oral purchase, savings,
option, bonus, appreciation, profit sharing, thrift, incentive, pension or
similar plan or arrangement or any written or oral compensatory contract or
arrangement.

          "Holder" means, as to the Covered Debt then in effect, each holder of
such Covered Debt as reflected on the securities register maintained by or on
behalf of the Corporation with respect to such Covered Debt.

          "Initial Covered Debt" means the Corporation's 6.25% Notes due 2036,
CUSIP No. 026874AZ0.

          "Intent-Based Replacement Disclosure" means, as to any security or
combination of securities, that the issuer has publicly stated its intention,
either in the prospectus or other offering document under which such securities
were initially offered for sale or in filings with the Commission made by the
issuer prior to or contemporaneously with the issuance of such securities, that
the issuer will redeem or repurchase such securities only with the proceeds of
replacement capital securities that have terms and provisions at the time of
redemption or repurchase that are as or more equity-like than the securities
then being redeemed or repurchased, raised within 180 days prior to the
applicable redemption or repurchase date.

          "Mandatorily Convertible Preferred Stock" means cumulative preferred
stock with (a) no prepayment obligation on the part of the issuer thereof,
whether at the election of the holders or otherwise, and (b) a requirement that
the preferred stock convert into Common Stock of the Corporation within three
years from the date of its issuance at a conversion ratio within a range
established at the time of issuance of the preferred stock.

          "Mandatory Trigger Provision" means, as to any security or combination
of securities, provisions in the terms thereof or of the related transaction
agreements that:

          (i) require, or at its option in the case of non-cumulative perpetual
     preferred stock permit, the issuer of such securities to make payment of
     Distributions on such securities only pursuant to the issuance and sale of
     APM Qualifying Securities, within two years of a failure to satisfy one or
     more financial tests set forth in the terms of such securities or related
     transaction agreements, in an amount such that the net proceeds of such
     sale at least equal the amount of unpaid Distributions on such securities
     and any pari passu securities (including without limitation all deferred
     and accumulated amounts) and in either case require the application of the
     net proceeds of such sale to pay such unpaid Distributions on those
     securities and any pari passu securities, provided that (A) if the
     Mandatory Trigger Provision does not require such issuance and sale within
     one year of such failure, the amount of common stock or rights to acquire
     common stock the net proceeds of which the issuer must apply to pay such
     Distributions pursuant to such provision may not exceed the Common Cap, and
     (B) the amount of Qualifying Non-Cumulative Preferred Stock the net
     proceeds of which the issuer may apply to pay such Distributions pursuant
     to such provision may not exceed the Preferred Cap;


                                      I-7



          (ii) if the provisions described in clause (i) do not require such
     issuance and sale within one year of such failure, prohibit the Corporation
     from repurchasing any of its securities ranking junior to or pari passu
     with any APM qualifying securities the proceeds of which were used to
     settle deferred interest during the relevant deferral period prior to the
     date six months after the issuer applies the net proceeds of the sales
     described in clause (i) to pay such unpaid Distributions in full, except
     where non-payment would cause the Corporation to breach the terms of the
     relevant instrument; and

          (iii) other than in the case of non-cumulative perpetual preferred
     stock, include a Bankruptcy Claim Limitation Provision.

          No remedy other than Permitted Remedies will arise by the terms of
such securities or related transaction agreements in favor of the holders of
such securities as a result of the issuer's failure to pay Distributions because
of the Mandatory Trigger Provision until Distributions have been deferred for
one or more Distribution Periods that total together at least ten years.

          "Market Disruption Events" means one or more events or circumstances
substantially similar to those listed as "Market Disruption Events" in the
Supplemental Indenture.

          "Market Value" means, on any date, (i) in the case of Common Stock,
the closing sale price per share of Common Stock (or if no closing sale price is
reported, the average of the bid and ask prices or, if more than one in either
case, the average of the average bid and the average ask prices) on that date as
reported in composite transactions by the New York Stock Exchange or, if the
Common Stock is not then listed on the New York Stock Exchange, as reported by
the principal U.S. securities exchange on which the Common Stock is traded or
quoted; if the Common Stock is not either listed or quoted on any U.S.
securities exchange on the relevant date, the market price will be the average
of the mid-point of the bid and ask prices for the Common Stock on the relevant
date submitted by at least three nationally recognized independent investment
banking firms selected by the Corporation for this purpose and (ii) in the case
of rights to acquire Common Stock, a value determined by the Corporation's Board
of Directors (or a duly authorized committee thereof) in good faith.

          "Measurement Date" means with respect to any repayment, redemption,
defeasance or purchase of the Debentures (i) on or prior to March 15, 2037, the
date 180 days prior to delivery of notice of such repayment, defeasance or
redemption or the date of such purchase and (ii) after March 15, 2037, the date
90 days prior to the date of such repayment, redemption, defeasance or purchase,
except that, if during the 90 days (or any shorter period) preceding the date
that is 90 days prior to the date of such repayment, redemption, defeasance or
purchase, net cash proceeds described above were received but no repayment,
redemption, defeasance or purchase was made in connection therewith, the
measurement date shall be the date upon which such 90-day (or shorter) period
prior to the 90-day period prior to the date such repayment, redemption,
defeasance or purchase began.

          "Measurement Period" with respect to any notice date or purchase date
means the period (i) beginning on the Measurement Date with respect to such
notice date or purchase date and (ii) ending on such notice date or purchase
date. Measurement Periods cannot run concurrently.

          "Non-Cumulative" means, with respect to any securities, that the
issuer may elect not to make any number of periodic Distributions without any
remedy arising under the terms of the securities or related agreements in favor
of the holders, other than one or more Permitted Remedies. Securities that
include an Alternative Payment Mechanism shall also be deemed to be
Non-Cumulative, other than for


                                      I-8



the purposes of the definitions of APM Qualifying Securities and Qualifying
Non-Cumulative Preferred Stock.

          "NRSRO" means a nationally recognized statistical rating organization
within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange Act
or any successor provision or, upon adoption, any rule for the registration of
nationally recognized statistical rating organizations adopted by the Securities
and Exchange Commission.

          "Optional Deferral Provision" means, as to any securities, provisions
in the terms thereof or of the related transaction agreements to the effect of
either (a) or (b) below:

          (a) (i) the issuer of such securities may, in its sole discretion,
defer in whole or in part payment of Distributions on such securities for one or
more consecutive Distribution Periods of up to five years or, if a Market
Disruption Event is continuing, ten years, without any remedy other than
Permitted Remedies and (ii) an Alternative Payment Mechanism (provided that such
Alternative Payment Mechanism need not apply during the first 5 years of any
deferral period and need not include a Common Cap or a Preferred Cap); or

          (b) the issuer of such securities may, in its sole discretion, defer
in whole or in part payment of Distributions on such securities for one or more
consecutive Distribution Periods up to ten years, without any remedy other than
Permitted Remedies.

          "Permitted Remedies" means, with respect to any securities, one or
more of the following remedies:

          (a) rights in favor of the holders of such securities permitting such
holders to elect one or more directors of the issuer (including any such rights
required by the listing requirements of any stock or securities exchange on
which such securities may be listed or traded); and

          (b) complete or partial prohibitions on the issuer paying
Distributions on or repurchasing common stock or other securities that rank pari
passu with or junior as to Distributions to such securities for so long as
Distributions on such securities, including unpaid Distributions, remain unpaid.

          "Person" means any individual, corporation, partnership, joint
venture, trust, limited liability company, corporation or other entity,
unincorporated organization or government or any agency or political subdivision
thereof.

          "Preferred Cap" has the meaning specified in the definition of
Alternative Payment Mechanism.

          "Prospectus Supplement" has the meaning specified in Recital B.

          "Qualifying Capital Securities" means securities (other than Common
Stock, rights to acquire Common Stock or securities exchangeable for or
convertible into Common Stock) that, in the determination of the Corporation's
Board of Directors (or a duly authorized committee thereof) reasonably
construing the definitions and other terms of this Replacement Capital Covenant,
meet one of the following criteria:


                                      I-9



          (i) in connection with any repayment, redemption or purchase of
     Debentures prior to March 15, 2017:

               (A) junior subordinated debt securities and guarantees issued by
          the Corporation or its Subsidiaries with respect to trust preferred
          securities if the junior subordinated debt securities and guarantees
          (1) rank pari passu with or junior to the Debentures upon the
          liquidation, dissolution or winding-up of the Corporation, (2) are
          Non-Cumulative, (3) have no maturity or a maturity of at least 60
          years and (4) are subject to a Qualifying Replacement Capital
          Covenant;

               (B) securities issued by the Corporation or its Subsidiaries that
          (1) rank pari passu with or junior to the Debentures upon the
          liquidation, dissolution or winding-up of the Corporation, (2) have no
          maturity or a maturity of at least 60 years and (3)(i) are
          Non-Cumulative and are subject to a Qualifying Replacement Capital
          Covenant or (ii) have a Mandatory Trigger Provision and an Optional
          Deferral Provision and are subject to Intent-Based Replacement
          Disclosure; or

               (C) securities issued by the Corporation or its Subsidiaries that
          (1) rank pari passu with or junior to the Debentures, (2) have no
          maturity or a maturity of at least 40 years, (3) are subject to a
          Qualifying Replacement Capital Covenant and (4) have a Mandatory
          Trigger Provision and an Optional Deferral Provision; or

          (ii) in connection with any repayment, redemption or purchase of
     Debentures on or after March 15, 2017 and prior to March 15, 2037:

               (A) all types of securities described that would be Qualifying
          Capital Securities on or prior to March 15, 2017;

               (B) securities issued by the Corporation or its Subsidiaries that
          (1) rank pari passu with or junior to the Debentures upon the
          liquidation, dissolution or winding-up of the Corporation, (2) have no
          maturity or a maturity of at least 60 years, (3) are subject to a
          Qualifying Replacement Capital Covenant and (4) have an Optional
          Deferral Provision;

               (C) securities issued by the Corporation or its Subsidiaries that
          (1) rank pari passu with or junior to the Debentures upon a
          liquidation, dissolution or winding up of the Corporation, (2) are
          Non-Cumulative, (3) have no maturity or a maturity of at least 60
          years and (4) are subject to Intent-Based Replacement Disclosure; or

               (D) securities issued by the Corporation or its Subsidiaries that
          (1) rank pari passu with or junior to the Debentures upon the
          liquidation, dissolution or winding-up of the Corporation, (2) have no
          maturity or a maturity of at least 40 years and (3) (a) are
          Non-Cumulative and subject to a Qualifying Replacement Capital
          Covenant or (b) have a Mandatory Trigger Provision and an Optional
          Deferral Provision and are subject to Intent-Based Replacement
          Disclosure;

               (E) securities issued by the Corporation or its Subsidiaries that
          (1) rank junior to all of the senior and subordinated debt of the
          Corporation other than the Debentures and the pari passu securities,
          (2) have a Mandatory Trigger Provision and an


                                      I-10



          Optional Deferral Provision and are subject to Intent-Based
          Replacement Disclosure and (3) have no maturity or a maturity of at
          least 60 years;

               (F) cumulative preferred stock issued by the Corporation or its
          Subsidiaries that (1) has no prepayment obligation on the part of the
          issuer thereof, whether at the election of the holders or otherwise,
          and (2) (a) has no maturity or a maturity of at least 60 years and (b)
          is subject to a Qualifying Replacement Capital Covenant; or

               (G) other securities issued by the Corporation or its
          Subsidiaries that (1) rank upon a liquidation, dissolution or
          winding-up of the Corporation (a) pari passu with or junior to the
          Debentures or (b) pari passu with the claims of the Corporation's
          trade creditors and junior to all of the Corporation's long-term
          indebtedness for money borrowed (other than the Corporation's
          long-term indebtedness for money borrowed from time to time
          outstanding that by its terms ranks pari passu with such securities on
          a liquidation, dissolution or winding-up of the Corporation); and (2)
          either (x) have no maturity or a maturity of at least 40 years and
          have a Mandatory Trigger Provision and an Optional Deferral Provision
          and are subject to Intent-Based Replacement Disclosure or (y) have no
          maturity or a maturity of at least 25 years and are subject to a
          Qualifying Replacement Capital Covenant and have a Mandatory Trigger
          Provision and an Optional Deferral Provision; or

          (iii) in connection with any repayment, redemption or purchase of
     Debentures at any time after March 15, 2037:

               (A) all of the types of securities that would be Qualifying
          Capital Securities prior to March 15, 2037;

               (B) securities issued by the Corporation or its Subsidiaries that
          (1) rank pari passu with or junior to the Debentures upon a
          liquidation, dissolution or winding up, (2) either (a) have no
          maturity or a maturity of at least 60 years and have Intent-Based
          Replacement Disclosure or (b) have no maturity or a maturity of at
          least 30 years and are subject to a Qualifying Replacement Capital
          Covenant and (3) have an Optional Deferral Provision;

               (C) securities issued by the Corporation or its Subsidiaries that
          (1) rank junior to all of the senior and subordinated debt of the
          Corporation other than the Debentures and any other pari passu
          securities, (2) have a Mandatory Trigger Provision and an Optional
          Deferral Provision and are subject to Intent-Based Replacement
          Disclosure and (3) have no maturity or a maturity of at least 30
          years; or

               (D) preferred stock issued by the Corporation or its Subsidiaries
          that either (1) has no maturity or a maturity of at least 60 years and
          Intent-Based Replacement Disclosure or (2) has a maturity of at least
          40 years and is subject to a Qualifying Replacement Capital Covenant.

          "Qualifying Non-Cumulative Preferred Stock" means non-cumulative
perpetual preferred stock issued by the Corporation or its Subsidiaries that (a)
ranks pari passu with or junior to all other outstanding preferred stock of the
issuer other than a preferred stock that is issued or issuable pursuant to a
stockholders' rights plan or similar plan or arrangement, and (b) contains no
remedies other


                                      I-11



than Permitted Remedies and either (i) is subject to Intent-Based Replacement
Disclosure and has a provision that prohibits the Corporation from making any
Distributions thereon upon the Corporation's failure to satisfy one or more
financial tests set forth therein or (ii) is subject to a replacement capital
covenant substantially similar to this Replacement Capital Covenant.

          "Qualifying Replacement Capital Covenant" means (a) a replacement
capital covenant substantially similar to this Replacement Capital Covenant
applicable to the Debentures or (b) a replacement capital covenant a replacement
capital covenant, as identified by the Corporation's Board of Directors, or a
duly authorized committee thereof, acting in good faith and in its reasonable
discretion and reasonably construing the definitions and other terms of this
Replacement Capital Covenant, (i) entered into by a company that at the time it
enters into such replacement capital covenant is a reporting company under the
Securities Exchange Act and (ii) that restricts the related issuer from
redeeming or purchasing identified securities except out of the proceeds of
specified Replacement Capital Securities that have terms and provisions at the
time of redemption or repurchase that are as or more equity-like than the
securities then being redeemed or repurchased, raised within 180 days prior to
the applicable redemption or repurchase date.

          "Redesignation Date" means, as to the Covered Debt in effect at any
time, the earliest of (a) the date that is two years prior to the final maturity
date of such Covered Debt, (b) if the Corporation elects to redeem, or the
Corporation or a Subsidiary of the Corporation elects to repurchase, such
Covered Debt either in whole or in part with the consequence that after giving
effect to such redemption or repurchase the outstanding principal amount of such
Covered Debt is less than $100,000,000, the applicable redemption or repurchase
date and (c) if such Covered Debt is not Eligible Subordinated Debt of the
Corporation, the date on which the Corporation issues long-term indebtedness for
money borrowed that is Eligible Subordinated Debt.

          "Replacement Capital Covenant" has the meaning specified in the
introduction to this instrument.

          "Replacement Capital Securities" means

          (a)  Common Stock and rights to acquire Common Stock;

          (b)  Mandatorily Convertible Preferred Stock;

          (c)  Debt Exchangeable for Equity; and

          (d)  Qualifying Capital Securities.

          "Rights to acquire Common Stock" includes any right to acquire Common
Stock, including any right to acquire Common Stock pursuant to a stock purchase
plan, Employee Benefit Plan or the Assurance Agreements.

          "Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time.

          "Subordinated Indenture" means the Junior Subordinated Debt Indenture,
dated as of March 13, 2007, between the Corporation and The Bank of New York, as
trustee, as amended and supplemented by the Supplemental Indenture and as
further amended and supplemented from time to time in accordance with its terms.

          "Supplemental Indenture" means the First Supplemental Indenture, dated
as of March 15, 2007, between the Corporation and The Bank of New York, as
trustee.

          "Subsidiary" means, at any time, any Person the shares of stock or
other ownership interests of which having ordinary voting power to elect a
majority of the board of directors or other managers of such Person are at the
time owned, directly or indirectly through one or more intermediaries (including
other Subsidiaries) or both, by another Person.

          "Termination Date" has the meaning specified in Section 4(a).


                                      I-12

          REPLACEMENT CAPITAL COVENANT, dated as of March 15, 2007 (this
"Replacement Capital Covenant"), by American International Group, Inc., a
Delaware corporation (together with its successors and assigns, including any
entity surviving or resulting from a merger, consolidation, binding share
exchange, sale, lease or transfer of all or substantially all of the assets or
other business combination, the "Corporation"), in favor of and for the benefit
of each Covered Debtholder (as defined below).

                                    RECITALS

          A. On the date hereof, the Corporation is issuing (Euro)1,000,000,000
aggregate principal amount of its Series A-3 Junior Subordinated Debentures due
March 15, 2067 (the "Debentures").

          B. This Replacement Capital Covenant is the "Replacement Capital
Covenant" referred to in the Prospectus Supplement, dated March 8, 2007 (the
"Prospectus Supplement"), relating to the Debentures.

          C. The Corporation is entering into and disclosing the content of this
Replacement Capital Covenant in the manner provided below with the intent that
the covenants provided for in this Replacement Capital Covenant be enforceable
by each Covered Debtholder and that the Corporation be estopped from
disregarding the covenants in this Replacement Capital Covenant, in each case to
the fullest extent permitted by applicable law.

          D. The Corporation acknowledges that reliance by each Covered
Debtholder upon the covenants in this Replacement Capital Covenant is reasonable
and foreseeable by the Corporation and that, were the Corporation to disregard
its covenants in this Replacement Capital Covenant, each Covered Debtholder
would have sustained an injury as a result of its reliance on such covenants.

          NOW, THEREFORE, the Corporation hereby covenants and agrees as follows
in favor of and for the benefit of each Covered Debtholder.

          SECTION 1. Definitions. Capitalized terms used in this Replacement
Capital Covenant (including the Recitals) have the meanings set forth in
Schedule I hereto.

          SECTION 2. Limitations on Redemption and Repurchase of Debentures. The
Corporation hereby promises and covenants to and for the benefit of each Covered
Debtholder that the Corporation shall not repay, redeem, defease or purchase,
and no Subsidiary of the Corporation shall purchase, all or any part of the
Debentures prior to March 15, 2047, except to the extent that the principal
amount repaid or defeased or the applicable redemption or purchase price does
not exceed the sum of the following amounts:

          (i) the Applicable Percentage of the aggregate amount of (a) the net
     cash proceeds the Corporation and its Subsidiaries have received from the
     sale of Common Stock and rights to acquire Common Stock to Persons other
     than the Corporation and its Subsidiaries, (b) the Market Value of any
     Common Stock (or rights to acquire Common Stock) the Corporation and its
     Subsidiaries have delivered as consideration for property or assets in an
     arms length transaction and (c) the Market Value of any Common Stock that
     the Corporation and its Subsidiaries have issued to persons other than the
     Corporation and its Subsidiaries in connection with the conversion of any
     convertible or exchangeable securities, other than securities for which the
     Corporation or any of its Subsidiaries has received equity credit from any
     NRSRO, in each case



     since the most recent Measurement Date (without double counting proceeds
     received in any prior Measurement Period); plus

          (ii) the Applicable Percentage of the aggregate amount of net cash
     proceeds the Corporation and its Subsidiaries have received within a
     Measurement Period (without double counting proceeds received in any prior
     Measurement Period) from the sale of Mandatorily Convertible Preferred
     Stock and Debt Exchangeable for Equity to Persons other than the
     Corporation and its Subsidiaries; plus

          (iii) the Applicable Percentage of the aggregate amount of net cash
     proceeds that the Corporation and its Subsidiaries have received within a
     Measurement Period (without double counting proceeds received in any prior
     Measurement Period) from the sale of Qualifying Capital Securities to
     persons other than the Corporation and its Subsidiaries;

provided that the limitations in this Section 2 shall not restrict the
repayment, redemption or other acquisition of any Debentures that the
Corporation has previously defeased in accordance with this Replacement Capital
Covenant.

          SECTION 3. Covered Debt. (a) The Corporation represents and warrants
that the Initial Covered Debt is Eligible Senior Debt.

          (b) On or during the 30-day period immediately preceding any
Redesignation Date with respect to the Covered Debt then in effect, the
Corporation shall identify the series of Eligible Debt that will become the
Covered Debt on and after such Redesignation Date in accordance with the
following procedures:

          (i) the Corporation shall identify each series of its then outstanding
     unsecured, long-term indebtedness for money borrowed that is Eligible Debt;

          (ii) if only one series of the Corporation's then outstanding
     unsecured, long-term indebtedness for money borrowed is Eligible Debt, such
     series shall become the Covered Debt commencing on the related
     Redesignation Date;

          (iii) if the Corporation has more than one outstanding series of
     unsecured, long-term indebtedness for money borrowed that is Eligible Debt,
     then the Corporation shall identify the series that has the latest
     occurring final maturity date as of the date the Corporation is applying
     the procedures in this Section 3(b) and such series shall become the
     Covered Debt on the related Redesignation Date;

          (iv) the series of outstanding long-term indebtedness for money
     borrowed that is determined to be Covered Debt pursuant to clause (ii) or
     (iii) above shall be the Covered Debt for purposes of this Replacement
     Capital Covenant for the period commencing on the related Redesignation
     Date and continuing to but not including the Redesignation Date as of which
     a new series of outstanding unsecured, long-term indebtedness is next
     determined to be the Covered Debt pursuant to the procedures set forth in
     this Section 3(b); and

          (v) in connection with such identification of a new series of Covered
     Debt, the Corporation shall, as provided for in Section 3(c), give a notice
     and file with the Commission a Current Report on Form 8-K under the
     Securities Exchange Act including or incorporating by


                                       2



     reference this Replacement Capital Covenant as an exhibit within the time
     frame provided for in such section.

          (c) Notice. In order to give effect to the intent of the Corporation
described in Recital C, the Corporation covenants that (i) simultaneously with
the execution of this Replacement Capital Covenant or as soon as practicable
after the date hereof, it shall (x) give notice to the Holders of the Initial
Covered Debt, in the manner provided in the indenture relating to the Initial
Covered Debt, of this Replacement Capital Covenant and the rights granted to
such Holders hereunder and (y) file a copy of this Replacement Capital Covenant
with the Commission as an exhibit to a Current Report on Form 8-K under the
Securities Exchange Act; (ii) so long as the Corporation is a reporting company
under the Securities Exchange Act, the Corporation will include in each Annual
Report on Form 10-K filed with the Commission under the Securities Exchange Act
a description of the covenant set forth in Section 2 and identify the series of
long-term indebtedness for borrowed money that is Covered Debt as of the date
such Form 10-K is filed with the Commission; (iii) if a series of the
Corporation's long-term indebtedness for money borrowed (1) becomes Covered Debt
or (2) ceases to be Covered Debt, the Corporation will give notice of such
occurrence within 30 days to the holders of such long-term indebtedness for
money borrowed in the manner provided for in the indenture, fiscal agency
agreement or other instrument under which such long-term indebtedness for money
borrowed was issued and report such change in a Current Report on Form 8-K,
which must include or and incorporate by reference this Replacement Capital
Covenant, and in the Corporation's next Quarterly Report on Form 10 Q or Annual
Report on Form 10-K, as applicable; (iv) if, and only if, the Corporation ceases
to be a reporting company under the Securities Exchange Act, the Corporation
will post on its website the information otherwise required to be included in
Securities Exchange Act filings pursuant to clauses (ii) and (iii) of this
Section 3(c); and (v) promptly upon request by any Holder of Covered Debt, the
Corporation will provide such Holder with an executed copy of this Replacement
Capital Covenant.

          SECTION 4. Termination, Amendment and Waiver. (a) The obligations of
the Corporation pursuant to this Replacement Capital Covenant shall remain in
full force and effect until the earliest date (the "Termination Date") to occur
of (i) March 15, 2047, (ii) the date, if any, on which the Holders of a majority
of the then outstanding principal amount of the then-effective series of Covered
Debt consent or agree in writing to the termination of this Replacement Capital
Covenant and the obligations of the Corporation hereunder and (iii) the date on
which the Corporation ceases to have any series of outstanding Eligible Senior
Debt or Eligible Subordinated Debt (in each case without giving effect to the
rating requirement in clause (b) of the definition of each such term). Moreover,
if an event of default under the Supplemental Indenture resulting in an
acceleration of the Debentures occurs, this Replacement Capital Covenant shall,
without any further action, immediately terminate upon such acceleration. From
and after the Termination Date, the obligations of the Corporation pursuant to
this Replacement Capital Covenant shall be of no further force and effect.

          (b) This Replacement Capital Covenant may be amended or supplemented
from time to time by a written instrument signed by the Corporation with the
consent of the Holders of a majority of the then outstanding principal amount of
the then-effective series of Covered Debt, provided that this Replacement
Capital Covenant may be amended or supplemented from time to time by a written
instrument signed only by the Corporation (and without the consent of the
Holders of the then-effective series of Covered Debt) if any of the following
apply (it being understood that any such amendment or supplement may fall into
one or more of the following): (i) the effect of such amendment or supplement is
solely to impose additional restrictions on, or eliminate certain of, the types
of securities qualifying as Replacement Capital Securities and an officer of the
Corporation has delivered to the Holders of the then-effective series of Covered
Debt in the manner provided for in the indenture, fiscal agency agreement or


                                       3



other instrument with respect to such Covered Debt a written certificate to that
effect, (ii) such amendment or supplement is not materially adverse to the
rights of the Covered Debtholders hereunder and an officer of the Corporation
has delivered to the Holders of the then-effective series of Covered Debt in the
manner provided for in the indenture, fiscal agency agreement or other
instrument with respect to such Covered Debt a written certificate stating that,
in his or her determination, such amendment or supplement is not materially
adverse to the Covered Debtholders, or (iii) such amendment or supplement
eliminates Common Stock and/or Mandatorily Convertible Preferred Stock as
Replacement Capital Securities if, in the case of this clause (iii), the
Corporation has been advised in writing by a nationally recognized independent
accounting firm that there is more than an insubstantial risk that the failure
to do so would result in a reduction in the Corporation's earnings per share as
calculated for financial reporting purposes.

          (c) For purposes of Sections 4(a) and 4(b), the Holders whose consent
or agreement is required to terminate, amend or supplement the obligations of
the Corporation under this Replacement Capital Covenant shall be the Holders of
the then-effective Covered Debt as of a record date established by the
Corporation that is not more than 30 days prior to the date on which the
Corporation proposes that such termination, amendment or supplement becomes
effective.

          SECTION 5. Miscellaneous. (a) This Replacement Capital Covenant shall
be governed by and construed in accordance with the laws of the State of New
York.

          (b) This Replacement Capital Covenant shall be binding upon the
Corporation and its successors and assigns and shall inure to the benefit of the
Covered Debtholders as they exist from time-to-time (it being understood and
agreed by the Corporation that any Person who is a Covered Debtholder at the
time such Person acquires, holds or sells Covered Debt shall retain its status
as a Covered Debtholder for so long as the series of long-term indebtedness for
borrowed money owned by such Person is Covered Debt and, if such Person
initiates a claim or proceeding to enforce its rights under this Replacement
Capital Covenant after the Corporation has violated its covenants in Section 2
and before the series of long-term indebtedness for money borrowed held by such
Person is no longer Covered Debt, such Person's rights under this Replacement
Capital Covenant shall not terminate by reason of such series of long-term
indebtedness for money borrowed no longer being Covered Debt). Other than the
Covered Debtholders as provided in the previous sentence, no other Person shall
have any rights under this Replacement Capital Covenant or be deemed a third
party beneficiary of this Replacement Capital Covenant. In particular, no holder
of the Debentures is a third party beneficiary of this Replacement Capital
Covenant, it being understood that such holders may have rights under the
Subordinated Indenture.

          (c) All demands, notices, requests and other communications to the
Corporation under this Replacement Capital Covenant shall be deemed to have been
duly given and made if in writing and (i) if served by personal delivery upon
the Corporation, on the day so delivered (or, if such day is not a Business Day,
the next succeeding Business Day) or (ii) if delivered by registered post or
certified mail, return receipt requested, or sent to the Corporation by a
national or international courier service, on the date of receipt by the
Corporation (or, if such date of receipt is not a Business Day, the next
succeeding Business Day), and in each case to the Corporation at the address set
forth below, or at such other address as the Corporation may thereafter notify
to Covered Debtholders or post on its website as the address for notices under
this Replacement Capital Covenant:

          American International Group, Inc.
          70 Pine Street
          New York, New York 10270
          Attention: Secretary


                                       4



          IN WITNESS WHEREOF, the Corporation has caused this Replacement
Capital Covenant to be executed by its duly authorized officer, as of the day
and year first above written.

                                        AMERICAN INTERNATIONAL GROUP, INC.


                                        By: /s/ Robert A. Gender
                                            ------------------------------------
                                        Name: Robert A. Gender
                                              ----------------------------------
                                        Title: Vice President and Treasurer
                                               ---------------------------------



                                                                         ANNEX I

                                   DEFINITIONS

          "Alternative Payment Mechanism" means, with respect to any securities
or combination of securities (together in this definition, "securities"),
provisions in the related transaction documents that require the Corporation to
issue (or use commercially reasonable efforts to issue) one or more types of APM
Qualifying Securities raising eligible proceeds at least equal to the deferred
Distributions on such securities and apply the proceeds to pay unpaid
Distributions on such securities, commencing on the earlier of (x) the first
Distribution Date after commencement of a deferral period on which the
Corporation pays current Distributions on such securities and (y) the fifth
anniversary of the commencement of such deferral period, and that

          (a) define "eligible proceeds" to mean, for purposes of such
     Alternative Payment Mechanism, the net proceeds (after underwriters' or
     placement agents' fees, commissions or discounts and other expenses
     relating to the issuance or sale of the relevant securities, where
     applicable) that the Corporation has received during the 180 days prior to
     the related Distribution Date from the issuance of APM Qualifying
     Securities to persons that are not Subsidiaries of the Corporation up to
     the Preferred Cap in the case of APM Qualifying Securities that are
     Qualifying Non-Cumulative Preferred Stock;

          (b) permit the Corporation to pay current Distributions on any
     Distribution Date out of any source of funds but (x) require the
     Corporation to pay deferred Distributions only out of eligible proceeds and
     (y) prohibit the Corporation from paying deferred Distributions out of any
     source of funds other than eligible proceeds, unless otherwise required at
     the time by any applicable regulatory authority or if an event of default
     has occurred and is continuing;

          (c) if deferral of Distributions continues for more than one year,
     require the Corporation not to redeem or repurchase any of its securities
     ranking junior to or pari passu with any APM Qualifying Securities the
     proceeds of which were used to settle deferred interest during the relevant
     deferral period until at least one year after all deferred Distributions
     have been paid, except where non-payment would cause the Corporation to
     breach the terms of the relevant instrument;

          (d) limit the obligation of the Corporation to issue (or use
     commercially reasonable efforts to issue) APM Qualifying Securities up to:

               (i) in the case of APM Qualifying Securities that are Common
          Stock or rights to purchase Common Stock, during the first five years
          of any deferral period (x) an amount from the issuance thereof
          pursuant to the Alternative Payment Mechanism equal to 2% of the
          Corporation's most recently published market capitalization or (y) a
          number of shares of Common Stock or rights to purchase a number of
          shares of Common Stock not in excess of 2% of the number of shares of
          outstanding Common Stock set forth in the Corporation's most recently
          published financial statements (the amount in clause (x) or (y) is
          referred to as the "Common Cap"); and

               (ii) in the case of APM Qualifying Securities that are Qualifying
          Non-Cumulative Perpetual Preferred Stock, an amount from the issuance
          thereof pursuant to the related Alternative Payment Mechanism
          (including at any point in time from all prior issuances thereof
          pursuant to such Alternative Payment Mechanism) equal to 25% of the
          liquidation or principal amount of the securities that are the subject
          of the related Alternative Payment Mechanism (the "Preferred Cap");



          (e) permit the Corporation, at its option, to impose a limitation on
     the issuance of APM Qualifying Securities consisting of Common Stock and
     rights to purchase Common Stock, in each case to a maximum issuance cap to
     be set at the Corporation's discretion and otherwise substantially similar
     to the "maximum share number" and "maximum warrant number", respectively,
     each as defined in the Prospectus Supplement, provided that such maximum
     issuance cap will be subject to the Corporation's agreement to use
     commercially reasonable efforts to increase the maximum issuance cap when
     reached and (i) simultaneously satisfy its future fixed or contingent
     obligations under other securities and derivative instruments that provide
     for settlement or payment in shares of Common Stock or (ii) if the
     Corporation cannot increase the maximum issuance cap as contemplated in the
     preceding clause, by requesting its board of directors to adopt a
     resolution for shareholder vote at the next occurring annual shareholders
     meeting to increase the number of shares of the Corporation's authorized
     common stock for purposes of satisfying the Corporation's obligations to
     pay deferred distributions;

          (f) in the case of securities other than Non-Cumulative Perpetual
     Preferred Stock, include a Bankruptcy Claim Limitation Provision; and

          (g) permit the Corporation, at its option, to provide that if the
     Corporation is involved in a merger, consolidation, amalgamation, binding
     share exchange or conveyance, transfer or lease of assets substantially as
     an entirety to any other person or a similar transaction (a "business
     combination") where immediately after the consummation of the business
     combination more than 50% of the surviving or resulting entity's voting
     stock is owned by the shareholders of the other party to the business
     combination or continuing directors cease for any reason to constitute a
     majority of the directors of the surviving or resulting entity, then
     clauses (a), (b) and (c) above will not apply to any deferral period that
     is terminated on the next interest payment date following the date of
     consummation of the business combination. "Continuing director" means a
     director who was a director of the Corporation at the time the definitive
     agreement relating to the transaction was approved by the Corporation's
     board of directors;

provided (and it being understood) that:

          (1) the Corporation shall not be obligated to issue (or use
     commercially reasonable efforts to issue) APM Qualifying Securities for so
     long as a Market Disruption Event has occurred and is continuing;

          (2) if, due to a Market Disruption Event or otherwise, the Corporation
     is able to raise and apply some, but not all, of the eligible proceeds
     necessary to pay all deferred Distributions on any Distribution Date, the
     Corporation will apply any available eligible proceeds to pay accrued and
     unpaid Distributions on the applicable Distribution Date in chronological
     order subject to the Common Cap, the Preferred Cap, and any maximum
     issuance cap referred to above, as applicable; and

          (3) if the Corporation has outstanding more than one class or series
     of securities under which it is obligated to sell a type of APM Qualifying
     Securities and apply some part of the proceeds to the payment of deferred
     Distributions, then on any date and for any period the amount of net
     proceeds received by the Corporation from those sales and available for
     payment of deferred Distributions on such securities shall be applied to
     such securities on a pro rata basis up to the Common Cap, the Preferred Cap
     and any maximum issuance cap referred to above, as applicable, in
     proportion to the total amounts that are due on such securities.


                                      I-2



          "APM Qualifying Securities" means, with respect to an Alternative
Payment Mechanism, one or more of the following (as designated in the
transaction documents for the Qualifying Capital Securities that include an
Alternative Payment Mechanism):

          (i)  Common Stock; or

          (ii) rights to purchase Common Stock; and

          (iii) Qualifying Non-Cumulative Preferred Stock;

provided that if the APM Qualifying Securities for any Alternative Payment
Mechanism include both Common Stock and rights to purchase Common Stock, such
Alternative Payment Mechanism may permit, but need not require, the Corporation
to issue rights to purchase Common Stock.

          "Applicable Percentage" means:

          (i) in the case of any Common Stock or rights to acquire Common Stock,
     a percentage equivalent of 1 divided by (a) 75% with respect to any
     repayment, redemption or purchase prior to March 15, 2017, (b) 50% with
     respect to any repayment, redemption or purchase on or after March 15, 2017
     and prior to March 15, 2037 and (c) 25% with respect to any repayment,
     redemption or purchase on or after March 15, 2037 (for example, prior to
     March 15, 2017, the Applicable Percentage in the case of such securities
     will be 133.33%);

          (ii) in the case of any Mandatorily Convertible Preferred Stock, a
     percentage equivalent of 1 divided by (a) 75% with respect to any
     repayment, redemption or purchase prior to March , 2017, (b) 50% with
     respect to any repayment, redemption or purchase on or after March 15, 2017
     and prior to March 15, 2037 and (c) 25% with respect to any repayment,
     redemption or purchase on or after March 15, 2037 (for example, prior to
     March 15, 2017, the Applicable Percentage in the case of such securities
     will be 133.33%);

          (iii) in the case of any Debt Exchangeable for Equity or any
     Qualifying Capital Securities described in clause (i) of the definition of
     that term, a percentage equivalent of 0.75 divided by (a) 75% with respect
     to any repayment, redemption or purchase prior to March 15, 2017, (b) 50%
     with respect to any repayment, redemption or purchase on or after March 15,
     2017 and prior to March 15, 2037 and (c) 25% with respect to any repayment,
     redemption or purchase on or after March 15, 2037 (for example, on or after
     March 15, 2037 and prior to March 15, 2037, the Applicable Percentage in
     the case of such securities will be 150%);

          (iv) in the case of any Qualifying Capital Securities described in
     clause (ii) of the definition of that term, a percentage equivalent of 0.50
     divided by (a) 50% with respect to any repayment, redemption or purchase on
     or after March 15, 2017 and prior to March 15, 2037 and (b) 25% with
     respect to any repayment, redemption or purchase on or after March 15, 2037
     (for example, after March 15, 2037, the Applicable Percentage in the case
     of such securities will be 200%); and

          (v) in the case of any Qualifying Capital Securities described in
     clause (iii) of the definition of that term, 100%.

          "Assurance Agreement" means the Assurance Agreement, by the
Corporation in favor of eligible employees dated as of June 27, 2005, relating
to certain obligations of Starr International


                                      I-3



Company, Inc. (as such agreement may be amended, supplemented, extended,
modified or replaced from time to time).

          "Bankruptcy Claim Limitation Provision" means, with respect to any
securities or combination of securities that have an Alternative Payment
Mechanism or a Mandatory Trigger Provision (together in this definition,
"securities"), provisions that, upon any liquidation, dissolution, winding up or
reorganization or in connection with any insolvency, receivership or proceeding
under any bankruptcy law with respect to the issuer, limit the claim of the
holders of such securities to Distributions that accumulate during (A) any
deferral period, in the case of securities that have an Alternative Payment
Mechanism or (B) any period in which the Corporation fails to satisfy one or
more financial tests set forth in the terms of such securities or related
transaction agreements, in the case of securities having a Mandatory Trigger
Provision, to:

          (i) in the case of securities having an Alternative Payment Mechanism
     or Mandatory Trigger Provision with respect to which the APM Qualifying
     Securities do not include Qualifying Non-Cumulative Preferred Stock, 25% of
     the stated or principal amount of such securities then outstanding; and

          (ii) in the case of any other securities, the sum of (x) the amount of
     accumulated and unpaid Distributions (including compounded amounts) that
     relate to the earliest two years of the portion of the deferral period for
     which Distributions have not been paid and (y) an amount equal to the
     excess, if any, of the Preferred Cap over the aggregate amount of net
     proceeds from the sale of Qualifying Non-Cumulative Preferred Stock that
     the issuer has applied to pay such Distributions pursuant to the
     Alternative Payment Mechanism or the Mandatory Trigger Provision, provided
     that the holders of such securities are deemed to agree that, to the extent
     the remaining claim exceeds the amount set forth in subclause (x), the
     amount they receive in respect of such excess shall not exceed the amount
     they would have received had such claim ranked pari passu with the
     interests of the holders, if any, of Qualifying Non-Cumulative Preferred
     Stock.

          "Business Day" means each day other than (a) a Saturday or Sunday or
(b) a day on which banking institutions in New York, New York are authorized or
required by law or executive order to remain closed or, on or after March 15,
2017, a day that is not a London business day. A "London business day" is any
day on which dealings in U.S. dollars are transacted in the London interbank
market.

          "Commission" means the United States Securities and Exchange
Commission or any successor agency.

          "Common Cap" has the meaning specified in the definition of
Alternative Payment Mechanism.

          "Common Stock" means any equity securities (including equity
securities held as treasury shares) or rights to acquire equity securities of
the Corporation that have no preference in the payment of dividends or amounts
payable upon the liquidation, dissolution or winding up of the Corporation
(including a security that tracks the performance of, or relates to the results
of, a business, unit or division of the Corporation), and any securities that
have no preference in the payment of dividends or amounts payable upon
liquidation, dissolution or winding up and are issued in exchange therefor in
connection with a merger, consolidation, binding share exchange, business
combination, recapitalization or other similar event.


                                      I-4



          "Corporation" has the meaning specified in the introduction to this
instrument.

          "Covered Debt" means (a) at the date of this Replacement Capital
Covenant and continuing to but not including the first Redesignation Date, the
Initial Covered Debt and (b) thereafter, commencing with each Redesignation Date
and continuing to but not including the next succeeding Redesignation Date, the
Eligible Debt identified pursuant to Section 3(b) as the Covered Debt for such
period.

          "Covered Debtholder" means each Person (whether a Holder or a
beneficial owner holding through a participant in a clearing agency) that buys,
holds or sells long-term indebtedness for money borrowed of the Corporation
during the period that such long-term indebtedness for money borrowed is Covered
Debt, provided that, except as provided in Section 5(b), a Person who has sold
all of its right, title and interest in Covered Debt shall cease to be a Covered
Debtholder at the time of such sale if, at such time, the Corporation has not
breached or repudiated, or threatened to breach or repudiate, its obligations
hereunder.

          "Debentures" has the meaning specified in Recital A.

          "Debt Exchangeable for Equity" means a security or combination of
securities (together in this definition, "securities") that:

          (i) gives the holder a beneficial interest in (a) debt securities of
     the Corporation that include a provision requiring it to issue (or use
     commercially reasonable efforts to issue) one or more types of APM
     Qualifying Securities raising proceeds at least equal to the deferred
     distributions on such subordinated debt securities commencing not later
     than two years after the Corporation first defers distributions on such
     securities and that are the most junior subordinated debt of the
     Corporation (or rank pari passu with the most junior subordinated debt of
     the Corporation) and (b) a fractional interest in a stock purchase contract
     for Qualifying Non-Cumulative Preferred Stock;

          (ii) provides that the holders directly or indirectly grant to the
     Corporation a security interest in such debt securities and their proceeds
     (including any substitute collateral permitted under the transaction
     documents) to secure the holders' direct or indirect obligation to purchase
     stock pursuant to such stock purchase contracts;

          (iii) includes a remarketing feature pursuant to which such debt
     securities of the Corporation are remarketed to new holders commencing
     within five years from the date of issuance of the security or earlier in
     the event of an early settlement event based on (a) the capital ratios of
     the Corporation or (b) the dissolution of the Corporation;

          (iv) provides for the proceeds raised in the remarketing to be used to
     purchase Qualifying Non-Cumulative Preferred Stock under the stock purchase
     contracts and, if there has not been a successful remarketing by the first
     Distribution Date that is six years after the date of issuance of such debt
     securities of the Corporation, provides that the stock purchase contracts
     will be settled by the Corporation exercising its remedies as a secured
     party with respect to such debt securities or other collateral directly or
     indirectly pledged by holders in the Debt Exchangeable for Equity;


                                      I-5



          (v) includes a Qualifying Replacement Capital Covenant, provided that
     such replacement capital covenant will apply to such securities and to the
     Qualifying Non-Cumulative Preferred Stock and will not include Debt
     Exchangeable for Equity as a replacement security for such securities or
     the Qualifying Non-Cumulative Preferred Stock; and

          (vi) after the issuance of such Qualifying Non-Cumulative Preferred
     Stock, provides the holder of the security with a beneficial interest in
     such Qualifying Non-Cumulative Preferred Stock.

          "Distribution Date" means, as to any securities or combination of
securities, the dates on which Distributions on such securities are scheduled to
be made.

          "Distribution Period" means, as to any securities or combination of
securities, each period from and including a Distribution Date for such
securities to but not including the next succeeding Distribution Date for such
securities.

          "Distributions" means, as to a security or combination of securities,
dividends, interest or other income distributions to the holders or beneficial
owners thereof that are not Subsidiaries of the Corporation.

          "Eligible Debt" means, at any time, Eligible Subordinated Debt or, if
no Eligible Subordinated Debt is then outstanding, Eligible Senior Debt.

          "Eligible Senior Debt" means, at any time in respect of any issuer,
each series of outstanding long-term indebtedness for money borrowed of such
issuer that (a) upon a bankruptcy, liquidation, dissolution or winding up of the
issuer, ranks most senior among the issuer's then outstanding classes of
unsecured indebtedness for money borrowed, (b) is then assigned a rating by at
least one NRSRO (provided that this clause (b) shall apply on a Redesignation
Date only if on such date the issuer has outstanding senior long-term
indebtedness for money borrowed that satisfies the requirements of clauses (a),
(c) and (d) that is then assigned a rating by at least one NRSRO), (c) has an
outstanding principal amount of not less than $250,000,000, and (d) was issued
through or with the assistance of a commercial or investment banking firm or
firms acting as underwriters, initial purchasers or placement or distribution
agents. For purposes of this definition as applied to securities with a CUSIP
number, each issuance of long-term indebtedness for money borrowed that has (or,
if such indebtedness is held by a trust or other intermediate entity established
directly or indirectly by the issuer, the securities of such intermediate entity
that have) a separate CUSIP number shall be deemed to be a series of the
issuer's long-term indebtedness for money borrowed that is separate from each
other series of such indebtedness.

          "Eligible Subordinated Debt" means, at any time in respect of any
issuer, each series of the issuer's then-outstanding long-term indebtedness for
money borrowed that (a) upon a bankruptcy, liquidation, dissolution or winding
up of the issuer, ranks subordinate to the issuer's then outstanding series of
unsecured indebtedness for money borrowed that ranks most senior, (b) is then
assigned a rating by at least one NRSRO (provided that this clause (b) shall
apply on a Redesignation Date only if on such date the issuer has outstanding
subordinated long-term indebtedness for money borrowed that satisfies the
requirements in clauses (a), (c) and (d) that is then assigned a rating by at
least one NRSRO), (c) has an outstanding principal amount of not less than
$250,000,000, and (d) was issued through or with the assistance of a commercial
or investment banking firm or firms acting as underwriters, initial purchasers
or placement or distribution agents. For purposes of this definition as applied
to securities with a CUSIP number, each issuance of long-term indebtedness for
money borrowed that has (or, if such indebtedness is


                                      I-6



held by a trust or other intermediate entity established directly or indirectly
by the issuer, the securities of such intermediate entity that have) a separate
CUSIP number shall be deemed to be a series of the issuer's long-term
indebtedness for money borrowed that is separate from each other series of such
indebtedness.

          "Employee Benefit Plan" means any written or oral purchase, savings,
option, bonus, appreciation, profit sharing, thrift, incentive, pension or
similar plan or arrangement or any written or oral compensatory contract or
arrangement.

          "Holder" means, as to the Covered Debt then in effect, each holder of
such Covered Debt as reflected on the securities register maintained by or on
behalf of the Corporation with respect to such Covered Debt.

          "Initial Covered Debt" means the Corporation's 6.25% Notes due 2036,
CUSIP No. 026874AZ0.

          "Intent-Based Replacement Disclosure" means, as to any security or
combination of securities, that the issuer has publicly stated its intention,
either in the prospectus or other offering document under which such securities
were initially offered for sale or in filings with the Commission made by the
issuer prior to or contemporaneously with the issuance of such securities, that
the issuer will redeem or repurchase such securities only with the proceeds of
replacement capital securities that have terms and provisions at the time of
redemption or repurchase that are as or more equity-like than the securities
then being redeemed or repurchased, raised within 180 days prior to the
applicable redemption or repurchase date.

          "Mandatorily Convertible Preferred Stock" means cumulative preferred
stock with (a) no prepayment obligation on the part of the issuer thereof,
whether at the election of the holders or otherwise, and (b) a requirement that
the preferred stock convert into Common Stock of the Corporation within three
years from the date of its issuance at a conversion ratio within a range
established at the time of issuance of the preferred stock.

          "Mandatory Trigger Provision" means, as to any security or combination
of securities, provisions in the terms thereof or of the related transaction
agreements that:

          (i) require, or at its option in the case of non-cumulative perpetual
     preferred stock permit, the issuer of such securities to make payment of
     Distributions on such securities only pursuant to the issuance and sale of
     APM Qualifying Securities, within two years of a failure to satisfy one or
     more financial tests set forth in the terms of such securities or related
     transaction agreements, in an amount such that the net proceeds of such
     sale at least equal the amount of unpaid Distributions on such securities
     and any pari passu securities (including without limitation all deferred
     and accumulated amounts) and in either case require the application of the
     net proceeds of such sale to pay such unpaid Distributions on those
     securities and any pari passu securities, provided that (A) if the
     Mandatory Trigger Provision does not require such issuance and sale within
     one year of such failure, the amount of common stock or rights to acquire
     common stock the net proceeds of which the issuer must apply to pay such
     Distributions pursuant to such provision may not exceed the Common Cap, and
     (B) the amount of Qualifying Non-Cumulative Preferred Stock the net
     proceeds of which the issuer may apply to pay such Distributions pursuant
     to such provision may not exceed the Preferred Cap;


                                      I-7



          (ii) if the provisions described in clause (i) do not require such
     issuance and sale within one year of such failure, prohibit the Corporation
     from repurchasing any of its securities ranking junior to or pari passu
     with any APM qualifying securities the proceeds of which were used to
     settle deferred interest during the relevant deferral period prior to the
     date six months after the issuer applies the net proceeds of the sales
     described in clause (i) to pay such unpaid Distributions in full, except
     where non-payment would cause the Corporation to breach the terms of the
     relevant instrument; and

          (iii) other than in the case of non-cumulative perpetual preferred
     stock, include a Bankruptcy Claim Limitation Provision.

          No remedy other than Permitted Remedies will arise by the terms of
such securities or related transaction agreements in favor of the holders of
such securities as a result of the issuer's failure to pay Distributions because
of the Mandatory Trigger Provision until Distributions have been deferred for
one or more Distribution Periods that total together at least ten years.

          "Market Disruption Events" means one or more events or circumstances
substantially similar to those listed as "Market Disruption Events" in the
Supplemental Indenture.

          "Market Value" means, on any date, (i) in the case of Common Stock,
the closing sale price per share of Common Stock (or if no closing sale price is
reported, the average of the bid and ask prices or, if more than one in either
case, the average of the average bid and the average ask prices) on that date as
reported in composite transactions by the New York Stock Exchange or, if the
Common Stock is not then listed on the New York Stock Exchange, as reported by
the principal U.S. securities exchange on which the Common Stock is traded or
quoted; if the Common Stock is not either listed or quoted on any U.S.
securities exchange on the relevant date, the market price will be the average
of the mid-point of the bid and ask prices for the Common Stock on the relevant
date submitted by at least three nationally recognized independent investment
banking firms selected by the Corporation for this purpose and (ii) in the case
of rights to acquire Common Stock, a value determined by the Corporation's Board
of Directors (or a duly authorized committee thereof) in good faith.

          "Measurement Date" means with respect to any repayment, redemption,
defeasance or purchase of the Debentures (i) on or prior to March 15, 2037, the
date 180 days prior to delivery of notice of such repayment, defeasance or
redemption or the date of such purchase and (ii) after March 15, 2037, the date
90 days prior to the date of such repayment, redemption, defeasance or purchase,
except that, if during the 90 days (or any shorter period) preceding the date
that is 90 days prior to the date of such repayment, redemption, defeasance or
purchase, net cash proceeds described above were received but no repayment,
redemption, defeasance or purchase was made in connection therewith, the
measurement date shall be the date upon which such 90-day (or shorter) period
prior to the 90-day period prior to the date such repayment, redemption,
defeasance or purchase began.

          "Measurement Period" with respect to any notice date or purchase date
means the period (i) beginning on the Measurement Date with respect to such
notice date or purchase date and (ii) ending on such notice date or purchase
date. Measurement Periods cannot run concurrently.

          "Non-Cumulative" means, with respect to any securities, that the
issuer may elect not to make any number of periodic Distributions without any
remedy arising under the terms of the securities or related agreements in favor
of the holders, other than one or more Permitted Remedies. Securities that
include an Alternative Payment Mechanism shall also be deemed to be
Non-Cumulative, other than for


                                      I-8



the purposes of the definitions of APM Qualifying Securities and Qualifying
Non-Cumulative Preferred Stock.

          "NRSRO" means a nationally recognized statistical rating organization
within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange Act
or any successor provision or, upon adoption, any rule for the registration of
nationally recognized statistical rating organizations adopted by the Securities
and Exchange Commission.

          "Optional Deferral Provision" means, as to any securities, provisions
in the terms thereof or of the related transaction agreements to the effect of
either (a) or (b) below:

          (a) (i) the issuer of such securities may, in its sole discretion,
defer in whole or in part payment of Distributions on such securities for one or
more consecutive Distribution Periods of up to five years or, if a Market
Disruption Event is continuing, ten years, without any remedy other than
Permitted Remedies and (ii) an Alternative Payment Mechanism (provided that such
Alternative Payment Mechanism need not apply during the first 5 years of any
deferral period and need not include a Common Cap or a Preferred Cap); or

          (b) the issuer of such securities may, in its sole discretion, defer
in whole or in part payment of Distributions on such securities for one or more
consecutive Distribution Periods up to ten years, without any remedy other than
Permitted Remedies.

          "Permitted Remedies" means, with respect to any securities, one or
more of the following remedies:

          (a) rights in favor of the holders of such securities permitting such
holders to elect one or more directors of the issuer (including any such rights
required by the listing requirements of any stock or securities exchange on
which such securities may be listed or traded); and (b) complete or partial
prohibitions on the issuer paying Distributions on or repurchasing common stock
or other securities that rank pari passu with or junior as to Distributions to
such securities for so long as Distributions on such securities, including
unpaid Distributions, remain unpaid.

          "Person" means any individual, corporation, partnership, joint
venture, trust, limited liability company, corporation or other entity,
unincorporated organization or government or any agency or political subdivision
thereof.

          "Preferred Cap" has the meaning specified in the definition of
Alternative Payment Mechanism.

          "Prospectus Supplement" has the meaning specified in Recital B.

          "Qualifying Capital Securities" means securities (other than Common
Stock, rights to acquire Common Stock or securities exchangeable for or
convertible into Common Stock) that, in the determination of the Corporation's
Board of Directors (or a duly authorized committee thereof) reasonably
construing the definitions and other terms of this Replacement Capital Covenant,
meet one of the following criteria:


                                      I-9



          (i) in connection with any repayment, redemption or purchase of
     Debentures prior to March 15, 2017:

               (A) junior subordinated debt securities and guarantees issued by
          the Corporation or its Subsidiaries with respect to trust preferred
          securities if the junior subordinated debt securities and guarantees
          (1) rank pari passu with or junior to the Debentures upon the
          liquidation, dissolution or winding-up of the Corporation, (2) are
          Non-Cumulative, (3) have no maturity or a maturity of at least 60
          years and (4) are subject to a Qualifying Replacement Capital
          Covenant;

               (B) securities issued by the Corporation or its Subsidiaries that
          (1) rank pari passu with or junior to the Debentures upon the
          liquidation, dissolution or winding-up of the Corporation, (2) have no
          maturity or a maturity of at least 60 years and (3)(i) are
          Non-Cumulative and are subject to a Qualifying Replacement Capital
          Covenant or (ii) have a Mandatory Trigger Provision and an Optional
          Deferral Provision and are subject to Intent-Based Replacement
          Disclosure; or

               (C) securities issued by the Corporation or its Subsidiaries that
          (1) rank pari passu with or junior to the Debentures, (2) have no
          maturity or a maturity of at least 40 years, (3) are subject to a
          Qualifying Replacement Capital Covenant and (4) have a Mandatory
          Trigger Provision and an Optional Deferral Provision; or

          (ii) in connection with any repayment, redemption or purchase of
     Debentures on or after March 15, 2017 and prior to March 15, 2037:

               (A) all types of securities described that would be Qualifying
          Capital Securities on or prior to March 15, 2017;

               (B) securities issued by the Corporation or its Subsidiaries that
          (1) rank pari passu with or junior to the Debentures upon the
          liquidation, dissolution or winding-up of the Corporation, (2) have no
          maturity or a maturity of at least 60 years, (3) are subject to a
          Qualifying Replacement Capital Covenant and (4) have an Optional
          Deferral Provision;

               (C) securities issued by the Corporation or its Subsidiaries that
          (1) rank pari passu with or junior to the Debentures upon a
          liquidation, dissolution or winding up of the Corporation, (2) are
          Non-Cumulative, (3) have no maturity or a maturity of at least 60
          years and (4) are subject to Intent-Based Replacement Disclosure; or

               (D) securities issued by the Corporation or its Subsidiaries that
          (1) rank pari passu with or junior to the Debentures upon the
          liquidation, dissolution or winding-up of the Corporation, (2) have no
          maturity or a maturity of at least 40 years and (3) (a) are
          Non-Cumulative and subject to a Qualifying Replacement Capital
          Covenant or (b) have a Mandatory Trigger Provision and an Optional
          Deferral Provision and are subject to Intent-Based Replacement
          Disclosure;

               (E) securities issued by the Corporation or its Subsidiaries that
          (1) rank junior to all of the senior and subordinated debt of the
          Corporation other than the Debentures and the pari passu securities,
          (2) have a Mandatory Trigger Provision and an


                                      I-10



          Optional Deferral Provision and are subject to Intent-Based
          Replacement Disclosure and (3) have no maturity or a maturity of at
          least 60 years;

               (F) cumulative preferred stock issued by the Corporation or its
          Subsidiaries that (1) has no prepayment obligation on the part of the
          issuer thereof, whether at the election of the holders or otherwise,
          and (2) (a) has no maturity or a maturity of at least 60 years and (b)
          is subject to a Qualifying Replacement Capital Covenant; or

               (G) other securities issued by the Corporation or its
          Subsidiaries that (1) rank upon a liquidation, dissolution or
          winding-up of the Corporation (a) pari passu with or junior to the
          Debentures or (b) pari passu with the claims of the Corporation's
          trade creditors and junior to all of the Corporation's long-term
          indebtedness for money borrowed (other than the Corporation's
          long-term indebtedness for money borrowed from time to time
          outstanding that by its terms ranks pari passu with such securities on
          a liquidation, dissolution or winding-up of the Corporation); and (2)
          either (x) have no maturity or a maturity of at least 40 years and
          have a Mandatory Trigger Provision and an Optional Deferral Provision
          and are subject to Intent-Based Replacement Disclosure or (y) have no
          maturity or a maturity of at least 25 years and are subject to a
          Qualifying Replacement Capital Covenant and have a Mandatory Trigger
          Provision and an Optional Deferral Provision; or

          (iii) in connection with any repayment, redemption or purchase of
     Debentures at any time after March 15, 2037:

               (A) all of the types of securities that would be Qualifying
          Capital Securities prior to March 15, 2037;

               (B) securities issued by the Corporation or its Subsidiaries that
          (1) rank pari passu with or junior to the Debentures upon a
          liquidation, dissolution or winding up, (2) either (a) have no
          maturity or a maturity of at least 60 years and have Intent-Based
          Replacement Disclosure or (b) have no maturity or a maturity of at
          least 30 years and are subject to a Qualifying Replacement Capital
          Covenant and (3) have an Optional Deferral Provision;

               (C) securities issued by the Corporation or its Subsidiaries that
          (1) rank junior to all of the senior and subordinated debt of the
          Corporation other than the Debentures and any other pari passu
          securities, (2) have a Mandatory Trigger Provision and an Optional
          Deferral Provision and are subject to Intent-Based Replacement
          Disclosure and (3) have no maturity or a maturity of at least 30
          years; or

               (D) preferred stock issued by the Corporation or its Subsidiaries
          that either (1) has no maturity or a maturity of at least 60 years and
          Intent-Based Replacement Disclosure or (2) has a maturity of at least
          40 years and is subject to a Qualifying Replacement Capital Covenant.

          "Qualifying Non-Cumulative Preferred Stock" means non-cumulative
perpetual preferred stock issued by the Corporation or its Subsidiaries that (a)
ranks pari passu with or junior to all other outstanding preferred stock of the
issuer other than a preferred stock that is issued or issuable pursuant to a
stockholders' rights plan or similar plan or arrangement, and (b) contains no
remedies other


                                      I-11



than Permitted Remedies and either (i) is subject to Intent-Based Replacement
Disclosure and has a provision that prohibits the Corporation from making any
Distributions thereon upon the Corporation's failure to satisfy one or more
financial tests set forth therein or (ii) is subject to a replacement capital
covenant substantially similar to this Replacement Capital Covenant.

          "Qualifying Replacement Capital Covenant" means (a) a replacement
capital covenant substantially similar to this Replacement Capital Covenant
applicable to the Debentures or (b) a replacement capital covenant, as
identified by the Corporation's Board of Directors, or a duly authorized
committee thereof, acting in good faith and in its reasonable discretion and
reasonably construing the definitions and other terms of this Replacement
Capital Covenant, (i) entered into by a company that at the time it enters into
such replacement capital covenant is a reporting company under the Securities
Exchange Act and (ii) that restricts the related issuer from redeeming or
purchasing identified securities except out of the proceeds of specified
Replacement Capital Securities that have terms and provisions at the
time of redemption or repurchase that are as or more equity-like than the
securities then being redeemed or repurchased, raised within 180 days prior to
the applicable redemption or repurchase date.

          "Redesignation Date" means, as to the Covered Debt in effect at any
time, the earliest of (a) the date that is two years prior to the final maturity
date of such Covered Debt, (b) if the Corporation elects to redeem, or the
Corporation or a Subsidiary of the Corporation elects to repurchase, such
Covered Debt either in whole or in part with the consequence that after giving
effect to such redemption or repurchase the outstanding principal amount of such
Covered Debt is less than $100,000,000, the applicable redemption or repurchase
date and (c) if such Covered Debt is not Eligible Subordinated Debt of the
Corporation, the date on which the Corporation issues long-term indebtedness for
money borrowed that is Eligible Subordinated Debt.

          "Replacement Capital Covenant" has the meaning specified in the
introduction to this instrument.

          "Replacement Capital Securities" means

          (a)  Common Stock and rights to acquire Common Stock;

          (b)  Mandatorily Convertible Preferred Stock;

          (c)  Debt Exchangeable for Equity; and

          (d)  Qualifying Capital Securities.

          "Rights to acquire Common Stock" includes any right to acquire Common
Stock, including any right to acquire Common Stock pursuant to a stock purchase
plan, Employee Benefit Plan or the Assurance Agreements.

          "Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time.

          "Subordinated Indenture" means the Junior Subordinated Debt Indenture,
dated as of March 13, 2007, between the Corporation and The Bank of New York, as
trustee, as amended and supplemented by the Supplemental Indenture and as
further amended and supplemented from time to time in accordance with its terms.

          "Supplemental Indenture" means the First Supplemental Indenture, dated
as of March 15, 2007, between the Corporation and The Bank of New York, as
trustee.

          "Subsidiary" means, at any time, any Person the shares of stock or
other ownership interests of which having ordinary voting power to elect a
majority of the board of directors or other managers of such Person are at the
time owned, directly or indirectly through one or more intermediaries (including
other Subsidiaries) or both, by another Person.

          "Termination Date" has the meaning specified in Section 4(a).


                                      I-12