AMERICAN INTERNATIONAL GROUP, INC.
                                 70 PINE STREET
                               NEW YORK, NY 10270



      KATHLEEN E. SHANNON                                      TEL: 212-770-5123
SENIOR VICE PRESIDENT, SECRETARY                               FAX: 212-785-1584
  AND DEPUTY GENERAL COUNSEL                            KATHLEEN.SHANNON@AIG.COM


                                                                     May 2, 2006

Jeffrey Riedler
Assistant Director
Securities and Exchange Commission
Division of Corporate Finance
100 F Street, NE
Washington, DC 20549


By Facsimile


Re:   American International Group, Inc. --
      Form S-1 Registration Statement filed March 17, 2006
      (File No. 333-132561)

      Form 10-K for the year ended December 31, 2005
      (File No. 1-8787)


Dear Sirs:

          As noted in American International Group, Inc.'s response letter,
dated April 24, 2006, the questions and comments in your letter dated April 12,
2006, we are providing a response to your Question 7 by this supplemental
letter. The attached repeats your question in bold-faced type and sets forth the
disclosure that AIG proposes to include in its amendment to the above referenced
Registration Statement on Form S-1.

          Thank you again for your consideration of our responses. We look
forward to speaking to you tomorrow. If you have any questions or require any
additional information, please do not hesitate to contact me at (212) 770-5123.


                                                         Very truly yours,
                                                         /s/ Kathleen E. Shannon
                                                         Kathleen E. Shannon

(Attachment)

cc:  Mark Brunhofer
     John Krug
     Kevin Woody
     (Securities and Exchange Commission)

     Ann Bailen Fisher
     Robert W. Reeder
     Robert S. Risoleo
     (Sullivan & Cromwell LLP)

                                                                      ATTACHMENT


7.   PLEASE DISCLOSE THE EXTENT TO WHICH YOUR CONTRACTS ALLOW CLIENTS TO
TERMINATE IF YOUR RATINGS ARE DOWNGRADED BY ONE OR MORE RATING AGENCIES. THE
DISCUSSION SHOULD INDICATE THE ROUGH PERCENTAGE OF YOUR CONTRACTS THAT INCLUDE
SUCH PROVISIONS AND THE LEVEL TO WHICH THE RATINGS MUST FALL BEFORE THE
CUSTOMER IS PERMITTED TO CANCEL THE CONTRACT.

Ratings downgrades could also trigger the application of termination provisions
in certain of AIG's contracts, principally agreements entered into by AIGFP and
assumed reinsurance contracts entered into by Transatlantic.

Certain municipal guaranteed investment agreements and master swap agreements
entered into by AIGFP contain termination provisions based on ratings, which,
at specified ratings levels, would give AIGFP's counterparties the right to
require repayment (in the case of guaranteed investment agreements) or
termination (in the case of master swap agreements). Approximately 42 percent
of AIGFP's municipal guaranteed investment agreements outstanding at December
31, 2005 included credit rating termination provisions, of which approximately
89 percent would not be triggered until a downgrade from AIG's current ratings
of Aa2 by Moody's and AA by S&P, to Baa1 or below by Moody's or to BBB+ or
below by S&P (five rating notches or two levels below the current ratings).
Approximately 37 percent of the master swap agreements outstanding between
AIGFP and counterparties with which AIGFP has outstanding transactions at
December 31, 2005 included a mutual credit rating termination provision, of
which approximately 56 percent would not be triggered until a ratings downgrade
of AIG to the ratings described above.

The effect on AIGFP's liquidity of termination provisions in municipal
guaranteed investment agreements and master swap agreements would be influenced
by a number of factors. The liquidity effect from the termination of any such
agreement would be offset to the extent AIGFP had previously posted collateral
to secure its obligations under the terminated agreement (as such collateral
would be released upon AIGFP's making the termination payment); AIGFP is often
required to post collateral under both guaranteed investment agreements and
master swap agreements before AIG's credit ratings reach levels that would
permit termination of such agreements. In the case of a terminated master swap
agreement, whether AIGFP would be required to make a termination payment, and
the amount of such payment, if any, would depend on the market value of the
transactions under the agreement at the time of termination. Such values change
continually with changes in various market levels (e.g., interest rates).

With respect to reinsurance contracts entered into by Transatlantic,
approximately 28 percent of the in-force contracts at December 31, 2005
contained clauses that permitted the ceding company to cancel the contract upon
a ratings downgrade. The cancellation clauses would not be triggered until a
downgrade of Transatlantic's financial strength ratings (currently rated AA- by
S&P and A+ under review with negative implications by A.M. Best) below A- by
S&P or A.M. Best.