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A N D R E WM. CUOMOAttorney General

STATE OF NEW YORK

OFFICE OF THE ATTORNEYENERAL1 2 0 BROADWAY

N E W Y O RK , N Y 1 0 2 7 1

October 22, 2008

Edward M . LiddyChairman& CEOAmerican International Group , Inc.70 Pine Street

New York, NY, 10270

Re: Actions on Financial Products Unit and CEO M artin Sullivan

Dear Mr. Liddy,

This letter is to confirm that pursuant to our review of the docu ments that Am ericanInternational Group ("AIG") has begun providing to m y O ffice, AIG has agreed to take thefollowing actions.

First, this is to confirm that AIG has agreed to freeze any payments pursuant to the

employm ent package of its former Chief Executive Officer Martin Sullivan in light of theAttorney G eneral's ongoing review. Pursuant to that contract, Mr. Sullivan would have been paidapproximately $1 9 m illion plus other benefits.

Second, AIG has agreed and confirmed that no funds will be distributed out of the $60 0million deferred com pensation and bon us pools of AIG 's Financial Products subsidiary. To beclear, it is my position that until the taxpayers are repaid with interest the more than $120 billionthat has been used in the rescue financing of AIG , no funds should be paid out of these pools toany executives. A s AIG recovers using taxpayer mone y, these pools should not be used toreward executives ahead of taxpayers.

It is my u nderstanding that Joseph C asano, the former head of the subsidiary, has a sharetotaling approximately $69 million o f these funds. In addition, after Casano, five other topexecutives in AIG Financial Products have a combined share in these funds totalingapproximately $9 3 million. The Financial Products subsidiary was largely responsible for AIG'scollapse, and Casano has been terminated.I believe that rebuilding trust in our capital marketsrequires executive compensation p ackages that are rational, fair, and based o n bona fideperformance m easures that are disclosed to the public. We m ust ensure that executive pay

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package structures no longer create improper incentives for execu tives to overleve rage theircompanies and manipulate the books for their own short-term financial benefit.

The A merican taxpayer is now supporting AIG, making the preservation o f thesetaxpayer fund s a vital obligation and a priority responsibility of your company. Taxpayers are, in

many ways, now like shareholders of your company, and the new AIG has a responsibity to themin the first instance. Indeed, given the overall circumstances and the damage incurred by theAm erican taxpaye r, their interests should be paramount. I applaud the different tone you arenow setting at AIG w hich augers well for the company going forw ard, and I hope it will set anew standard for corporate culture at similarly situated firms.

Very truly yours,

Attorney G eneral of theState of New York

cc: Anastasia Kelly, Esq.