AIG Signs Definitive Agreement with Federal Reserve Bank of New York for $85 Billion...

AIG Signs Definitive Agreement with Federal Reserve Bank of New York for $85 Billion Credit Facility

NEW YORK--(Business Wire)--
American International Group, Inc. (AIG) today announced that it
has signed a definitive agreement with the Federal Reserve Bank of New
York for a two-year, $85 billion revolving credit facility. Interest
will accrue at a rate based on 3-month LIBOR plus 8.50%. The facility
provides for an initial gross commitment fee of 2% of the total
facility on the closing date. AIG will also pay a commitment fee on
undrawn amounts at the rate of 8.50% per annum. Interest and the
commitment fees are generally payable through an increase in the
outstanding balance under the facility.

AIG is required to repay the facility from, among other things,
the proceeds of certain asset sales and issuances of debt or equity
securities. These mandatory repayments permanently reduce the amount
available to be borrowed under the facility. Under the agreement, AIG
will issue a new series of Convertible Participating Serial Preferred
Stock to a trust that will hold the Preferred Stock for the benefit of
the United States Treasury. The Preferred Stock will be entitled to
participate in any dividends paid on the common stock, with the
payments attributable to the Preferred Stock being approximately, but
not in excess of, 79.9% of the aggregate dividends paid. The Preferred
Stock will vote with the common stock on all matters, and will hold
approximately, but not in excess of, 79.9% of the aggregate voting
power. The Preferred Stock will be convertible into common stock
following a special shareholders meeting to amend AIG's restated
certificate of incorporation.

Borrowings under the facility are conditioned on the Federal
Reserve Bank of New York being reasonably satisfied with, among other
things, AIG's corporate governance. The facility contains customary
affirmative and negative covenants, including a requirement to
maintain a minimum amount of liquidity and a requirement to use
reasonable efforts to cause the composition of the Board of Directors
of AIG to be satisfactory to the trust holding the Preferred Stock
within 10 days after the establishment of the trust.

AIG Chairman and Chief Executive Officer Edward M. Liddy said,
"AIG made an exhaustive effort to address its liquidity needs through
private sector financing, but was unable to do so in the current
environment. This facility was the company's best alternative. We are
pleased to have finalized the terms of the facility, and are already
developing a plan to sell assets, repay the facility and emerge as a
smaller but profitable company. Importantly, AIG's insurance
subsidiaries remain strong, liquid and well-capitalized."

The facility will be secured by a pledge of the capital stock and
assets of certain of AIG's subsidiaries, subject to exclusions for
certain property the pledge of which is not permitted by AIG debt
instruments, as well as exclusions of assets of regulated
subsidiaries, assets of foreign subsidiaries and assets of special
purpose vehicles.

It should be noted that the remarks made in this press release may
contain projections concerning financial information and statements
concerning future economic performance and events, plans and
objectives relating to management, operations, products and services,
and assumptions underlying these projections and statements. It is
possible that AIG's actual results and financial condition may differ,
possibly materially, from the anticipated results and financial
condition indicated in these projections and statements. Factors that
could cause AIG's actual results to differ, possibly materially, from
those in the specific projections and statements are discussed in Item
1A. Risk Factors of AIG's Annual Report on Form 10-K for the year
ended December 31, 2007, and in Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations of AIG's
Quarterly Report on Form 10-Q for the period ended June 30, 2008. AIG
is not under any obligation (and expressly disclaims any such
obligations) to update or alter its projections and other statements
whether as a result of new information, future events or otherwise.

American International Group, Inc. (AIG), a world leader in
insurance and financial services, is the leading international
insurance organization with operations in more than 130 countries and
jurisdictions. AIG companies serve commercial, institutional and
individual customers through the most extensive worldwide
property-casualty and life insurance networks of any insurer. In
addition, AIG companies are leading providers of retirement services,
financial services and asset management around the world. AIG's common
stock is listed on the New York Stock Exchange, as well as the stock
exchanges in Ireland and Tokyo.

American International Group, Inc.
Charlene Hamrah (Investment Community)
212-770-7074
or
Nicholas Ashooh (News Media)
212-770-3523

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