8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 29, 2010

Commission file number 1-8787

American International Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization) 13-2592361
(I.R.S. Employer Identification No.)

180 Maiden Lane, New York, New York
(Address of principal executive offices) 10038
(Zip Code)

Registrant’s telephone number, including area code: (212) 770-7000

Former name, former address and former fiscal year, if changed since last report:
70 Pine Street, New York, NY 10270

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e4(c) under the Exchange Act (17 CFR 240.13e-4(c))

American International Group, Inc., and Subsidiaries

Item 2.01. Completion of Acquisition or Disposition of Assets.

AIA Initial Public Offering

     On October 29, 2010, American International Group, Inc. (AIG) completed an initial public offering of 8.08 billion ordinary shares of AIA Group Limited (AIA) for aggregate gross proceeds of approximately $20.51 billion. Upon completion of the initial public offering, AIG owned approximately 33 percent of AIA’s outstanding shares. Accordingly in the fourth quarter of 2010, AIG will deconsolidate AIA. Under the terms of an agreement with the underwriters, AIG is precluded from selling any of its remaining shares of AIA until October 18, 2011 and more than half of its remaining shares of AIA until April 18, 2012. Based on AIG’s significant continuing involvement through its equity ownership, AIA is not being presented as a discontinued operation in the Consolidated Financial Statements at September 30, 2010. At October 29, 2010, the fair value of AIG’s retained interest in AIA was approximately $11.8 billion.

ALICO Sale

     Upon the November 1, 2010 closing date, as consideration for the sale of American Life Insurance Company (ALICO) and Delaware American Life Insurance Company, ALICO Holdings LLC (ALICO Holdings) received total consideration of approximately $16.2 billion, comprising net cash consideration of $7.2 billion (which included an upward purchase price adjustment of approximately $400 million pursuant to the terms of the ALICO stock purchase agreement), 78,239,712 shares of MetLife, Inc. (MetLife) common stock, 6,857,000 shares of newly issued MetLife participating preferred stock convertible into 68,570,000 shares of MetLife common stock upon the approval of MetLife shareholders, and 40,000,000 equity units of MetLife with an aggregate stated value of $3.0 billion. AIG intends to monetize these MetLife securities over time, subject to market conditions, following the lapse of agreed-upon minimum holding periods.

     Prior to conversion into MetLife common stock, the MetLife participating preferred stock will be entitled to dividends equivalent, on an as-converted basis, to those that may be declared from time to time on MetLife common stock.

     Each of the equity units of MetLife has an initial stated amount of $75 and consists of an ownership interest in three series of senior debt securities of MetLife and three stock purchase contracts with a weighted average life of approximately three years. The stock purchase contracts obligate the holder of an equity unit to purchase, and obligate MetLife to sell, a number of shares of MetLife common stock that will be determined based on the market price of MetLife common stock at the scheduled settlement dates under the stock purchase contracts (a minimum of 67,764,000 shares and a maximum of 84,696,000 shares in the aggregate for all equity units, subject to anti-dilution adjustments). The equity units provide for the remarketing of the senior debt securities to fund the purchase price of the MetLife common stock. They also entitle the holder to receive interest payments on the senior debt securities and deferrable contract payments at a combined rate equal to 5% of their stated amount. The equity units have been placed in escrow as collateral to secure payments, if any, in respect of indemnity obligations owed by ALICO Holdings to MetLife under the ALICO stock purchase agreement and other transaction agreements. The escrow collateral will be released to ALICO Holdings over a 30 month period, to the extent not used to make indemnity payments or to secure pending indemnity claims submitted by MetLife.

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American International Group, Inc., and Subsidiaries

Item 9.01. Financial Statements and Exhibits.

(b) Pro Forma Financial Information

The unaudited pro forma condensed consolidated financial statements are attached as Exhibit 99.1.

(d) Exhibits.

Exhibit Number
	99.1	Unaudited Pro Forma Condensed Consolidated Balance Sheet at June 30, 2010 as if the initial public offering of AIA Group Limited (AIA) and the sale of American Life Insurance Company (ALICO) had been completed at June 30, 2010 and unaudited Pro Forma Condensed Consolidated Statements of Income (Loss) for the six months ended June 30, 2010 and for the year ended December 31, 2009 as if the initial public offering of AIA and the sale of ALICO had been completed on January 1, 2009.

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American International Group, Inc., and Subsidiaries

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	[American International Group, Inc.] (Registrant)
Date: November 4, 2010	By:	/s/ Kathleen E. Shannon
		Name:	Kathleen E. Shannon
		Title:	Senior Vice President and Deputy General Counsel

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EX-99.1

Exhibit 99.1

American International Group, Inc., and Subsidiaries

Pro Forma Condensed Consolidated Balance Sheet (Unaudited) June 30, 2010

				Pro Forma Adjustments (a)
(in millions except share data)	Historical			AIA			ALICO			Pro Forma
Assets:
Investments:
Fixed maturity securities:
Bonds available for sale, at fair value	$	315,489		$	(53,263	)	$	—		$	262,226
Bond trading securities, at fair value		27,486			(2,230	)		—			25,256
Equity securities:
Common and preferred stock available for sale, at fair value		11,016			(5,165	)		—			5,851
Common and preferred stock trading, at fair value		5,276			(4,788	)		8,874	(b)		9,362
Other investments		160,735			(9,323	)		152	(c)		163,066
					11,770	(b)
					(268	)(c)
Total investments		520,002			(63,267	)		9,026			465,761
Premiums and other receivables, net of allowance		18,329			(676	)		—			17,653
Reinsurance assets, net of allowance		24,414			(82	)		—			24,332
Deferred policy acquisition costs		28,970			(10,300	)		—			18,670
Current and deferred income taxes		3,999			(4,367	)		(625			(993	)
					(5,974	)(d)
Other assets		38,958			(2,438	)		—			35,904
					(616	)(d)
Separate account assets, at fair value		53,803			(6,894	)		—			46,909
Assets held for sale		162,056						(107,069	)		54,987
Total assets	$	850,531		$	(88,640	)	$	(98,668	)	$	663,223
Liabilities:
Liability for unpaid claims and claims adjustment expense	$	85,604		$	—		$	—		$	85,604
Future policy benefits for life and accident and health insurance contracts		92,949			(45,409	)		—			47,540
Policyholder contract deposits		156,758			(12,697	)		—			144,061
Other liabilities		79,923			(9,833	)		190	(e)		70,280
Federal Reserve Bank of New York credit facility		26,457			(3,509	)(d)		—			22,948
Other long-term debt		108,286			(499	)		—			107,787
Separate account liabilities		53,803			(6,894	)		—			46,909
Liabilities held for sale		142,104			—			(93,468	)		48,636
Total liabilities		745,884			(78,841	)		(93,278	)		573,765
Redeemable noncontrolling interests in partially owned consolidated subsidiaries		1,923			—			—			1,923
AIG shareholders’ equity:
Preferred stock
Series E; $5.00 par value; 400,000 shares issued, at aggregate liquidation value		41,605			—			—			41,605
Series F; $5.00 par value; 300,000 shares issued, at aggregate liquidation value of $7,543		7,378			—			—			7,378
Series C; $5.00 par value; 100,000 shares issued, at aggregate liquidation value of $0.50		23,000			—			—			23,000
Common stock, $2.50 par value; 5,000,000,000 shares authorized, 141,777,208 shares issued		354			—			—			354
Treasury stock, at cost; 6,660,908 shares of common stock		(873	)		—			—			(873	)
Additional paid-in capital		6,297									6,297
Accumulated deficit		(12,120	)		9,861	(f)					789
					(6,908	)(d)		(674	)(d)
Accumulated other comprehensive income		9,829			(2,908	)		(1,230	)		5,691
Total AIG shareholders’ equity		75,470			6,953			1,818			84,241
Noncontrolling interests:
Noncontrolling nonvoting, callable, junior and senior preferred interests held by Federal Reserve Bank of New York		25,567			(16,354	)(g)		(7,206	)(g)		2,007
Other		1,687			(59	)		(154	)		1,287
					(339	)(c)		152	(c)
Total noncontrolling interests		27,254			(16,752	)		(7,208	)		3,294
Total equity		102,724			(9,799	)		(5,390	)		87,535
Total liabilities and equity	$	850,531		$	(88,640	)	$	(98,668	)	$	663,223

See Note 3 to the Pro Forma Condensed Consolidated Financial Statements.

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American International Group, Inc., and Subsidiaries

Pro Forma Condensed Consolidated Statement of Income (Unaudited) Six Months Ended June 30, 2010

				Pro Forma Adjustments(a)
(dollars in millions, except share data)	Historical			AIA			ALICO			Pro Forma
Revenues:
Premiums and other considerations	$	25,075		$	(4,808	)	$	-		$	20,267
Net investment income		10,931			(1,588	)		4	(b)		9,368
					21	(b)
Net realized capital gains (losses):
Net other-than-temporary impairments on available for sale securities recognized in income from continuing operations		(1,434	)		30			—			(1,404	)
Other realized capital gains		375			(264	)		—			111
Total net realized capital losses		(1,059	)		(234	)		—			(1,293	)
Other income		4,946			(3	)		—			4,943
Total revenues		39,893			(6,612	)		4			33,285
Benefits, claims and expenses:
Policyholder benefits and claims incurred		21,035			(3,968	)		—			17,067
Policy acquisition and other insurance expenses		7,829			(1,275	)		—			6,554
Interest expense		3,885			(168	)(c)		—			3,717
Other expenses		3,784			(26	)		(7	)		3,751
Total benefits, claims and expenses		36,533			(5,437	)		(7	)		31,089
Income from continuing operations before income tax expense (benefit)		3,360			(1,175	)		11			2,196
Income tax expense (benefit)		(112	)		(199	)		177			264
Income from continuing operations		3,472			(1,374	)		(166	)		2,441
Less:
Net income from continuing operations attributable to noncontrolling interests:
Noncontrolling nonvoting, callable, junior and senior preferred interests held by Federal Reserve Bank of New York		1,027			(758	)(d)		(186	)(d)		83
Other		139			(7	)		4	(b)		160
					24	(b)
Net income from continuing operations attributable to AIG	$	2,306		$	(633	)	$	16		$	1,689
Income from continuing operations per common share attributable to AIG: (e)
Basic	$	3.44								$	2.52
Diluted	$	3.44								$	2.52
Weighted average shares outstanding:
Basic		135,745,903									135,745,903
Diluted		135,807,313									135,807,313

See Note 4 to the Pro Forma Condensed Consolidated Financial Statements.

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American International Group, Inc., and Subsidiaries

Pro Forma Condensed Consolidated Statement of Loss (Unaudited) Year Ended December 31, 2009

				Pro Forma Adjustments(a)
(dollars in millions, except share data)	Historical			AIA			ALICO			Pro Forma
Revenues:
Premiums and other considerations	$	54,767		$	(9,264)		$	—		$	45,503
Net investment income		20,373			(5,214)			10	(b)		14,980
					(189)	(b)
Net realized capital gains (losses):
Net other-than-temporary impairments on available for salesecurities recognized in loss from continuing operations		(6,303	)		(372)			—			(6,675	)
Other realized capital gains (losses)		368			(66)			—			302
Total net realized capital losses		(5,935	)		(438	)		—			(6,373	)
Other income		12,918			(4)			—			12,914
Total revenues		82,123			(15,109	)		10			67,024
Benefits, claims and expenses:
Policyholder benefits and claims incurred		52,798			(10,419)			—			42,379
Policy acquisition and other insurance expenses		16,942			(2,528)			—			14,414
Interest expense		15,184			(1,702)	(c)		(304)	(c)		13,178
Other expenses		12,061			(21)			(11)			12,029
Total benefits, claims and expenses		96,985			(14,670	)		(315	)		82,000
Income (loss) from continuing operations before income tax expense (benefit)		(14,862	)		(439	)		325			(14,976	)
Income tax expense (benefit)		(1,500	)		(1,071)			(782)			(3,353	)
Income (loss) from continuing operations		(13,362	)		632			1,107			(11,623	)
Less:
Net income (loss) from continuing operations attributable to noncontrolling interests:
Noncontrolling nonvoting, callable, junior and senior preferred interests held by Federal Reserve Bank of New York		140			404	(d)		50	(d)		594
Other		(1,574	)		(174)			10	(b)		(1,738	)
Net income (loss) from continuing operations attributable to AIG	$	(11,928	)	$	402		$	1,047		$	(10,479	)
Loss from continuing operations per common share attributable to AIG: (i)
Basic	$	(97.72	)							$	(87.01	)
Diluted	$	(97.72	)							$	(87.01	)
Weighted average shares outstanding:
Basic		135,324,896									135,324,896
Diluted		135,324,896									135,324,896

See Note 4 to the Pro Forma Condensed Consolidated Financial Statements.

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American International Group, Inc., and Subsidiaries

Note 1 — Basis of Presentation

     The unaudited Pro Forma Condensed Consolidated Statements of Income (Loss) for the year ended December 31, 2009 and the six-month period ended June 30, 2010 give effect to the initial public offering of AIA Group Limited (AIA) and sale of American Life Insurance Company (ALICO) as if they had occurred on January 1, 2009. The unaudited Pro Forma Condensed Consolidated Balance Sheet at June 30, 2010 gives effect to the dispositions as if they had occurred on June 30, 2010. The details of these transactions are described in Item 2.01 of this Current Report.

     The unaudited pro forma condensed consolidated financial statements have been prepared from available information and management estimates in accordance with the requirements of the Securities and Exchange Commission and do not purport to be indicative of the financial condition or results of operations of AIG as of such date or for such periods, nor are they necessarily indicative of future results. However, the pro forma adjustments reflected in the accompanying unaudited pro forma consolidated financial information reflect estimates and assumptions that AIG believes to be reasonable.

Note 2 — Use of Net Cash Proceeds

     Under the limited liability company agreements of AIA Aurora LLC, a special purpose vehicle formed by AIG to hold AIA (AIA Aurora), and ALICO Holdings LLC, a special purpose vehicle formed by AIG to hold ALICO (ALICO Holdings), net cash proceeds from the initial public offering (IPO) of AIA and from the sale of ALICO would be distributed to the members of AIA Aurora and ALICO Holdings, respectively, with distributions made first to the Federal Reserve Bank of New York (FRBNY) in its capacity as holder of the preferred interests in AIA Aurora and ALICO Holdings.

     However, under AIG’s Agreement in Principle to recapitalize AIG (the Recapitalization) with the FRBNY, the United States Department of the Treasury and the AIG Credit Facility Trust, net cash proceeds from the IPO of AIA and from the sale of ALICO will instead be placed into escrow. Upon the closing of the Recapitalization, net cash proceeds from the AIA IPO and from the sale of ALICO will first be loaned to AIG and used to repay amounts owed under the FRBNY credit facility (FRBNY Credit Facility) provided under the Credit Agreement, dated as of September 22, 2008, between AIG and the FRBNY. Any amount of the net cash proceeds remaining after repayment of the FRBNY Credit Facility would then be distributed to the FRBNY to reduce the liquidation preference of the FRBNY’s preferred interests in AIA Aurora and ALICO Holdings as described above. AIG holds the common interests in AIA Aurora and ALICO Holdings and will generally receive distributions only after the preferred interests have received all required distributions.

     If the Recapitalization transactions are not completed, it is expected that the escrow arrangement would terminate and that net cash proceeds would be distributed as originally contemplated by the limited liability company agreements of AIA Aurora and ALICO Holdings. In that case, it is expected that, of the approximately $20.2 billion of net cash proceeds from the IPO of AIA, approximately $16 billion plus accrued, but unpaid, preferred returns would be distributed to the FRBNY as holder of the preferred interests in AIA Aurora, with the balance distributed to AIG as holder of the common interests and used to repay amounts owing under the FRBNY Credit Facility; and that $7.2 billion in net cash proceeds from the sale of ALICO would be distributed to the FRBNY as holder of the preferred interests in ALICO Holdings.

     These pro forma condensed consolidated financial statements do not give effect to the provisions of the Recapitalization Agreement in Principle, as these transactions are subject to negotiation and execution of definitive agreements.

Note 3 — Unaudited Pro Forma AIA and ALICO Adjustments to Condensed Consolidated Balance Sheet

(a)	IPO of AIA reduced AIG’s ownership percentage to approximately 33 percent. Unless otherwise noted, adjustments reflect AIG’s deconsolidation of AIA and elimination of ALICO held for sale balance sheet amounts at June 30, 2010.
(b)	Represents AIG’s retained interest in AIA after the IPO and the portion of proceeds from the sale of ALICO representing equity securities of MetLife.
(c)	Entries to reflect the effects of changes in AIG’s ownership interests held by AIA and ALICO in variable interest entities that result in the deconsolidation or recognition of noncontrolling interests.
(d)	Represents remaining proceeds of $3.5 billion from the AIA IPO applied as a mandatory prepayment of the FRBNY Credit Facility, after reducing the liquidation preference on the preferred interests held by the FRBNY. Also reflects associated write-off of prepaid commitment fee asset.
(e)	Represents amount of liabilities to be retained.
(f)	Represents gains on the AIA IPO and the sale of ALICO. Also includes the reversal of accrued dividends, accretion and residual value on participation interests relating to reducing the liquidation preference on the preferred interests held by the FRBNY.
(g)	Represents the application of cash proceeds from AIA’s IPO and the sale of ALICO to reduce the liquidation preference on the preferred interests held by the FRBNY with the remaining AIA net cash proceeds used to paydown the FRBNY Credit Facility.

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Note 4 — Unaudited Pro forma AIA and ALICO Adjustments to Condensed Consolidated Statements of Income (Loss)

(a)	Upon completion of the IPO of AIA, AIG’s ownership percentage was reduced to approximately 33 percent. Unless otherwise noted, adjustments relate to the deconsolidation of AIA from AIG’s results. Results from ALICO are not included in continuing operations herein as ALICO was presented as a discontinued operation.
(b)	Entries to reflect the effects of changes in AIG’s ownership interests held by AIA and ALICO in variable interest entities that result in the deconsolidation or recognition of noncontrolling interests.
(c)	Reflects adjustments to interest expense, including periodic amortization of the prepaid commitment fee asset following the application of proceeds.
(d)	Reflects the effects of the application of cash proceeds on previously recognized preferred interest returns.
(e)	Computed in accordance with AIG’s earnings per share calculation methodology, as set forth in Note 16 to the Consolidated Financial Statements included within AIG’s Form 8-K dated August 6, 2010 after giving effect to pro forma adjustments above.

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