Document:

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                                                                    Exhibit 10.1

[DEPARTMENT OF JUSTICE SEAL]

                                    U.S. DEPARTMENT OF JUSTICE

                                    Criminal Division

                                    Fraud Section
--------------------------------------------------------------------------------
                                    Washington, D.C. 20530

                                    February 7,2006

Martin Flumenbaum, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019-6064

         Re: American International Group, Inc.

         This letter sets forth the agreement ("Agreement") between the United
States Department of Justice, Fraud Section, Criminal Division (the
"Department") and American International Group, Inc. ("AIG"). (1)

         The Department has notified AIG that, in the Department's view, which
is based upon an investigation by the Department and the United States Postal
Inspection Service, AIG, acting through some of its employees, violated federal
criminal law in connection with misstatements in periodic financial reports AIG
filed with the United States Securities & Exchange Commission ("SEC") between
2000 and 2004, which misstatements related to transactions known as "AIG/Gen Re
LPT" and "CAPCO."

Facts Regarding AIG/Gen Re LPT and CAPCO

         The parties jointly acknowledge the following factual statements
regarding AIG/Gen Re LPT and CAPCO as accurate:

         AIG/Gen Re LPT

         AIG improperly recorded approximately $250 million in loss reserves in
the fourth quarter of 2000 and reported those additional loss reserves to the
public in its earnings releases and in financial reports it filed with the SEC.
It improperly recorded an additional $250 million in loss reserves in the first
quarter of 2001 and also reported those additional loss reserves in its earnings
releases and SEC reports. Both increases in loss reserves resulted from the
AIG/Gen RE LPT transactions.

----------
         (1) This Agreement does not impact, alter or modify in any way the
terms of the Deferred Prosecution Agreement dated November 30, 2004 between the
Department and AIG-FP Pagic Equity Holding Corp., or the letter agreement dated
November 30, 2004 between the Department, the United States Attorneys Office for
the Southern District of Indiana and AIG, or any of the obligations thereunder
by AIG or AIG-FP Pagic Equity Holding Corp.

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         AIG entered into these transactions following investment analysts'
criticism of AIG's reported loss reserve reductions in the third quarter of
2000. During the fourth quarter of 2000, high-level executives at AIG solicited
high-level executives at Gen Re to execute a series of transactions which were
designed to enable AIG to book and improperly report an increase in loss
reserves totaling $500 million. The transaction documentation included: 1) a
false "paper trail" offer letter which made it appear that AIG had been
requested by Gen Re to assume certain reinsurance risk from Gen Re; and 2)
contracts which falsely made it appear that AIG was assuming reinsurance risk
and was being paid an up-front fee of $10 million for doing so, when, in fact,
AIG was not assuming any real risk and was paying Gen Re an undisclosed $5
million plus interest for participating in the transactions. As a result of
these sham transactions, AIG improperly reported positive loss reserve growth
for each of those periods when, in fact, AIG would have reported further
decreases in loss reserves for those quarters.

         On or about May 31, 2005, AIG filed its 2004 Form 10-K with the SEC
which reversed and restated the $500 million increase in loss reserves relating
to the AIG/Gen Re LPT transaction and stated in part: "AIG has concluded that
the transaction was done to accomplish a desired accounting result and did not
entail sufficient qualifying risk transfer. As a result, AIG has determined that
the transaction should not have been recorded as insurance. AIG's restated
financial statements recharacterize the transaction as a deposit rather than as
insurance."

CAPCO

         In 2000, AIG initiated a scheme to hide approximately $200 million in
underwriting losses in its general insurance business by improperly converting
them into capital losses (i.e., investment losses) that were less important to
the investment community, and thus would blunt the attention of investors and
analysts. As a result of the CAPCO transaction, AIG improperly failed to record
and report in its earnings releases disseminated to investors and in financial
reports filed with the SEC approximately $200 million in underwriting losses for
the years 2000, 2001 and 2002.

         To effect that scheme, AIG structured a series of bogus transactions to
convert underwriting losses to investment losses by transferring them to Capco
Reinsurance Company, Ltd. ("Capco"), an offshore entity. AIG in effect
capitalized Capco through an AIG subsidiary and through non-recourse loans to
individuals who acted as supposed independent shareholders of Capco. AIG should
have consolidated Capco's financial results into AIG's financial statements
because, among other reasons, Capco lacked sufficient equity from sources other
than AIG and its affiliates. In its restatement filed with the SEC in May 2005,
AIG admitted that the Capco transaction "involved an improper structure created
to recharacterize underwriting losses relating to auto warranty business as
capital losses. That structure ... appears to have not been properly disclosed
to appropriate AIG personnel or its independent auditors."

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The Parties' Agreement

   AIG agrees:

         1.       to accept responsibility for its actions and the actions of
                  its employees as set forth above;

         2.       to abide by the Consent and Undertakings of Defendant American
                  International Group, Inc. in the SEC Action, a copy of which
                  is attached hereto as Appendix B and incorporated herein;

         3.       to cooperate with the ongoing criminal investigation by the
                  Department;

         4.       to timely and voluntarily make available to the Department all
                  current employees that the Department requests to interview;

         5.       to provide in a timely way to the Department all documents and
                  other materials, including documents and materials located
                  outside the United States, that the Department requests;

         6.       to provide in a timely way truthful, complete and accurate
                  information to the Department concerning any matter relating
                  to the ongoing criminal investigation by the Department;

         7.       to acknowledge and agree that the Department can share any
                  information, documents, materials and statements provided by
                  AIG with other federal law enforcement entities and regulatory
                  agencies;

         8.       not to make, cause others to make, or acknowledge as true any
                  factual statement inconsistent with the factual descriptions
                  of the AIG/Gen Re LPT and CAPCO transactions contained herein,
                  provided, however, that nothing in this paragraph precludes
                  AIG from taking good faith positions in litigation involving a
                  private party; and

         9.       to pay $25 million by certified check or bank cashier's check
                  to the United States Postal Inspection Service Consumer Fraud
                  Fund immediately upon execution of this Agreement.

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         The Department acknowledges: 1) AIG's cooperation in the Department's
investigation to date; and 2) AIG's acceptance of its responsibility to date for
its actions and the actions of its employees, as demonstrated by: a) its consent
to the Final Judgment as to Defendant American International Group, Inc., in the
matter styled Securities and Exchange Commission v. American International
Group, Inc., (the "SEC Action"), a copy of which is attached hereto as Appendix
A and incorporated herein; and b) its payment of $800 million as required by the
Final Judgment as to Defendant American International Group, Inc., in the SEC
Action.

         In consideration of AIG's agreements as set forth above, as well as its
cooperation and acceptance of responsibility as described above, the Department
will not prosecute AIG for any crimes committed by AIG relating to the AIG/Gen
Re LPT or CAPCO transactions, subject to the terms set forth below.

         AIG understands and agrees that if AIG or any of its employees,
officers and directors fail to comply with, or violate, any provision of this
Agreement, the Department can prosecute AIG for crimes committed by and through
its employees related to the AIG/Gen Re LPT or CAPCO transactions. Should the
Department determine that AIG has committed a willful and knowing breach of any
provision of this Agreement, the Department shall provide written notice to AIG
of the alleged breach.

         AIG further understands and agrees that the Department's exercise of
discretion under the preceding paragraph is not subject to review in any court
or tribunal outside the Criminal Division of the Department of Justice, and that
any prosecution following such a determination may be premised on any
information provided by AIG and its employees, officers and directors to the
Department and any leads derived therefrom. AIG agrees that it will not seek to
suppress the use of any such information, or any leads derived therefrom, and
that it will stipulate to the admissibility of all such information in any
prosecution by the Department.

         AIG understands and agrees that this Agreement expires three years from
the date of its execution and that it is binding only upon AIG and the
Department. AIG agrees to toll the running of the statute of limitations on all
federal crimes committed by AIG acting through its employees relating in any way
to the AIG/Gen Re LPT or CAPCO transactions for the three years this agreement
is in effect.

         AIG understands and agrees that this Agreement does not provide any
protection to any individual or any entity other than AIG.

         AIG hereby warrants and represents that it is authorized to enter into
this Agreement and that the person signing this Agreement has the authority to
bind AIG.

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         This Agreement constitutes the entire agreement between the parties and
it may not be modified except in writing signed by all the parties. This
Agreement may be executed in counterparts.

                                             Yours truly,

                                             /s/ Paul E. Pelletier
                                             ----------------------------
                                             Paul E. Pelletier, Acting Chief
                                             Fraud Section, Criminal Division
                                             United States Department of Justice

Agreed:

/s/ Martin Sullivan
----------------------------
Martin Sullivan
President and Chief Executive Officer
American International Group, Inc.

/s/ Martin Flumenbaum
----------------------------
Martin Flumenbaum
Counsel for American International Group, Inc.

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                                                                    Exhibit 10.2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE COMMISSION,

                     PLAINTIFF,

                         V.

                                             06 CIV.__________________ (____)

AMERICAN INTERNATIONAL GROUP, INC.,

                     DEFENDANT.

                         FINAL JUDGMENT AS TO DEFENDANT

                       AMERICAN INTERNATIONAL GROUP, INC.

         The Securities and Exchange Commission having filed a Complaint, and
Defendant American International Group, Inc. ("Defendant") having entered a
general appearance; consented to the Court's jurisdiction over Defendant and the
subject matter of this action; consented to entry of this Final Judgment without
admitting or denying the allegations of the Complaint (except as to
jurisdiction); waived findings of fact and conclusions of law; and waived any
right to appeal from this Final Judgment:

                                       I.

         IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant and its
agents, servants, employees, attorneys, and all persons in active concert or
participation with them who receive actual notice of this Final Judgment by
personal service or otherwise are permanently restrained and enjoined from
violating Section 17(a) of the Securities Act [15 U.S.C. Section 77q(a)] in the
offer or sale of any security by the use of any means or instruments of

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transportation or communication in interstate commerce or by use of the mails,
directly or indirectly:

         (a)      to employ any device, scheme, or artifice to defraud;

         (b)      to obtain money or property by means of any untrue statement
                  of a material fact or any omission of a material fact
                  necessary in order to make the statements made, in light of
                  the circumstances under which they were made, not misleading;

                  or

         (c)      to engage in any transaction, practice, or course of business
                  which operates or would operate as a fraud or deceit upon the
                  purchaser.

                                      II.

         IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant and its
agents, servants, employees, attorneys, and all persons in active concert or
participation with them who receive actual notice of this Final Judgment by
personal service or otherwise are permanently restrained and enjoined from
violating, directly or indirectly, Section 10(b) of the Exchange Act [15 U.S.C.
Section 78j(b)] and Rule l0b-5 [17 C.F.R. Section 240.10b-5], by using any means
or instrumentality of interstate commerce, or of the mails, or of any facility
of any national securities exchange, in connection with the purchase or sale of
any security:

         (a)      to employ any device, scheme, or artifice to defraud;

         (b)      to make any untrue statement of a material fact or to omit to
                  state a material fact necessary in order to make the
                  statements made, in the light of the circumstances under which
                  they were made, not misleading; or

         (c)      to engage in any act, practice, or course of business which
                  operates or would operate as a fraud or deceit upon any
                  person.

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                                      III.

         IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant and its
agents, servants, employees, attorneys, and all persons in active concert or
participation with them who receive actual notice of this Final Judgment by
personal service or otherwise are permanently restrained and enjoined from
violating Section 13(a) of the Exchange Act [15 U.S.C. Section 78m(a)] or Rules
12b-20,13a-1 or 13a-13 [17 C.F.R. Sections 240.12b-20,240.13a-1 and
240.13a-13], by, directly or indirectly:

         (A)      failing to file with the Commission any report required to be
                  filed with the Commission pursuant to Section 13(a) of the
                  Exchange Act [15 U.S.C. Section 78m(a)], and the rules and
                  regulations promulgated thereunder; or

         (B)      filing with the Commission a report required to be filed with
                  the Commission pursuant to Section 13(a) of the Exchange Act
                  [15 U.S.C. Section 78m(a)] and the rules and regulations
                  promulgated thereunder that (1) contains an untrue statement
                  of material fact; (2) fails to include, in addition to the
                  information required to be stated in such report, such
                  further material information as may be necessary to make the
                  required statements, in light of the circumstances under which
                  they are made, not misleading; or (3) fails to disclose any
                  information required to be disclosed therein.

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                                      IV.

         IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant and its
agents, servants, employees, attorneys, and all persons in active concert or
participation with them who receive actual notice of this Final Judgment by
personal service or otherwise are permanently restrained and enjoined from
violating Sections l3(b)(2) and 13(b)(5) of the Exchange Act [15 U.S.C Section
78m(b)(2) and Section 78m(b)(5)] and Rule 13b2-1 [17 CFR Section 240.l3b2-l]
by, directly or indirectly:

         (A)      failing to make and keep books, records and accounts, which,
                  in reasonable detail, accurately and fairly reflect the
                  transactions and dispositions of the assets of an issuer;

         (B)      failing to devise and maintain a system of internal accounting
                  controls sufficient to provide reasonable assurances that

                  (1)      transactions are executed in accordance with
                           management's general or specific authorization;

                  (2)      transactions are recorded as necessary to permit
                           preparation of financial statements in conformity
                           with generally accepted accounting principles, or any
                           other criteria applicable to such statements, and to
                           maintain accountability for assets;

                  (3)      access to assets is permitted only in accordance with
                           management's general or specific authorization; and

                  (4)      the recorded accountability for assets is compared
                           with the existing assets at reasonable intervals and
                           appropriate action is taken with respect to any
                           differences;

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         (C)      falsifying, or causing to be falsified, any book, record or
                  account subject to Section 13(b)(2)(A) of the Exchange Act [15
                  U.S.C. Section 78m(b)(2)(A)], or

         (D)      knowingly circumventing or knowingly failing to implement a
                  system of internal accounting controls or knowingly falsifying
                  any book, record, or account described in Section 13(b)(2) of
                  the Exchange Act [15 U.S.C. Section 78m(b)(2)].

                                       V.

         IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendant shall
disgorge $700,000,000 representing profits gained as a result of the conduct
alleged in the Complaint, pursuant to Section 21(d)(5) of the Exchange Act [15
U.S.C. Section 78u(d)(5)] and pay a civil penalty in the amount of $100,000,000
pursuant to Section 20(d) of the Securities Act [15 U.S.C. Section 77t(d)] and
Section 21(d)(3) of the Exchange Act [15 U.S.C. Section 78u(d)(3)]. Defendant
shall satisfy this obligation by paying a total of $800,000,000 within ten
business days after the entry of this Final Judgment to the Clerk of this Court
by means of a wire transfer, certified check, bank cashier's check, or United
States postal money order payable to the Clerk of the Court, together with a
cover letter identifying American International Group, Inc. as a defendant in
this action; setting forth the title and civil action number of this action and
the name of this Court; and specifying that payment is made pursuant to this
Final Judgment. Defendant shall simultaneously transmit photocopies of such
payment and letter to the Commission's counsel in this action, Robert J. Keyes,
U.S. Securities and Exchange Commission, Northeast Regional Office, 3 World
Financial Center, Room 4300, New York, New York 10281-1022. Defendant shall pay
post-judgment interest on any delinquent amounts pursuant to 28 U.S.C. Section
1961. By making this payment, Defendant relinquishes all legal and equitable
right, title, and interest in such funds, and no part of the funds shall be
returned to Defendant. The Clerk shall

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deposit the funds into an interest bearing account with the Court Registry
Investment System ("CRIS"). These funds, together with any interest and income
earned thereon (collectively, the "Fund"), shall be held by the CRIS until
further order of the Court. In accordance with 28 U.S.C. Section 1914 and the
guidelines set by the Director of the Administrative Office of the United States
Courts, the Clerk is directed, without further order of this Court, to deduct
from the income earned on the money in the Fund a fee equal to two percent of
the income earned on the Fund. Such fee shall not exceed that authorized by the
Judicial Conference of the United States.

         The Commission shall by motion, subject to the Court's approval,
propose a plan to distribute the Fund for the benefit of investors, including,
but not limited to, some or all of the members of the putative class in any
Related Investor Action, pursuant to the Fair Fund provisions of Section 308(a)
of the Sarbanes-Oxley Act of 2002. Regardless of whether any such Fair Fund
distribution is made, amounts ordered to be paid as civil penalties pursuant to
this Judgment shall be treated as penalties paid to the government for all
purposes, including all tax purposes. To preserve the deterrent effect of the
civil penalty, Defendant shall not, after offset or reduction of any award of
compensatory damages in any Related Investor Action based on Defendant's payment
of disgorgement in this action, argue that it is entitled to, nor shall it
further benefit by, offset or reduction of such compensatory damages award by
the amount of any part of Defendant's payment of a civil penalty in this action
("Penalty Offset"). If the court in any Related Investor Action grants such a
Penalty Offset, Defendant shall, within 30 days after entry. of a final order
granting the Penalty Offset, notify the Commission's counsel in this action and
pay the amount of the Penalty Offset to the United States Treasury or to a Fair
Fund, as the Commission directs. Such a payment shall not be deemed an
additional civil penalty and shall not be deemed to change the amount of the
civil penalty imposed in this Judgment. For purposes

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of this paragraph, a "Related Investor Action" means a private damages action
brought against Defendant by or on behalf of one or more investors based on
substantially the same facts as alleged in the Complaint in this action,
including but not limited to the lawsuits that have been consolidated as In re
American International Group, Inc. Securities Litigation, Master No. 04 Civ.
8142 (JES) (SDNY).

                                      VI.

         IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Consent is
incorporated herein with the same force and effect as if fully set forth herein,
and that Defendant shall comply with all of the undertakings and agreements set
forth therein.

                                      VII.

         IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that this Court shall
retain jurisdiction of this matter for the purposes of enforcing the terms of
this Final Judgment.

SO ORDERED.

Dated:                ,2006

        New York, New York

                                  UNITED STATES DISTRICT JUDGE

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                     CONSENT AND UNDERTAKINGS OF DEFENDANT

                         AMERICAN INTERNATIONAL GROUP, INC.

     1. Defendant American International Group, Inc. ("Defendant" or "AIG")
waives service of a summons and the complaint in this action, enters a general
appearance, and admits the Court's jurisdiction over Defendant and over the
subject matter of this action.

     2. Without admitting or denying the allegations of the Complaint (except as
to personal and subject matter jurisdiction, which Defendant admits), Defendant
hereby consents to the entry of the Final Judgment in the form attached hereto
(the "Final Judgment") and incorporated by reference herein, which, among other
things:

     a.   permanently restrains and enjoins Defendant from violation of Section
          17(a) of the Securities Act of 1933 ("Securities Act"), Sections
          l0(b), 13(a), 13(b)(2)(A) and (B), and 13(b)(5) of the Securities
          Exchange Act of 1934 ("Exchange Act"), and Rules 10b-5, 12b-20, 13a-1,
          13a-13, and 13b2-1;

     b.   orders Defendant to pay disgorgement in the amount of $700,000,000;
          and

     c.   orders Defendant to pay a civil penalty in the amount of $100,000,000
          under Section 20(d) of the Securities Act [15 U.S.C. Section 77t(d)]
          and Section 21(d)(3) of the Exchange Act [15 U.S.C. Section
          78u(d)(3)].

     3. Defendant acknowledges that Commission shall by motion, subject to the
Court's approval, propose a plan to distribute the disgorgement and civil
penalty paid pursuant to the Final Judgment, together with any interest and
income earned thereon, for the benefit of investors, including, but not limited
to, some or all of the members of the putative class in any Related Investor
Action, pursuant to the Fair Fund provisions of Section 308(a) of the
Sarbanes-Oxley Act of 2002. Regardless of whether any such Fair Fund
distribution is made, the civil

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penalty shall be treated as a penalty paid to the government for all purposes,
including all tax purposes. To preserve the deterrent effect of the civil
penalty, Defendant agrees that it shall not, after offset or reduction of any
award of compensatory damages in any Related Investor Action based on
Defendant's payment of disgorgement in this action, argue that it is entitled
to, nor shall it further benefit by, offset or reduction of such compensatory
damages award by the amount of any part of Defendant's payment of a civil
penalty in this action ("Penalty Offset"). If the court in any Related Investor
Action grants such a Penalty Offset, Defendant agrees that it shall, within 30
days after entry of a final order granting the Penalty Offset, notify the
Commission's counsel in this action and pay the amount of the Penalty Offset to
the United States Treasury or to a Fair Fund, as the Commission directs. Such a
payment shall not be deemed an additional civil penalty and shall not be deemed
to change the amount of the civil penalty imposed in this action. For purposes
of this paragraph, a "Related Investor Action" means a private damages action
brought against Defendant by or on behalf of one or more investors based on
substantially the same facts as alleged in the Complaint in this action,
including but not limited to the lawsuits that have been consolidated as In re
American International Group, Inc. Securities Litigation, Master File No. 04
Civ. 8142 (JES) (SDNY).

     4. Defendant agrees to comply with the following undertakings:

          A. Retention of a Consultant

               1.   AIG agrees to retain, pay for, and enter into an agreement
                    with a consultant ("Consultant"), not unacceptable to the
                    Commission Staff, in consultation with the Attorney General
                    of the State of New York (the "Attorney General") and with
                    the Superintendent of Insurance of the State of New York
                    (the "Superintendent"), to conduct a comprehensive

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                    examination and review of the areas specified below and to
                    make recommendations to AIG's Board of Directors and the
                    Commission Staff. The Consultant's compensation and expenses
                    shall be borne exclusively by AIG, and shall not be deducted
                    from any amount due under the provisions of the Final
                    Judgment.

                    a. The agreement shall provide that the Consultant examine:

                     i.     AIG's internal controls over financial reporting
                            (the Consultant may, if appropriate, rely on AIG's
                            independent accountant's attestation and report on
                            management's assessment of the effectiveness of
                            AIG's internal control structure and procedures
                            pursuant to Section 404 of the Sarbanes-Oxley Act);

                     ii.    The organization and reporting structure of AIG's
                            internal audit department and AIG's disclosure
                            committee (which is described in Exhibit A);

                     iii.   The policies, procedures and effectiveness of AIG's
                            regulatory, compliance and legal functions,
                            including the operations of any committees
                            established to review and approve transactions or
                            for the purpose of preventing the recording of
                            transactions or financial reporting results in a
                            manner inconsistent with Generally Accepted
                            Accounting Principles ("GAAP");

                     iv.    AIG's records management and retention policies
                            and procedures;

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                      v.    The adequacy of whistleblower procedures designed
                            to allow employees and others to report
                            confidentially matters that may have bearing on
                            AIG's financial reporting obligations;

                     vi.    AIG's training and education program described in
                            paragraph D.2, below;

                     vii.   The reforms that AIG has implemented as a result
                            of the Review, which are set forth in Exhibit A; and

                     viii.  The adequacy and effectiveness of the remediation
                            plan described in paragraph D.1 below.

          B. Consultant's Reporting Obligations

               1.   The Consultant shall issue a report to AIG's Board of
                    Directors and to the Commission Staff within three months of
                    appointment, provided, however, that the Consultant may seek
                    to extend the period of review for one or more additional
                    three-month terms by requesting such an extension from the
                    Commission's Staff. The Commission Staff, after consultation
                    with the Attorney General and the Superintendent, shall have
                    discretion to grant such extensions as it deems reasonable
                    and warranted.

               2.   The Consultant's report shall set forth the Consultant's
                    recommendations regarding best practices in the areas
                    specified in paragraph 1.a.i through 1.a.viii above,
                    including the Consultant's recommendations for any changes
                    in or improvements to AIG's policies and procedures that the
                    Consultant reasonably deems necessary to conform to the law
                    and best

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                    practices, and a procedure for implementing the recommended
                    changes in or improvements to AIG's policies and procedures.

               3.   AIG shall adopt all recommendations contained in the report
                    of the Consultant referred to in paragraph B.2 above,
                    provided, however, that within forty-five days of receipt of
                    the report, AIG shall in writing advise the Consultant and
                    the Commission Staff of any recommendations that it
                    considers to be unnecessary or inappropriate. With respect
                    to any recommendation that AIG considers unnecessary or
                    inappropriate, AIG need not adopt that recommendation at
                    that time but shall propose in writing an alternative
                    policy, procedure or system designed to achieve the same
                    objective or purpose.

               4.   As to any recommendation with respect to AIG's policies and
                    procedures on which AIG and the Consultant do not agree,
                    such parties shall attempt in good faith to reach an
                    agreement within ninety days of the issuance of the
                    Consultant's report. In the event AIG and the Consultant are
                    unable to agree on an alternative proposal, AIG will abide
                    by the determinations of the Consultant.

               5.   AIG shall retain the Consultant for a period of three years
                    from the date of appointment in accordance with the
                    provisions of paragraph C below. Once the Consultant's
                    recommendations become final, the Consultant shall oversee
                    the implementation of such recommendations and provide a
                    report to AIG's Board of Directors and to the Commission
                    Staff every three months concerning the progress of such
                    implementation. If, at the

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                    conclusion of this three-year period, less than all
                    recommended reforms have been substantially implemented for
                    at least two successive quarters, the Commission Staff may,
                    in its discretion after consultation with the Attorney
                    General and the Superintendent, direct AIG to extend the
                    Consultant's term of appointment until such time as all
                    recommended reforms have been substantially implemented for
                    at least two successive quarters.

          C. Terms of Retention

               Within forty-five days after the date of entry of the Final
               Judgment, AIG will submit to the Commission Staff a proposal
               setting forth the identity, qualifications, and proposed terms of
               retention of the Consultant. The Commission Staff, within thirty
               days of such notice, will either (1) deem AIG's choice of
               Consultant and proposed terms of retention not unacceptable or
               (2) require AIG to propose an alternative Consultant and/or
               revised proposed terms of retention within fifteen days. This
               process will continue, as necessary, until AIG has selected a
               Consultant and retention terms that are not unacceptable to the
               Commission Staff. AIG shall enter into an agreement with the
               Consultant that shall contain the following terms:

               1.   The Consultant shall provide AIG's Board of Directors and
                    the Commission Staff with such documents or other
                    information concerning the areas identified in paragraph A
                    above, as any of them may request during the pendency or at
                    the conclusion of the review.

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               2.   The Consultant shall have reasonable access to all of the
                    books and records of AIG and its subsidiaries and the
                    ability to meet privately with the personnel of AIG and its
                    subsidiaries. AIG may not assert the attorney-client
                    privilege, the protection of the work-product doctrine, or
                    any privilege as a ground for not providing the Consultant
                    with contemporaneous documents or other information related
                    to the matters that are the subject of the review. AIG shall
                    instruct and otherwise encourage its officers, directors,
                    and employees to cooperate fully with the review conducted
                    by the Consultant, and inform its officers, directors, and
                    employees that failure to cooperate with the review will be
                    grounds for dismissal, other disciplinary actions, or other
                    appropriate actions.

               3.   The Consultant shall have the right, as reasonable and
                    necessary in his or her judgment, to retain, at AIG's
                    expense, attorneys, accountants, and other persons or firms,
                    other than officers, directors, or employees of AIG, to
                    assist in the discharge of his or her obligations under the
                    undertakings. AIG shall pay all reasonable fees and expenses
                    of any persons or firms retained by the Consultant.

               4.   The Consultant shall make and keep notes of interviews
                    conducted, and keep a copy of documents gathered, in
                    connection with the performance of his or her
                    responsibilities, and require all persons and firms retained
                    to assist the Consultant to do so as well.

               5.   The Consultant's relationship with AIG shall not be treated
                    as one between an attorney and client. The Consultant will
                    not assert the

                                       14
<PAGE>
                    attorney-client privilege, the protection of the
                    work-product doctrine, or any privilege as a ground for not
                    providing any information obtained in the review sought by
                    the Commission Staff.

               6.   If the Consultant determines that he or she has a conflict
                    with respect to one or more of the areas described in
                    paragraph A or otherwise, he or she shall delegate his or
                    her responsibilities with respect to that subject to a
                    person who is chosen by the Consultant and who is not
                    unacceptable to the Commission Staff.

               7.   For the period of engagement and for a period of two years
                    from completion of the engagement, the Consultant shall not
                    enter into any employment, consulting, attorney-client,
                    auditing or other professional relationship with AIG, or any
                    of its present or former subsidiaries or affiliates,
                    directors, officers, employees, or agents acting in their
                    capacity as such; and shall require that any firm with which
                    the Consultant is affiliated or of which the Consultant is a
                    member, or any person engaged to assist the Consultant in
                    performance of the Consultant's duties under the Final
                    Judgment not, without prior written consent of the
                    Commission Staff, enter into any employment, consulting,
                    attorney-client, auditing or other professional relationship
                    with AIG, or any of its present or former subsidiaries or
                    affiliates, directors, officers, employees, or agents acting
                    in their capacity as such for the period of the engagement
                    and for a period of two years after the engagement. For the
                    purposes of this section,

                                       15
<PAGE>
                    representation of a person or firm insured by AIG shall not
                    be deemed a professional relationship with AIG.

               8.   AIG, including the Board of Directors and committees of the
                    Board of Directors of AIG, shall not assert, or permit its
                    subsidiaries to assert, the attorney-client privilege, the
                    protection of the work-product doctrine, or any privilege as
                    a ground for not providing to the Consultant any documents,
                    information, or testimony that AIG provided to the
                    Commission Staff which the Consultant has deemed necessary
                    for his or her review.

               9.   The Consultant shall treat and maintain information of AIG
                    and its subsidiaries as strictly confidential and shall not
                    disclose such information other than to the Commission
                    Staff, and to the Consultant's personnel, agents or
                    representatives who need to know such information for the
                    purpose of the review contemplated herein, or as otherwise
                    required by law.

               10.  At the conclusion of the Consultant's engagement, subject to
                    the approval of the Commission Staff, after consultation
                    with the Attorney General and the Superintendent, the
                    Consultant shall return to AIG all documents reflecting or
                    referring to non-public business and financial information
                    of AIG and its subsidiaries.

          D. Additional Undertakings

               1.   Within four months after the entry of the Final Judgment,
                    AIG will draft a remediation plan consisting of (i) steps to
                    address and correct the causes of

                                       16
<PAGE>
                    the material weaknesses in internal controls over financial
                    reporting as identified in AIG's 2004 Form 10-K; (ii) a
                    program to test the operational effectiveness of new or
                    enhanced controls; and (iii) completion of management's
                    testing of the relevant significant controls.

               2.   AIG agrees that it will establish and maintain a training
                    and education program, completion of which will be required
                    for (a) officers, executives, and employees of AIG and its
                    subsidiaries who are involved in the oversight of accounting
                    and financial reporting functions; (b) all employees in
                    AIG's legal division with responsibility for or oversight of
                    AIG's accounting, financial reporting or disclosure
                    obligations; and (c) other senior officers and executives of
                    AIG and its subsidiaries, as proposed by AIG and approved by
                    the Consultant (collectively the "Mandatory Participants").

               3.   The structure and operation of the training and education
                    program shall be reviewed and approved by the Consultant.
                    The training and education program shall be designed to
                    cover, at a minimum, the following: (a) the obligations
                    imposed on AIG by the federal securities laws, including
                    AIG's financial reporting and disclosure obligations; (b)
                    proper internal accounting controls and procedures; (c)
                    discovering and recognizing accounting practices that do not
                    conform to GAAP or that are otherwise improper; and (d) the
                    obligations assumed by, and responses expected of, the
                    Mandatory Participants upon learning of improper, illegal or
                    potentially illegal acts relating to AIG's accounting and
                    financial

                                       17
<PAGE>
                    reporting. The Board of Directors shall communicate to the
                    Mandatory Participants, in writing or by video, its
                    endorsement of the training and education program.

     5. Defendant waives the entry of findings of fact and conclusions of law
pursuant to Rule 52 of the Federal Rules of Civil Procedure.

     6. Defendant waives the right, if any, to a jury trial and to appeal from
the entry of the Final Judgment.

     7. Defendant enters into this Consent voluntarily and represents that no
threats, offers, promises, or inducements of any kind have been made by the
Commission or any member, officer, employee, agent, or representative of the
Commission to induce Defendant to enter into this Consent.

     8. Defendant agrees that this Consent shall be incorporated into the Final
Judgment with the same force and effect as if fully set forth therein.

     9. Defendant will not oppose the enforcement of the Final Judgment on the
ground, if any exists, that it fails to comply with Rule 65(d) of the Federal
Rules of Civil Procedure, and hereby waives any objection based thereon.

     10. Defendant waives service of the Final Judgment and agrees that entry of
the Final Judgment by the Court and filing with the Clerk of the Court will
constitute notice to Defendant of its terms and conditions. Defendant further
agrees to provide counsel for the Commission, within thirty days after the Final
Judgment is filed with the Clerk of the Court, with an affidavit or declaration
stating that Defendant has received and read a copy of the Final Judgment.

     11. Consistent with 17 C.F.R. Section 202.5(f), this Consent resolves only
the claims asserted against Defendant in this civil proceeding. Defendant
acknowledges that no promise or

                                       18
<PAGE>
representation has been made by the Commission or any member, officer, employee,
agent, or representative of the Commission with regard to any criminal liability
that may have arisen or may arise from the facts underlying this action or
immunity from any such criminal liability. Defendant waives any claim of Double
Jeopardy based upon the settlement of this proceeding, including the imposition
of any remedy. Defendant further acknowledges that the Court's entry of a
permanent injunction may have collateral consequences under federal or state law
and the rules and regulations of self-regulatory organizations, licensing
boards, and other regulatory organizations. Such collateral consequences
include, but are not limited to, a statutory disqualification with respect to
membership or participation in, or association with a member of, a
self-regulatory organization. This statutory disqualification has consequences
that are separate from any sanction imposed in an administrative proceeding. In
addition, in any disciplinary proceeding before the Commission based on the
entry of the injunction in this action, Defendant understands that it shall not
be permitted to contest the factual allegations of the complaint in this action.

     12. Defendant understands and agrees to comply with the Commission's policy
"not to permit a defendant or respondent to consent to a judgment or order that
imposes a sanction while denying the allegation in the complaint or order for
proceedings." 17 C.F.R. Section 202.5. In compliance with this policy, Defendant
agrees: (i) not to take any action or to make or permit to be made any public
statement denying, directly or indirectly, any allegation in the complaint or
creating the impression that the complaint is without factual basis; and (ii)
that upon the filing of this Consent, Defendant hereby withdraws any papers
filed in this action to the extent that they deny any allegation in the
complaint. If Defendant breaches this agreement, the Commission may petition the
Court to vacate the Final Judgment and restore this action to its active docket.

                                       19
<PAGE>
Nothing in this paragraph affects Defendant's: (i) testimonial obligations; or
(ii) right to take legal or factual positions in litigation or other legal
proceedings in which the Commission is not a party.

     13. Defendant hereby waives any rights under the Equal Access to Justice
Act, the Small Business Regulatory Enforcement Fairness Act of 1996, or any
other provision of law to seek from the United States, or any agency, or any
official of the United States acting in his or her official capacity, directly
or indirectly, reimbursement of attorney's fees or other fees, expenses, or
costs expended by Defendant to defend against this action. For these purposes,
Defendant agrees that Defendant is not the prevailing party in this action since
the parties have reached a good faith settlement.

     14. In connection with this action and any related judicial or
administrative proceeding or investigation commenced by the Commission or to
which the Commission is a party, Defendant (i) agrees to make its employees
available for interviews with the Commission Staff at such times and places as
the Commission Staff requests upon reasonable notice; (ii) will accept service
by mail or facsimile transmission of notices or subpoenas issued by the
Commission for documents or testimony at depositions, hearings, or trials, or in
connection with any related investigation by Commission Staff; (iii) appoints
Defendant's undersigned attorney as agent to receive service of such notices and
subpoenas; (iv) with respect to such notices and subpoenas, waives the
territorial limits on service contained in Rule 45 of the Federal Rules of Civil
Procedure and any applicable local rules, provided that the Commission
reimburses Defendant's travel, lodging, and subsistence expenses at the
then-prevailing U.S. Government per diem rates; and (v) consents to personal
jurisdiction over Defendant in any United States District Court for purposes of
enforcing any such subpoena.

                                       20
<PAGE>
     15. Defendant agrees that the Commission may present the Final Judgment to
the Court for signature and entry without further notice.

                                       21
<PAGE>
     16. Defendant agrees that this Court shall retain jurisdiction over this
matter for the purpose of enforcing the terms of the Final Judgment.

Dated: 2/1/06                         American International Group, Inc.

                                      By: /s/ Martin J. Sullivan
                                          --------------------------------------
                                          Martin J. Sullivan
                                          President and Chief Executive Officer

STATE OF New York   )
                    ) ss.:
COUNTY OF New York  )

     On February 1, 2006, Martin J. Sullivan, a person known to me, personally
appeared before me and acknowledged executing the foregoing Consent with full
authority to do so on behalf of American International Group, Inc. as its Pres.
& CEO.

                                      /s/ Sandra A. LeMonds
                                      --------------------------------------
                                      Notary Public
                                      Commission expires:

                                              SANDRA A. LeMONDS
                                              Notary Public, State of New York
                                              No. 01LE5059041
                                              Qualified in New York County
                                              Commission Expires April 22, 2006

Approved as to form:

/s/ Martin Flumenbaum
-------------------------------
Martin Flumenbaum, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019-6064
(212) 373-3000
Attorney for Defendant

                                       22
<PAGE>
                                    EXHIBIT A

 American International Group, Inc. ("AIG") represents that AIG's current senior
management and its Board of Directors have taken or are taking corporate
governance reforms, including, among other things:

      a)    ensuring that AIG's Audit Committee and Regulatory, Compliance and
            Legal Committee, respectively, will examine AIG's internal audit
            department and the compliance functions within AIG's legal
            department, including compliance with all of the terms and
            conditions of the Final Judgment;

      b)    ensuring that a disclosure committee is established to assist AIG's
            chief executive officer and chief financial officer in fulfilling
            their responsibility for oversight of the accuracy and timeliness of
            the disclosures made by AIG, that this committee includes among its
            members AIG's chief compliance officer, chief accounting officer and
            general counsel, and that the disclosure committee meets and confers
            prior to significant SEC filings and the issuance of earnings press
            releases;

      c)    establishing enhanced corporate governance procedures as are
            developed in discussions between the Consultant appointed pursuant
            to the Final Judgment, the board, and the nominating and corporate
            governance committee; and

      d)    establishing a general insurance risk-transfer policy and
            implementing practices and procedures for the evaluation of such
            risk transfer under GAAP and applicable insurance regulatory
            accounting principles.
<PAGE>
                              CORPORATE RESOLUTION

       The undersigned, Kathleen E. Shannon, the Senior Vice President and
 Secretary of American International Group, Inc. (hereinafter "AIG" or "the
 Corporation"), certifies that the following resolution was duly enacted at a
 meeting of the Board of Directors of AIG held on January 31, 2006:

       RESOLVED: That each of Martin J. Sullivan, the President of the
 Corporation, and Ernest T. Patrikis, the Senior Vice President and General
 Counsel of the Corporation, be and hereby is authorized to act on behalf of the
 Corporation, and to negotiate, approve, accept and execute the "Consent and
 Undertakings of American International Group, Inc." attached hereto, in
 connection with the investigation conducted by the Securities and Exchange
 Commission; in this connection, each of Martin J. Sullivan and Ernest T.
 Patrikis be and hereby is authorized to undertake such actions as he may deem
 necessary and advisable; including the execution of such documentation as may
 be required by the Securities and Exchange Commission in order to carry out the
 intent and purpose of the foregoing.

       I further certify that the aforesaid resolution has not been amended or
 revoked in any respect and is still in full force and effect.

       IN WITNESS WHEREOF, I have duly executed this Certificate as a sealed
 instrument as the duly elected, qualified and acting Senior Vice President and
 Secretary of American International Group, Inc., hereunto authorized this 7th
 day of February, 2006.

                                 AMERICAN INTERNATIONAL GROUP, INC.
 Dated: February 7, 2006         By:  /s/ Kathleen E. Shannon
                                 Its:  Senior Vice President and Secretary

                                       23
<PAGE>
 The parties entitled to be notified of the entry hereof and the names and
 addresses of their respective attorneys, if any, are:

 Plaintiff:

      Ken C. Joseph, Esq.
      United States Securities and Exchange Commission
      Northeast Regional Office
      3 World Financial Center
      Room 4300
      New York, NY 10281-1022
      (212) 336-0097

Defendant:

      Martin Flumenbaum, Esq.
      Paul, Weiss, Rifkind, Wharton & Garrison LLP
      1285 Avenue of the Americas
      New York, NY 10019-6064
      (212) 373-3000

                                       24
<PAGE>

MARK K. SCHONFELD (MS-2798)
REGIONAL DIRECTOR

ATTORNEY FOR PLAINTIFF
SECURITIES AND EXCHANGE COMMISSION
NORTHEAST REGIONAL OFFICE
3 WORLD FINANCIAL CENTER
NEW YORK, NY 10281-1022
(212) 336-1020

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE COMMISSION,

                   PLAINTIFF,

                                                       06 CIV. ______ (__)
          -AGAINST-                                    ECF CASE

AMERICAN INTERNATIONAL GROUP, INC.,
                                                       COMPLAINT

                   DEFENDANT.

      Plaintiff Securities and Exchange Commission (the "Commission"), for its
Complaint against Defendant American International Group, Inc. ("AIG"), alleges
as follows:

                             SUMMARY OF ALLEGATIONS

      1. In this case, the Commission alleges that from at least 2000 until
2005, AIG materially falsified its financial statements through a variety of
sham transactions and entities whose purpose was to paint a falsely rosy picture
of AIG's financial results to analysts and investors.

      2. Among other things, AIG structured two sham reinsurance transactions
with General Re Corporation ("Gen Re"). The purpose of the transactions was to
add a total of $500 million in phony loss reserves to AIG's balance sheet in the
fourth quarter of 2000 and the first
<PAGE>
quarter of 2001. The transactions were initiated by AIG to quell criticism by
analysts concerning a reduction in AIG's loss reserves in the third quarter of
2000. The transactions had no economic substance, amounting to a round trip of
cash, but they were designed to, and did, have a specific and false accounting
effect.

      3. Shortly after receiving the Commission's subpoena in February 2005
specifically directed to the Gen Re transaction, AIG commenced an internal
investigation that ultimately led to a restatement of its prior accounting for
approximately 66 transactions or items.

      4. In its restatement, AIG admitted not only that its accounting for
certain transactions had been improper, but also that the purpose behind those
transactions had been to improve financial results that AIG had believed to be
important to the market.

      5. AIG also conceded in its restatement that certain transactions may have
"involved documentation that did not accurately reflect the true nature of the
arrangements ... [and] misrepresentations to members of management, regulators
and AIG's independent auditors."

      6. AIG further admitted that "there was insufficient risk transfer to
qualify for insurance accounting for certain transactions where AIG subsidiaries
either wrote direct insurance or assumed or ceded reinsurance."

      7. In a May 31, 2005 press release announcing the restatement, AIG said
that the restatement would reduce AIG's consolidated shareholders' equity at
December 31, 2004 by approximately $2.26 billion (or 2.7%).

      8. During the period of the fraud, AIG distributed its stock in a
stock-for-stock corporate acquisition.

      9. AIG's admission of these extensive accounting irregularities came on
the heels of two prior Commission actions against AIG alleging violations of the
federal securities laws.

                                       2
<PAGE>
      10. In the first case, in September 2003, the Commission charged AIG with
securities fraud for fashioning and selling a sham "insurance" product to
Brightpoint, Inc. for the sole purpose of enabling Brightpoint to report false
and misleading financial information to the public. AIG settled that action with
the payment of a $10 million civil penalty. See SEC v. Brightpoint, Inc., et
al., Litig. Rel. No. 18340 (Sept. 11, 2003).

      11. In the second case, in November 2004, the Commission again charged AIG
with securities fraud for developing, marketing, and entering into transactions
that enabled another public company, PNC Financial Services Group, Inc., to
remove fraudulently certain volatile, troubled, or underperforming loans and
other assets from its balance sheet. AIG settled that action and related
criminal charges by paying $126 million in disgorgement and penalties and
retaining an independent consultant to, among other things, review certain other
transactions to which AIG had been a party. See SEC v. American Int'l Group,
Inc., Litig. Rel. No. 18985 (Nov. 30, 2004).

      12. In connection with the conduct alleged in this Complaint, AIG employed
devices, schemes, and artifices to defraud that AIG deliberately designed to
have a materially false and misleading impact on AIG's financial statements,
that did have such an impact, and that operated as a fraud.

      13. In the offer and sale and in connection with the purchase and sale of
its securities, AIG made material misrepresentations and omissions of material
fact in annual and other periodic reports filed with the Commission, other
Commission filings, and press releases.

                                   VIOLATIONS

      14. By virtue of the foregoing conduct, AIG, directly or indirectly,
singly or in concert, has engaged in acts, practices and courses of business
that constitute violations of

                                       3
<PAGE>
Sections 17(a)(l), 17(a)(2), and 17(a)(3) of the Securities Act of 1933
("Securities Act") [15 U.S.C. Sections 77q(a)(l), 77q(a)(2), 77q(a)(3)],
Sections l0(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange
Act of 1934 ("Exchange Act") [15 U.S.C. Sections 78j(b), 78m(a), 78(m)(b)(2)(A),
78(m)(b)(2)(B), and 78(m)(b)(5)] and Rules 1Ob-5(a), 10b-5(b),10b-5(c),
12b-20,13a-1,13a-13, and 13b2-1 [17 C.F.R. Sections 240.10b-5(a), 240.10b-5(b),
240.10b-5(c), 240.12b-20, 13a-1, 13a-13, and 13b2-1].

                             JURISDICTION AND VENUE

      15. The Commission brings this action pursuant to the authority conferred
upon it by Section 20(b) of the Securities Act [15 U.S.C. Section 77t(b)] and
Section 21(d)(1) of the Exchange Act [15 U.S.C. Section 78u(d)(l)] seeking a
final judgment: (i) restraining and permanently enjoining AIG from violating
certain specified provisions of the federal securities laws; (ii) requiring AIG
to disgorge any ill-gotten gains; and (iii) imposing civil money penalties
against AIG pursuant to Section 20(d) of the Securities Act [15 U.S.C. Section
77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. Section 78u(d)(3)].

      16. This Court has jurisdiction over this action pursuant to Section 22(a)
of the Securities Act [15 U.S.C. Section 77v(a)] and Sections 21(e) and 27 of
the Exchange Act [15 U.S.C. Sections 78u(e) and 78aa].

      17. AIG, directly or indirectly, singly or in concert, has made use of the
means and instrumentalities of interstate commerce, or of the mails, in
connection with the transactions, acts, practices and courses of business
alleged herein.

      18. Venue lies in the Southern District of New York, pursuant to Section
22(a) of the Securities Act [15 U.S.C. Section 77v(a)] and Section 27 of the
Exchange Act [15 U.S.C. Sections 78u(e) and 78aa]. AIG's principal corporate
offices are located in New York, New York.

                                       4
<PAGE>
                                  THE DEFENDANT

      19. AIG, a Delaware corporation, is a holding company that, through its
subsidiaries, is engaged in a broad range of insurance and insurance-related
activities in the United States and abroad. AIG's common stock is registered
with the Commission pursuant to Section 12(b) of the Exchange Act and is listed
on the New York Stock Exchange.

      20. During the period of the fraud, AIG distributed its stock in
connection with its August 29, 2001 acquisition of American General Corporation
("American General") to American General stockholders.

                             OTHER RELEVANT ENTITIES

      21. Gen Re is a Connecticut corporation with its principal corporate
offices located in Stamford, Connecticut. Gen Re is a holding company for global
reinsurance and related risk assessment, risk transfer, and risk management
operations. Gen Re became a wholly owned subsidiary of Berkshire Hathaway Inc.
on December 21, 1998. Berkshire Hathaway's Class A and Class B common stock is
registered with the Commission pursuant to Section 12(b) of the Exchange Act and
is traded on the New York Stock Exchange.

      22. Capco Reinsurance Company Ltd. ("Capco") was a Barbados company that
was a subsidiary of Western General Insurance Ltd. until 2000. Capco was
liquidated in 2002.

      23. Union Excess Reinsurance Company Ltd. ("Union Excess") is a Barbados
reinsurer used by AIG for the purpose of reinsuring certain insurance contracts
entered into by AIG.

                                      FACTS

      24. In 2000 and 2001, AIG falsely increased its loss reserves, and falsely
reported these increases in its financial statements, through two sham
transactions whose purpose was to

                                       5
<PAGE>
quell analyst criticism about AIG's declining loss reserves. In addition, AIG
entered into at least two other transactions that resulted in misrepresentations
in AIG's financial statements.

A. AIG'S INTERNAL REVIEW AND RESTATEMENT

      25. On February 10, 2005, the Commission issued a subpoena to AIG in
connection with an investigation. The subpoena prompted AIG to commence its own
internal investigation.

      26. From approximately March through May 2005, AIG conducted an internal
review under the direction of its current senior management and with the
oversight of AIG's audit committee.

      27. On March 14, 2005, AIG announced that its Board of Directors had
implemented a management succession plan with the selection of a new president
and CEO, who would succeed AIG's then-chairman and CEO. AIG also announced that
a new CFO had been selected and would succeed its then-CFO, who had taken a
leave of absence. On approximately March 28, 2005, AIG`s CEO retired.

      28. On March 30, 2005, AIG announced that the filing of its 2004 Form 10-K
would be delayed in order to complete an internal review of AIG's books and
records that included issues arising from pending regulatory investigations.

      29. On May 31, 2005, AIG announced that it had completed its internal
review and filed its 2004 Form 10-K. The Form 10-K included a restatement of its
financial statements for the years ended December 31, 2000, 2001, 2002 and 2003,
and selected quarterly information for the quarters ended March 31, June 30 and
September 30, 2003 and 2004, and the quarter ended December 31, 2003. In
connection with the restatement, AIG amended its periodic quarterly filings on
Form 10-Q for the periods ended March 31, 2003 and 2004 in a 10-Q/A filed on
June 28, 2005; for the periods ended June 30, 2003 and 2004 on a 10-Q/A filed on
August 9, 2005; and for the period ended September 30, 2004 in a 10-Q filed on
November 14, 2005.

                                       6
<PAGE>
      30. The restatement resulted in a reduction of consolidated shareholders'
equity of $2.26 billion at December 31,2004.

      31. AIG's restatement disclosed the following with respect to certain
transactions:

            In many cases these transactions or entries appear to have had the
            purpose of achieving an accounting result that would enhance
            measures believed to be important to the financial community and may
            have involved documentation that did not accurately reflect the true
            nature of the arrangements. In certain instances, these transactions
            or entries may also have involved misrepresentations to members of
            management, regulators and AIG's independent auditors.

      32. The restatement summarized several transactions that were accounted
for improperly. Among these were two sham reinsurance transactions with Gen Re
designed to improperly increase loss reserves.

      33. The restatement also briefly addressed several other transactions that
resulted in misstatements in AIG's financial statements, including transactions
involving Capco and Union Excess.

B. THE SHAM GEN RE TRANSACTIONS

      34. As a result of analysts' concerns regarding a reduction in AIG's loss
reserves in the third quarter of 2000, AIG and Gen Re structured two sham
reinsurance transactions. The transactions had as their purpose to provide
apparent support for AIG to add a total of $500 million in phony loss reserves
to its balance sheet in the fourth quarter of 2000 and the first quarter of
2001.

      35. In actuality, the two transactions entailed Gen Re paying $500 million
in reinsurance "premiums" in return for AIG's reinsuring a $500 million risk. In
other words, the transactions had no economic substance, amounting to a
roundtrip of cash, but were designed to

                                       7
<PAGE>
look like genuine reinsurance with the required element of risk transfer, in
order to achieve a specific, and false, accounting effect.

      36. The only economic benefit to either party was a $5 million fee paid by
AIG to Gen Re for putting the deal together -- a side deal not reflected in the
contracts. The "premiums" due AIG under the terms of the contracts were merely
window dressing and were in fact prefunded by AIG to Gen Re in an undisclosed
side agreement.

      37. Although AIG initiated the transactions, AIG, with Gen Re's
assistance, created a phony paper trail to make it appear as though Gen Re had
solicited the reinsurance when the parties knew that AIG sought the deal to
manipulate its financial statements.

      38. As AIG conceded in its restatement, the Gen Re transactions were "done
to accomplish a desired accounting result and did not entail sufficient
qualifying risk transfer. As a result, AIG has determined that the
transaction[s] should not have been recorded as insurance."

      39. In its restatement, AIG recharacterized the Gen Re transactions as a
deposit instead of as insurance.

      1. THE PURPOSE: THE FALSE APPEARANCE OF INCREASED LOSS RESERVES

      40. Prior to the Gen Re transactions, on October 26,2000, AIG issued its
third quarter earnings release showing an approximate $59 million decline in
general insurance reserves.

      41. This reduction in general insurance reserves drew criticism from
certain analysts. One analyst wrote: "One concern over the past several quarters
has been reserve growth, which has been minimal or even has declined in certain
quarters. There has been concern that AIG is releasing reserves to make its
numbers." Other analysts voiced similar concerns.

      42. At least two analysts downgraded AIG after the earnings release.

                                       8
<PAGE>
      43. Following AIG's third quarter 2000 earnings release, issued on October
26,2000, AIG's stock price dropped 6%.

      44. Just a few days later, on approximately October 31,2000, AIG's
then-CEO called Gen Re's then-CEO to propose a transaction whereby Gen Re would
transfer $200 million to $500 million of loss reserves to AIG by year-end.

      45. In conversations regarding this proposed transaction, AIG's CEO made
it clear to Gen Re's CEO that he wanted a transaction involving no risk to AIG.
A real transfer of loss reserves to AIG would necessarily have involved AIG's
assumption of some risk. However, AIG was one of Gen Re's largest clients and
Gen Re wanted to accommodate AIG.

      46. Gen Re's CEO turned to several Gen Re senior executives, including Gen
Re's then-CFO, to work out the details of the transaction.

      47. AIG's CEO turned to an AIG senior executive to act as the AIG point
person in structuring the deal.

      48. On November 1,2000, a Gen Re executive sent an email to Gen Re
officials confirming that he spoke with the AIG senior executive assigned to the
deal and that AIG "only want[s] reserve impact" from the deal "to address the
criticism [AIG] received from the analysts" in the third quarter of 2000. In
subsequent communications, AIG and Gen Re executives further discussed the
fundamental elements of the deal.

      49. AIG and Gen Re then fashioned two contracts between National Union
Fire Insurance Company of Pittsburgh, PA ("National Union"), an AIG subsidiary,
and Cologne Re Dublin ("CRD"), a Dublin, Ireland-based subsidiary of a Gen Re
subsidiary. These purportedly were retrocession contracts, or contracts in which
a reinsurer cedes to another reinsurer all or part of a reinsured risk it
previously assumed - in other words, reinsurance of reinsurance.

                                       9
<PAGE>
      50. Under the terms of the contracts, National Union purportedly reinsured
CRD for up to $600 million in losses ($300 million per contract). In
consideration for the reinsurance from National Union, CRD was obligated to pay
$500 million in premiums ($250 million per contract). In actuality, both parties
had agreed that AIG would not have to pay any losses under the contracts, even
though the contracts were written to appear as if AIG could incur $100 million
in losses.

      51. These sham contracts became the vehicle for adding loss reserves to
AIG's financial statements. Without the phony loss reserves added to AIG's
balance sheet and touted in its earnings releases, AIG's earnings releases would
have shown continued reductions in loss reserves for the fourth quarter of 2000
and the first quarter of 2001, instead of $500 million of additional loss
reserves.

      2. REINSURANCE ACCOUNTING PRINCIPLES

      52. The sole purpose of these transactions was to make it appear as though
Gen Re was purchasing reinsurance from AIG so that AIG could record loss
reserves associated with the reinsurance contracts.

      53. Had this been real reinsurance involving a real transfer of risk, AIG
would have been entitled to record reserves in the amount of the loss that was
probable and reasonably estimable under generally accepted accounting principles
("GAAP"). Under Statement of Financial Accounting Standards ("FAS") No. 113, a
reinsurer may record a loss reserve pertaining to a reinsurance contract only
when the reinsurer is assuming significant insurance risk (underwriting and
timing risk) and it is reasonably possible that the reinsurer may realize a
significant loss for the transaction.

                                       10
<PAGE>
      54. When there is insufficient risk transfer, a transaction may not be
treated as insurance for GAAP purposes, but rather must be accounted for using
the deposit method, which has no effect on loss reserves. Deposit accounting
simply reflects that one party owes funds to another party.

      55. AIG's contracts with Gen Re, through their subsidiaries National Union
and CRD, were not real reinsurance contracts, because AIG assumed no risk. The
only economic benefit to either party was a $5 million fee that AIG paid to Gen
Re for putting the sham transactions together.

      56. Because the transactions had no substance, AIG should not have
increased its reserves at all. At best, AIG should have recorded the
transactions as deposits on its books - i.e., as money owed to Gen Re - which
would have had no effect on AIG's reserves.

      57. By accounting for the transactions as if they were genuine reinsurance
contracts, AIG inflated its reserves for losses and loss expense by $500 million
and its premiums and other considerations by $500 million in total.

      3. THE STRUCTURE OF THE NO RISK DEAL

      58. The transactions consisted of two contracts. The first contract had an
effective date of December 1,2000. The second contract had an effective date of
March 31,2001.

      59. Under these contracts, National Union purportedly reinsured CRD for up
to $600 million in losses ($300 million per contract). In consideration for the
reinsurance from National Union, CRD was obligated to pay $500 million in
premiums ($250 million per contract).

      60. The contracts did not reflect the actual arrangement. As the AIG and
Gen Re executives who were involved understood, this was to be a riskless
transaction for both AIG and Gen Re.

                                       11
<PAGE>
      61. Although on the face of the contracts National Union appeared to
assume $100 million of risk over and above the $500 million in premiums CRD was
obligated to pay, this extra $100 million of risk was pure fiction added to make
it appear that the contracts transferred risk to National Union, as AIG
understood.

      62. In fact, National Union assumed no risk and CRD incurred no premium
liability. Of the $500 million in premiums set forth in the contracts, $490
million was on a "funds withheld" basis (i.e., the money was never paid to
National Union but was retained by CRD). CRD was supposed to pay the remaining
$10 million to National Union according to the contracts, but AIG "prefunded"
this portion of the contractual premium amount in a side deal that was not
reflected in the contracts.

      63. Hence, neither AIG nor Gen Re could profit or lose from the
transactions except for the $5 million fee AIG agreed to pay Gen Re for its
trouble.

      4. AIG AND GEN RE CONCEALED PAYMENTS THROUGH UNDISCLOSED SIDE AGREEMENTS

      64. AIG concealed undisclosed side agreements that revealed the true
nature of the transaction.

      65. Gen Re did not want to give National Union $10 million in purported
premiums until AIG prefunded that amount to Gen Re, plus Gen Re's fee for doing
the deal. The AIG executive assigned to the transaction proposed a solution to
this problem to Gen Re: AIG and Gen Re would enter into a purportedly unrelated
transaction to conceal the payment by AIG.

      66. The unrelated transaction, which was finalized by the AIG senior
executive in December 2001, involved an existing reinsurance contract between
Gen Re and another AIG subsidiary, Hartford Steam Boiler Inspection and
Insurance Company ("HSB").

                                       12
<PAGE>
      67. Gen Re held over $30 million in an account that would be owed to HSB
if that unrelated reinsurance contract were commuted, which is insurance
parlance for "terminated."

      68. The AIG senior executive proposed that the parties use the HSB money
to prefund the $10 million premium and pay the $5 million transaction fee for
the Gen Re transactions.

      69. AIG and Gen Re decided to commute the HSB contract and distribute
approximately $15 million from the account to Gen Re, $10 million of which would
be later paid to National Union by CRD as premiums, with the remaining $5
million to compensate Gen Re for doing the deal. In other words, an AIG
subsidiary, HSB, in effect paid another AIG subsidiary, National Union, the $10
million in premiums purportedly owed by CRD under the contracts between CRD and
National Union.

      70. AIG and Gen Re, through senior officers of each company, developed
three additional sham contracts to effect the transfers of the funds in the HSB
account and mask the funding for the AIG/Gen Re transactions.

      71. First, HSB and Gen Re executed a commutation agreement on December 21,
2001. Under the agreement, Gen Re was expressly obligated to pay $7.5 million to
HSB (compared to the over $30 million HSB otherwise would have been entitled to
receive).

      72. Second, National Union and Gen Re executed a retrocession agreement on
December 27, 2001. Under its terms, National Union agreed to reinsure Gen Re for
any losses Gen Re became obligated to pay under its reinsurance contract with
HSB. This was the very reinsurance contract that Gen Re and HSB had commuted
just a few days earlier, eliminating the possibility that Gen Re could incur any
losses under it. Nevertheless, Gen Re paid National Union approximately $9.1
million in "premiums" under their meaningless reinsurance contract,

                                       13
<PAGE>
thus concealing the true reason for the transfer of the $9.1 million and
obscuring that their source was the HSB account.

      73. Third, Gen Re and CRD entered into a sham reinsurance contract whereby
CRD would pay $400,000 in purported premiums to Gen Re for $13 million in
supposed reinsurance coverage. This sham contract was intended to mask the
purpose of the transfer of $12.6 million from the HSB account from Gen Re to
CRD, $10 million to prefund the premiums that CRD would pay to National Union
plus approximately $2.6 million for CRD's portion of the fee Gen Re charged for
putting the transaction together ($5 million as originally agreed plus $200,000
characterized as interest), for the two original agreements with National Union.
On December 28, 2001 Gen Re paid $12.6 million to CRD as "loss payments" due
under this newly created reinsurance contract. Gen Re kept the remaining
approximately $2.6 million as its share of the transaction fee. That same day,
CRD transferred $10 million to National Union for the premium supposedly due
under the agreements.

      74. The AIG and Gen Re executives who had proposed and developed the
structure of these sham contracts understood that these contractual contortions
were intended merely to mask the real reason for the transfer of funds between
AIG and Gen Re.

              5. AIG KNEW THE GEN RE TRANSACTIONS CONVEYED NO RISK

      75. From its inception, AIG's deal with Gen Re was designed to convey no
risk. As AIG's then-CEO and as its senior executives working on the transactions
understood, the transactions did not constitute genuine reinsurance that would
have allowed AIG to add loss reserves to its financial statements.

      76. AIG's CEO made it clear to Gen Re's CEO that he was seeking a transfer
of loss reserves in a risk-free transaction.

                                       14
<PAGE>

      77. Furthermore, AIG and Gen Re entered into side agreements under which
neither AIG nor Gen Re could profit or lose except for the $5 million fee AIG
agreed to pay Gen Re for its trouble.

      78. Contrary to what a company reinsuring losses would have done if the
deal were legitimate, AIG did not perform any due diligence regarding the
underlying losses it was supposedly reinsuring, did not seek or receive any
claims or reports on loss activity during the course of the contracts, and did
not even maintain an underwriting file for the two contracts with CRD.

      79. The AIG and Gen Re executives involved in the transaction also
understood that the accounting for the transaction would not be "symmetrical,"
that is, that AIG and Gen Re would account for it differently. AIG planned to
account for the transactions using reinsurance accounting principles to
improperly add loss reserves to AIG's balance sheet. AIG understood that Gen Re
planned to use deposit accounting, because no risk was conveyed.

      7. THE SHAM PAPER TRAIL

      80. In another effort to conceal a key aspect of the transaction, AIG and
Gen Re deliberately created a sham paper trail suggesting that Gen Re, not AIG,
had initiated the transaction.

      81. The paper trail was designed to make it look as though Gen Re had
solicited the contracts, when, in fact, AIG solicited the deal to manipulate its
loss reserves.

      82. The paper trail idea was first raised in a December 8, 2000 email in
which a senior Gen Re executive wondered: "Do we need to produce a paper trail
offering the transaction to the client?"

                                       15
<PAGE>
      83. Another Gen Re senior executive and the AIG executive assigned to the
deal discussed the idea later that day. AIG decided that it wanted a paper
trail, according to another Gen Re email dated December 8, 2000.

      84. As part of the paper trail, Gen Re faxed AIG an offer letter and draft
contract on December 18, 2000. The offer letter falsely suggested that CRD was
asking for AIG's "help" and "support."

     85. Later, on December 27, 2000, Gen Re emailed another cover letter for
the paper trail that made it appear as if CRD had solicited the transaction.
Once again, this letter falsely indicated that CRD was asking AIG to "provide us
with cover" and "to support the cover."

     86. In a recorded telephone conversation with two senior Gen Re executives
on December 28, 2000, the AIG executive assigned to the deal confirmed receipt
of Gen Re's December 27, 2000 letter. He told them he expected to send a reply
email that day accepting the proposal.

     87. In the same conversation, the AIG executive said that he did not need
any further documentation by year-end to book the transaction as a year 2000
transaction, and that once he sent his reply email accepting the offer, the
"paper trail" would be complete.

     88. The AIG executive sent his reply email completing the paper trail later
that evening.

      8. AIG IMPROPERLY ADDED LOSS RESERVES TO ITS FINANCIAL STATEMENTS

      89. AIG accounted for the agreements between National Union and CRD as if
they were real reinsurance contracts that transferred risk from Gen Re to AIG.
In fact, AIG, through its senior executives involved in the transactions, knew
that there was no such risk transfer and that the transactions in reality had no
economic substance and provided no up- or downside to

                                       16
<PAGE>
either party (other than the undisclosed $5 million fee AIG paid to Gen Re to
create the sham transactions).

      90. By accounting for the contracts as if they were real reinsurance
(i.e., not shams), AIG falsely inflated its Reserves for Losses and Loss Expense
by $250 million and its Premiums and Other Considerations by $250 million in the
financial statements contained in the Form 10-K for the year ended December 31,
2000, which AIG filed with the Commission on April 2, 2001. Similarly, AIG
falsely inflated its Reserves for Losses and Loss Expense by an additional $250
million and its Premiums and Other Considerations by $250 million in the
financial statements contained in the Form 10-Q for the quarter ended March 31,
2001, which AIG filed with the Commission on May 15, 2001. AIG also falsely
inflated its Reserves for Losses and Loss Expense by $500 million and its
Premiums and Other Considerations by $500 million in total in the financial
statements contained in the Form 10-K for the year ended December 31, 2001,
which AIG filed with the Commission on April 1, 2002.

      91. In connection with its acquisition of American General and its
distribution of shares to American General shareholders, AIG filed a
registration statement on Form S-4 on June 8, 2001, which incorporated by
reference AIG's Form 10-K for 2000 and its Form 10-Q for the first quarter of
2001.

      92. The sham loss reserves remained on AIG's financial statements filed
with the Commission, improperly boosting AIG's loss reserves by $500 million,
until the first contract was commuted in November 2004 (AIG's loss reserves were
then decreased by $250 million) and until AIG restated its accounting for the
transaction on May 31, 2005 (at which time the $500 million were restated as
deposits). On August 1, 2005, Gen Re notified AIG that it cancelled the second
contract.

                                       17
<PAGE>
      9. AIG's Materially False Earnings Releases

      93. On February 8, 2001, AIG issued its fourth quarter 2000 earnings
release. The release reflected the impact of the first Gen Re contract.

      94. The earnings release quoted AIG's then-CEO, who touted the increased
loss reserves: "AIG had a very good quarter and year.... We added $106 million
to AIG's general insurance net loss and loss adjustment reserves for the
quarter, and together with the acquisition of HSB Group, Inc., increased the
total of those reserves to $25.0 billion at year-end 2000."

      95. Analysts reacted favorably to the added reserves. A February 9, 2001
analyst report opined: "We think this quarter was a good example of AIG doing
what it does best: growing fast and making the numbers.... As important was the
change in reserves: AIG added $106 million to reserves and the paid/incurred
ratio fell to 97.1%, the lowest level since the first quarter of 1999."

      96. On April 26, 2001, AIG issued its first quarter 2001 earnings release.
The release reflected the impact of the second Gen Re contract.

      97. AIG's then-CEO again touted AIG's additions to its loss reserves in
this release: "AIG had a solid first quarter.... We added $63 million to AIG's
general insurance net loss and loss adjustment reserves for the quarter,
bringing the total of those reserves to $25.0 billion at March 31, 2001."

      98. Once again, analysts appeared to be pleased with the added reserves.

      99. Without the phony loss reserves, AIG's reported loss reserves would
have been $250 million lower in the fourth quarter of 2000 and $500 million less
in the first quarter 2001.

      100. Because the loss reserves added to AIG's balance sheet were phony,
the $106 million increase to reserves touted in AIG's fourth quarter 2000
earnings release in reality

                                       18
<PAGE>
was a $144 million decrease in reserves, and the $63 million increase in
reserves touted in AIG's first quarter 2001 earnings release was in reality a
$187 million decrease in reserves.

      C. OTHER ACCOUNTING MISREPRESENTATIONS

      101. AIG's restatement reflects 65 other items, the accounting for which
AIG determined was incorrect and required restatement. Among other things, these
instances of improper accounting include the Capco and Union Excess transactions
and five additional categories. The improper accounting has led to additional
restatements and the necessity of ongoing remediation activities by AIG.

      1. THE CAPCO TRANSACTION

      102. In 2000, AIG concocted a scheme to conceal approximately $200 million
in underwriting losses in its general insurance business by improperly
converting them to capital (or investment) losses that were not in AIG's general
insurance business and therefore would be less embarrassing to AIG.

      103. AIG structured a sham transaction designed to convert underwriting
losses to investment losses by moving them to an off-shore entity, Capco, a
Barbados reinsurer. Capco's preferred shareholder was an AIG subsidiary,
American International Reinsurance Company, Ltd. ("AIRCO"). Capco also had
nominally independent common shareholders. AIG funded the contributions of
certain of these shareholders.

      104. AIG ceded underwriting losses to Capco, through another AIG
subsidiary, depleting Capco's capital. In turn, AIRCO recognized capital losses
on its investment in Capco.

      105. AIG did not consolidate Capco's results in AIG's financial
statements; consolidation would have eliminated the effect of the fraud.

      106. In its restatement, AIG admitted that the transactions "involved an
improper structure created to recharacterize underwriting losses relating to
auto warranty business as

                                       19
<PAGE>
capital losses. That structure ... appears to have not been properly disclosed
to appropriate AIG personnel or its independent auditors."

      107. In addition, AIG conceded that its internal controls:

               were not effective to prevent certain members of senior
               management, including the former Chief Executive Officer and
               former Chief Financial Officer from having the ability, which in
               certain instances was utilized, to override certain controls and
               effect certain transactions and accounting entries. In certain of
               these instances, such transactions and accounting entries appear
               to have been largely motivated to achieve desired accounting
               results and were not properly accounted for in accordance with
               GAAP.. ..Specifically, this control deficiency permitted the
               following [including]:

               Creation of Capco, a special purpose entity used to effect
               transactions that were recorded to convert, improperly,
               underwriting losses to investment losses and that were not
               correctly accounted for in accordance with GAAP, resulting in a
               misstatement of premiums and other considerations, realized
               capital gains (losses), incurred policy losses and benefits and
               related balance sheet accounts.

      108. The Capco scheme was an improper effort to convert underwriting
losses to capital losses in violation of GAAP and without disclosure to AIG's
auditors, as the restatement acknowledged.

      2. THE UNION EXCESS TRANSACTIONS

      109. In 1991, AIG established Union Excess, an offshore reinsurer, to
which it ultimately ceded approximately 50 reinsurance contracts for its own
benefit.

      110. Although AIG controlled Union Excess, it improperly failed to
consolidate Union Excess's financial results with its own. AIG also took steps
to conceal its control over Union Excess from its auditors and regulators.

      111. As a result, AIG derived a number of advantageous but improper
financial results from its reinsurance cessions to Union Excess. In particular,
Union Excess was used to

                                       20
<PAGE>
"reinsure" certain AIG liabilities. It was treated as an independent entity,
which enabled AIG to reduce, improperly and in material amounts, the amount of
expense associated with the underlying insurance. These financial benefits would
have evaporated if AIG had consolidated Union Excess's results.

      112. AIG established Union Excess for an improper purpose, concealed the
true nature of its relationship with Union Excess from auditors and regulators,
and fraudulently improved its financial results by ceding reinsurance to Union
Excess.

      113. In its restatement, AIG admitted that, based on AIG's control over
Union Excess and the lack of intent to transfer risk, the accounting for the
transaction was improper. AIG should have consolidated Union Excess on its
financial statements. The benefits of the Union Excess relationship would thus
have been eliminated. AIG's restatement acknowledges that AIG controlled Union
Excess.

      114. Specifically, the restatement conceded that:

              AIG has concluded, based on documents and information identified
              during the course of the internal review, that reinsurance ceded
              to Union Excess Reinsurance Company, Ltd., a Barbados-domiciled
              reinsurer (Union Excess), did not result in risk transfer because
              of AIG's control over certain transactions undertaken directly or
              indirectly with Union Excess, including the timing and nature of
              certain commutations. Eliminating the cessions reduces reinsurance
              assets, effectively eliminates the inherent discount related to
              the loss reserves ceded under the contracts, and increases net
              premiums and losses. It should be noted that any income earned on
              the deposit assets in future periods would increase net investment
              income in those periods.

              In addition, as a result of certain facts and circumstances
              related to the formation of Union Excess, as well as certain
              relationships with Starr International Company, Inc. (SICO), Union
              Excess is now included in AIG's consolidated financial statements.
              The facts and

                                       21
<PAGE>
               circumstances surrounding SICO's involvement with Union Excess
               were not properly reflected in AIG's books and records, were not
               known to all relevant AIG financial reporting personnel and, AIG
               now believes, were not known to AIG's independent auditors. For
               example, a significant portion of the ownership interests of
               Union Excess shareholders are protected against loss under
               financial arrangements with SICO. Additionally, from its
               formation in 1991, Union Excess has reinsured risks emanating
               primarily or solely from AIG subsidiaries, both directly and
               indirectly. Further, it appears that the employees responsible
               for the reinsurance related to Union Excess managed that
               relationship to prevent significant losses or gains to Union
               Excess so that substantially all of the risks and rewards of the
               underlying reinsurance inured to AIG. This relationship allowed
               AIG to absorb substantially all the economic returns, which in
               turn caused Union Excess to be deemed a variable interest entity
               (VIE).

      115. AIG's restatement consolidated Union Excess's financial results with
its own.

      3. RISK TRANSFER

      116. AIG concluded that certain transactions - including but not limited
to the Gen Re and Union Excess transactions - did not have the sufficient risk
transfer necessary to qualify for reinsurance accounting. AIG has since restated
the accounting for these transactions using deposit, rather than reinsurance,
accounting.

      4. NET INVESTMENT INCOME

      117. AIG determined that certain transactions and investment strategies
that were entered into in order to enhance net investment income had been
accounted for incorrectly. The restatement admitted that certain transactions or
strategies were "initiated to increase net investment income." In other cases,
AIG accounting staff had incorrectly characterized transactions or reclassified
certain items to increase net investment income or accrued net investment income
on anticipated realizations of gains or carried interest. AIG reversed the
accounting in its restatement.

                                       22
<PAGE>
      5. TOP-LEVEL ADJUSTMENTS

      118. A number of accounting entries, originating at the parent company
level and directed by former senior management, were unsupported and had the
effect of reclassifying income statement items and changing the presentation of
certain financial measures. In some cases, top-level entries were made at the
parent level affecting subsidiaries without the knowledge of the subsidiaries'
management. In other cases, management either was aware of the entries or the
entries were subsequently "pushed-down" to the subsidiaries.

      119. The effect of these entries included reclassifying capital gains to
net investment income, increasing expense deferrals or reducing accruals, both
having the effect of increasing reported earnings, and reducing and increasing
reserves. The restatement reversed all unsupported "top-level" entries from
January 1, 2000 through December 31, 2004.

      6. CONVERSION OF UNDERWRITING LOSSES TO CAPITAL LOSSES

      120. AIG's restatement identified certain transactions and entries that
had the principal effect of improperly recharacterizing underwriting losses as
capital losses, including but not limited to the Capco transactions. This
category also included insurance and reinsurance transactions in which AIG's
accounting resulted in errors relating to the timing and classification of
income recognition and errors relating to the timing of premium recognition.
AIG's restatement conceded that the improper accounting had an effect on
underwriting losses in each year. The restatement reversed the accounting by
converting the capital losses back into underwriting losses.

                                       23
<PAGE>
      7. ASSET REALIZATION

      121. AIG concluded that adjustments needed to be made to the value of
certain assets on its consolidated balance sheet - for example, receivables for
which certain doubtful accounts and other accruals were neither properly
analyzed nor reconciled in prior periods and for which allowances were not
properly recorded in AIG's consolidated financial statements. According to the
restatement, certain of these items were known by members of former senior
management but were not previously disclosed to AIG's independent auditors. The
restatement made these adjustments to the value of the assets.

                             FIRST CLAIM FOR RELIEF
              VIOLATIONS OF SECTION 17(a)(l) OF THE SECURITIES ACT

      122. Paragraphs 1 through 121 are realleged and incorporated by reference
as if set forth fully herein.

      123. AIG, in the offer and sale of securities, by the use of the means and
instruments of transportation and communication in interstate commerce or by the
use of the mails, directly or indirectly, singly or in concert, has employed or
is employing devices, schemes and artifices to defraud.

      124. AIG knew or was reckless in not knowing of the activities described
above. The knowledge and conduct of its senior officers are attributable to AIG.

      125. By reason of the foregoing, AIG has violated, and unless enjoined
will again violate, Section 17(a)(l) of the Securities Act [15 U.S.C. Section
77q(a)(l)].

                      SECOND CLAIM FOR RELIEF VIOLATIONS OF
              SECTIONS 17(a)(2) AND 17(a)(3) OF THE SECURITIES ACT

      126. Paragraphs 1 through 121 are realleged and incorporated by reference
as if set forth fully herein.

                                       24
<PAGE>
      127. AIG, in the offer and sale of securities, by the use of the means and
instruments of transportation and communication in interstate commerce or by the
use of the mails, directly or indirectly, singly or in concert, has obtained or
is obtaining money and property by means of untrue statements of material fact
or omissions to state material facts necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading,
and has engaged or is engaging in transactions, practices or courses of business
which have operated or would operate as a fraud and deceit upon investors.

      128. By reason of the foregoing, AIG has violated, and unless enjoined
will again violate, Sections 17(a)(2) and (3) of the Securities Act [15 U.S.C.
Sections 77q(a)(2) and (3)].

                             THIRD CLAIM FOR RELIEF

                       VIOLATIONS OF SECTION 10(b) OF THE
             EXCHANGE ACT AND RULES 10b-5(a), 10b-5(b), AND 10b-5(c)

      129. Paragraphs 1 through 121 are realleged and incorporated by reference
as if set forth fully herein.

      130. AIG, in connection with the purchase and sale of securities, by the
use of the means and instrumentalities of interstate commerce or of the mails,
directly or indirectly, singly or in concert, has employed or is employing
devices, schemes and artifices to defraud; has made or is making untrue
statements of material fact and has omitted or is omitting to state material
facts necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading; and has engaged or is
engaging in acts, practices and courses of business which have operated or would
operate as a fraud and deceit upon investors.

      131. AIG knew or was reckless in not knowing of the activities described
above. The knowledge and conduct of its senior officers are attributable to AIG.

                                       25
<PAGE>
      132. By reason of the activities herein described, AIG has violated, and
unless enjoined will again violate, Section 10(b) of the Exchange Act [15 U.S.C.
Section 78j(b)] and Rule 10b-5(a), (b) and (c) promulgated thereunder [17 C.F.R.
Section 240.10b-5(a), (b) and (c)].

                             FOURTH CLAIM FOR RELIEF
                  VIOLATIONS OF RULE 13B2-L OF THE EXCHANGE ACT

      133. Paragraphs 1 through 121 are realleged and incorporated by reference
as if set forth fully herein.

      134. AIG, directly or indirectly, singly or in concert, falsified or
caused to be falsified its books, records and accounts that were subject to
Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. Section 78m(b)(2)(A)].

      135. By reason of the foregoing, AIG has violated, and unless enjoined
will again violate, Rule 13b2-l of the Exchange Act [17 C.F.R. Section
240.13b2-l].

                             FIFTH CLAIM FOR RELIEF
                       VIOLATIONS OF SECTION 13(a) OF THE
                 EXCHANGE ACT AND RULES 12b-20,13a-L AND 13a-13

      136. Paragraphs 1 through 121 are realleged and incorporated by reference
as if set forth fully herein.

      137. AIG did not file with the Commission such financial reports as the
Commission has prescribed, and AIG did not include, in addition to the
information expressly required to be stated in such reports, such further
material information as was necessary to make the statements made therein, in
light of the circumstances in which they were made, not misleading, in violation
of Section 13(a) of the Exchange Act [15 U.S.C. Section 78m(a)] and Rules
12b-20, 13a-l and 13a-13 [17 C.F.R. Sections 240.12b-20, 240.13a-l and
240.13a-13].

                                       26
<PAGE>
      138. By reason of the foregoing, AIG has violated, and unless enjoined
will again violate, Section 13(a) of the Exchange Act [15 U.S.C. Section 78m(a)]
and Rules 12b-20,13a-l and 13a-13 [17 C.F.R. Sections 240.12b-20, 240.13a-1 and
240.13a-13].

                             SIXTH CLAIM FOR RELIEF
                       VIOLATIONS OF SECTIONS 13(b)(2)(A),
                  13(b)(2)(B), AND 13(b)(5) OF THE EXCHANGE ACT

      139. Paragraphs 1 through 121 are realleged and incorporated by reference
as if set forth fully herein.

      140. AIG did not:

            a.    make and keep books, records, and accounts, which, in
                  reasonable detail, accurately and fairly reflected the
                  transactions and dispositions of its assets; and

            b.    devise and maintain a system of internal accounting controls
                  sufficient to provide reasonable assurances that:

                  i.    transactions were executed in accordance with
                        management's general or specific authorization;

                  ii.   transactions were recorded as necessary to permit
                        preparation of financial statements in conformity with
                        generally accepted accounting principles or any other
                        criteria applicable to such statements, and to maintain
                        accountability for assets;

                  iii.  access to assets was permitted only in accordance with
                        management's general or specific authorization; and

                                       27
<PAGE>
                  iv.   the recorded accountability for assets was compared with
                        the existing assets at reasonable intervals and
                        appropriate action was taken with respect to any
                        differences.

      141. Furthermore, AIG knowingly circumvented or knowingly failed to
implement a system of internal accounting controls and knowingly falsified
books, records, and accounts described above.

      142. By reason of the foregoing, AIG has violated, and unless enjoined
will again violate, Sections 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the
Exchange Act [15 U.S.C. Sections 78m(b)(2)(A), 78m(b)(2)(B), and 78m(b)(5)].

                                PRAYER FOR RELIEF

        WHEREFORE, the Commission respectfully requests a Final Judgment:

                                       I.

      Permanently enjoining AIG, its agents, servants, employees and attorneys
and all persons in active concert or participation with AIG who receive actual
notice of the injunction by personal service or otherwise, and each of them,
from future violations of Sections 17(a)(l), 17(a)(2), and 17(a)(3) of the
Securities Act [15 U.S.C. Sections 77q(a)(l), 77q(a)(2), 77q(a)(3)], Sections
10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Exchange Act [15
U.S.C. Sections 78j(b), 78m(a), 78m(b)(2)(A), 78m(b)(2)(B), and 78m(b)(5)] and
Rules 10b-5(a), 10b-5(b), 10b-5(c), 12b-20, 13a-l, 13a-13, and 13b2-l [17 C.F.R.
Sections 240.10b-5(a), 240.10b-5(b), 240.10b-5(c), 12b-20, 13a-l, 13a-13, and
13b2-l].

                                       II.

      Ordering AIG to disgorge any ill-gotten gains from the conduct alleged
herein.

                                       28
<PAGE>
                                      III.

      Ordering AIG to pay civil money penalties pursuant to Section 20(d) of the
Securities Act [15 U.S.C. Section 77t(d)] and Section 21(d)(3) of the Exchange
Act [15 U.S.C. Section 78u(d)(3)].

                                       IV.

      Granting such other and further relief as to this Court seems just and
proper.

Dated: New York, New York
       February 9, 2006

                                        By: /s/ Mark K. Schonfeld
                                           -------------------------------------
                                             Mark K. Schonfeld (MS-2798)

                                        Regional Director
                                        Attorney for Plaintiff
                                        SECURITIES AND EXCHANGE COMMISSION
                                        3 World Financial Center
                                        New York, NY 10281-1022
                                        (212)336-1020

Of Counsel:

Andrew M. Calamari
Robert J. Keyes
Ken C. Joseph
Eduardo A. Santiago-Acevedo
Linda L. Arnold
George G. Demos
Maureen P. King
Preethi Krishnamurthy

                                       29

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