AIG PRIVATE CLIENT GROUP
70 PINE STREET
21ST FLOOR
NEW YORK, NY 10270

CHARLES E. WILLIAMSON
..............PRESIDENT

TEL: (212) 770-7824
FAX: (212) 770-8043

March 2, 2009

Dear Colleagues,

No doubt many of you saw or read the earnings announcement that our holding company released this morning. In summary, the Federal Reserve and AIG have structured an arrangement that significantly improves AIG’s capital structure and protects the customers, creditors and counter parties of AIG. We will get all the details of this program out to you very quickly.

In this communication, I want to focus on what is important to you and me: the property casualty insurance companies.  Please consider the following:

1. All of the rating agencies have affirmed their ratings of the AIG insurance companies. You can continue to rely on our ability to pay claims and protect policyholder assets.

2. Our insurance companies reported an INCREASE in policyholder surplus at the end of the 4th quarter of 1.14 percent! I challenge you to find another carrier with such results. This means the insurance policies you have with us are backed up by $26.6B in statutory surplus.

3. AIG announced the intention to form a general insurance holding company, AIU Holdings, Inc., of which Private Client Group will be a part. It will be comprised of more than 44,000 employees and offer 500 products and services serving 40 million commercial and individual customers in 130 countries and jurisdictions.  As you know from previous communications, our insurance businesses are financially strong and never needed — or used — government funding.

Establishing AIU Holdings will enable the following:

1. Separate management
2. Separate branding
3. Separate ownership
4. Separate capital structure and ratings

We are extremely excited about reinventing ourselves and enabling you to focus solely on the needs of your clients. All of you have been amazingly supportive over the last six months.  We look forward to building a greater future with you. 

More details are forthcoming, but I wanted you to be able to share information ASAP with your clients.

Thank you.


Sincerely,