March 19, 2009                                                         Contact:Lucas Hamilton

Montana State Auditor’s Office Submits Demand Letter to AIG on Behalf of Montana Investors


      Montana State Auditor and Commissioner of Securities Monica Lindeen today sent a demand letter to AIG requesting information about the company’s finances and bonuses. Lindeen is asking her Securities Division to look into potential violations of Montana law, which specifically prohibits omission or misrepresentation in connection with the offer and sale of securities.
      
      The letter sent today asks that AIG provide information relating to the compensation recently paid to members of AIG’s Financial Products (AIGFP) subsidiary in light of AIG’s receipt of billions of dollars of taxpayers’ funds.
      
      “As was promised, we want to ensure the investing public that money received by the company is being used to improve the financial welfare of the company,” said Lindeen. “Not to line the pockets of the same individuals who may have helped cause the financial crisis in the first place.”
      
      According to the letter sent by the State Auditor’s Office to AIG, the information is necessary to determine what representations were made to Montana investors last fall as to the financial condition of the company and the use of Troubled Asset Relief Program (TARP) funds.
      
      As the Commissioner of Securities and the Commissioner of Insurance for the people of Montana, Monica Lindeen works to ensure Montana consumers are treated fairly, that companies writing business in Montana are solvent, and that our marketplace is transparent.
      
      A copy of the demand letter is pasted below and available online at http://www.sao.mt.gov/Lindeen%20Letter%20to%20AIG%203%2019%2009.pdf
      
      
      March 19, 2009
      
      Edward M. Liddy
      Chairman and CEO
      American International Group, Inc.
      70 Pine Street
      New York, NY 10270
      
      Re: AIG Compensation
      
      Dear Mr. Liddy:
      
      I write today to address the serious matter of executive compensation and bonuses paid to executives of AIG.
      
      As you know, AIG and its various units and subsidiaries are registered to sell both securities and insurance products in the State of Montana. As the Commissioner of Securities and the Commissioner of Insurance for the people of Montana, I take seriously my role in ensuring that Montana consumers are treated fairly, that companies writing business in Montana are solvent, and that our marketplace is transparent.
      
      The present crises at AIG has resulted in the loss of billions of dollars in shareholder equity to Montana investors. And, although the current crises appears to be housed within the financial services unit(s) of the company, this dire situation has caused additional consumer concern as to the solvency of the insurance business of AIG.
      
      Montana investors and insurance consumers, as federal taxpayers, are now participating in the infusion of funds in an attempt to save your company.
      
      In light of these sacrifices, I must express my dismay and deep concern at the revelation that massive amounts of taxpayer dollars were recently paid in compensation to members of AIG’s Financial Products (AIGFP) subsidiary. But my frustration from these revelations goes beyond the terrible perception that this creates in the public consciousness, to a sincere regulatory concern.
      
      What is the true financial condition of AIG? Has the crisis been mitigated by the injection of TARP funds, or has money been diverted to areas other than those necessary to immediately improve the financial welfare of the company? Are Montana consumers, who this office protects, at risk of a further massive failure? And more to the immediate point, what were the representations made to Montana investors last fall as to the financial condition of the company and the use of TARP funds?
      
      Unfortunately, I am not finding adequate answers to these important questions, which may involve violations of Montana law under the purview of this agency.
      
      Therefore, by the powers granted to me under Montana law, I hereby command that you provide the following information to this agency within five (5) business days of the date of this letter:
      
      1) A list of all individuals in the AIG Financial Products subsidiary who received bonus compensation between September 2008 and the present (the “Time Period.”) For each individual listed, provide the individual’s title, job responsibilities, amount of compensation paid, including salary and bonuses, and any and all employees who approved the bonus compensation, including title and contact information;
      
      2) Please identify the source of the above referenced compensation paid to individuals during the Time Period and provide supporting documentation;
      
      3) Copies of all employment contracts of all individuals who received compensation and bonuses during the relevant time period;
      
      4) A list of all persons involved with negotiating the compensation contracts, including their titles and contact information;
      
      5) Copies of any agreements regarding expenditures of TARP funds;
      
      6) Identify whether or not TARP Funds were used as source of compensation to AIGFP executives;
      
      7) Copies of any correspondence to shareholders during the Time Period regarding the financial health of AIG;
      
      8) Copies of the minutes of the Board of Directors of AIGFP during the relevant time period;
      
      9) A list of all holdings and transactions of the executive officers of AIGFP in any AIGFP securities during the Time Period; and
      
      10) All documents relating to communications with underwriters, broker-dealers, financial analysts, and other financial institutions relating to the issuance of AIGFP securities and its financial condition during the relevant time period.
      
      I am directing my Deputy Securities Commissioner, Lynne Egan to coordinate collection and examination of this information. Please forward this information to her attention at 840 Helena Avenue, Helena, Montana 59601. Deputy Commissioner Egan may be reached at (406) 444-4388. Please direct any further questions on this matter to Executive Counsel John Mudd (406) 444-2040.
      
      I look forward to your reply.
      
      Sincerely,
      
      
      
      
      __________________________
      
      Monica J. Lindeen
      
      Montana State Auditor
      
      Commissioner of Securities & Insurance