(Mark One)
þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended December 31, 2006
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from                 to

Delaware		13-2592361
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
70 Pine Street, New York, New York (Address of principal executive offices)		10270 (Zip Code)

		Name of each exchange
Title of each class		on which registered
Common Stock, Par Value $2.50 Per Share		New York Stock Exchange, Inc.

Title of each class
None

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Index					Page
Part I
	Item 1.		Business			3
	Item 1A.		Risk Factors			15
	Item 1B.		Unresolved Staff Comments			18
	Item 2.		Properties			18
	Item 3.		Legal Proceedings			18
	Item 4.		Submission of Matters to a Vote of Security Holders			21
Part II
	Item 5.		Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			22
	Item 6.		Selected Financial Data			24
	Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
	Item 7A.		Quantitative and Qualitative Disclosures About Market Risk			99
	Item 8.		Financial Statements and Supplementary Data			99
	Item 9.		Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			177
	Item 9A.		Controls and Procedures			177
	Item 9B.		Other Information			179
Part III*
	Item 10.		Directors, Executive Officers and Corporate Governance			180
	Item 11.		Executive Compensation			180
	Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			180
	Item 13.		Certain Relationships and Related Transactions, and Director Independence			180
	Item 14.		Principal Accountant Fees and Services			180
Part IV
	Item 15.		Exhibits and Financial Statement Schedules			180
Signatures						181

*	Except for the information provided in Part I under the heading “Directors and Executive Officers of AIG,” Part III Items 10, 11, 12, 13 and 14 are included in AIG’s Definitive Proxy Statement to be used in connection with AIG’s Annual Meeting of Shareholders scheduled to be held on May 16, 2007.

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	American Home Assurance Company (American Home)
	National Union Fire Insurance Company of Pittsburgh, Pa. (National Union)
	New Hampshire Insurance Company (New Hampshire)
	Lexington Insurance Company (Lexington)
	The Hartford Steam Boiler Inspection and Insurance Company (HSB)
	Transatlantic Reinsurance Company
	United Guaranty Residential Insurance Company
	American International Underwriters Overseas, Ltd. (AIUO)

	Domestic:
	American General Life Insurance Company (AIG American   General)
	American General Life and Accident Insurance Company   (AGLA)
	The United States Life Insurance Company in the City of New   York (USLIFE)
	The Variable Annuity Life Insurance Company (VALIC)
	AIG Annuity Insurance Company (AIG Annuity)
	SunAmerica Life Insurance Company (SunAmerica Life)
	AIG SunAmerica Life Assurance Company
	Foreign:
	American Life Insurance Company (ALICO)
	AIG Star Life Insurance Co., Ltd. (AIG Star Life)
	AIG Edison Life Insurance Company (AIG Edison Life)
	American International Assurance Company, Limited, together   with American International Assurance Company (Bermuda)   Limited (AIA)
	American International Reinsurance Company Limited (AIRCO)
	Nan Shan Life Insurance Company, Ltd. (Nan Shan)
	The Philippine American Life and General Insurance Company   (Philamlife)

	International Lease Finance Corporation (ILFC)
	AIG Financial Products Corp. and AIG Trading Group Inc. and   their respective subsidiaries (collectively, AIGFP)
	American General Finance, Inc. (AGF)
	AIG Consumer Finance Group, Inc. (AIGCFG)
	Imperial A.I. Credit Companies

	AIG SunAmerica Asset Management Corp. (SAAMCo)
	AIG Global Asset Management Holdings Corp. and its
	subsidiaries and affiliated companies (collectively, AIGGIG)

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Years Ended December 31,
(in millions)				2006				2005				2004				2003				2002
General Insurance operations:
	Gross premiums written			$	56,280			$	52,725			$	52,046			$	46,938			$	36,678
	Net premiums written				44,866				41,872				40,623				35,031				26,718
	Net premiums earned				43,451				40,809				38,537				31,306				23,595
	Net investment income(a)				5,696				4,031				3,196				2,566				2,350
	Realized capital gains (losses)				59				334				228				(39	)			(345	)
	Operating income(a)(b)(c)(d)				10,412				2,315				3,177				4,502				923
	Identifiable assets				167,004				150,667				131,658				117,511				105,891
Statutory measures(e):
	Statutory underwriting profit (loss)(b)(c)(d)				4,408				(2,165	)			(564	)			1,559				(1,843	)
	Loss ratio				64.6				81.1				78.8				73.1				83.1
	Expense ratio				24.5				23.6				21.5				19.6				21.8
	Combined ratio(d)				89.1				104.7				100.3				92.7				104.9
Life Insurance & Retirement Services operations:
	GAAP premiums				30,636				29,400				28,088				23,496				20,694
	Net investment income(a)				19,439				18,134				15,269				12,942				11,243
	Realized capital gains (losses) (f)				88				(158	)			45				362				(295	)
	Operating income(a)				10,032				8,904				7,925				6,929				5,258
	Identifiable assets				534,977				480,622				447,841				372,126				289,914
	Insurance in-force at end of year(g)				2,070,600				1,852,833				1,858,094				1,583,031				1,298,592
Financial Services operations:
	Interest, lease and finance charges(h)				8,010				10,525				7,495				6,242				6,822
	Operating income(h)				524				4,276				2,180				1,182				2,125
	Identifiable assets				206,845				166,488				165,995				141,667				128,104
Asset Management operations:
	Net investment income from spread-based products and advisory and management fees				5,814				5,325				4,714				3,651				3,467
	Operating income				2,346				2,253				2,125				1,316				1,125
	Identifiable assets				97,913				81,080				80,075				64,047				53,732
Other operations:
		Realized capital gains (losses)			(41	)			165				(229	)			(765	)			(1,013	)
		All other(i)			(1,586	)			(2,700	)			(333	)			(1,257	)			(610	)
Revenues(j)(k)					113,194				108,905				97,666				79,421				66,171
Total operating income(a)(j)(l)					21,687				15,213				14,845				11,907				7,808
Total assets					979,414				853,051				801,007				675,602				561,131

(a)	Includes the effect of out of period adjustments related to the accounting for certain interests in unit investment trusts and other mutual funds (unit investment trusts). For 2006, the effect was an increase of $490 million in both revenues and operating income for General Insurance and an increase of $240 million and $169 million in revenues and operating income, respectively, for Life Insurance & Retirement Services.
(b)	Includes current year catastrophe-related losses of $2.89 billion and $1.05 billion in 2005 and 2004, respectively. There were no significant catastrophe-related losses in 2006.
(c)	Includes additional losses incurred and net reinstatement premiums related to prior year catastrophes of $199 million and $277 million in 2006 and 2005, respectively.

(d)	Operating income was reduced by fourth quarter charges of $1.8 billion, $850 million and $2.1 billion for 2005, 2004 and 2002, respectively, resulting from the annual review of General Insurance loss and loss adjustment reserves. In 2006, 2005 and 2004, changes in estimates for asbestos and environmental reserves were $198 million, $873 million and $850 million, respectively.

(e)	Calculated on the basis under which the U.S.-domiciled insurance companies are required to report such measurements to regulatory authorities.

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(f)	Includes the effect of hedging activities that did not qualify for hedge accounting treatment under Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (FAS 133) and the application of Statement of Financial Accounting Standards No. 52, “Foreign Currency Translation” (FAS 52). For 2006, 2005, 2004, 2003 and 2002, respectively, the amounts included are $355 million, $(495) million, $(140) million, $78 million and $(91) million.
(g)	2005 includes the effect of the non-renewal of a single large group life case of $36 billion. Also, the foreign in-force is translated to U.S. dollars at the appropriate balance sheet exchange rate in each period.
(h)	Includes the effect of hedging activities that did not qualify for hedge accounting treatment under FAS 133, including the related foreign exchange gains and losses. For 2006, 2005, 2004, 2003 and 2002, respectively, the effect was $(1.82) billion, $2.01 billion, $(122) million, $(1.01) billion and $220 million in both revenues and operating income for Capital Markets. These amounts result primarily from interest rate and foreign currency derivatives that are economically hedging available for sale securities and borrowings. For 2004, 2003 and 2002, respectively, the effect was $(27) million, $49 million and $20 million in operating income for Aircraft Leasing. In 2006 and 2005, Aircraft Leasing derivative gains and losses were reported as part of AIG’s Other category, and were not reported in Aircraft Leasing operating income.
(i)	Includes $1.6 billion of regulatory settlement costs in 2005 as described under Item 3. Legal Proceedings.
(j)	Includes the effect of hedging activities that did not qualify for hedge accounting treatment under FAS 133, including the related foreign exchange gains and losses. For 2006, 2005, 2004, 2003 and 2002, respectively, the effect was $(1.86) billion, $2.02 billion, $385 million, $(1.50) billion and $(216) million in revenues and $(1.86) billion, $2.02 billion, $671 million, $(1.22) billion and $(58) million in operating income. These amounts result primarily from interest rate and foreign currency derivatives that are hedging available for sale securities and borrowings.

(k)	Represents the sum of General Insurance net premiums earned, Life Insurance & Retirement Services GAAP premiums, net investment income, Financial Services interest, lease and finance charges, Asset Management net investment income from spread-based products and advisory and management fees, and realized capital gains (losses).

(l)	Represents income before income taxes, minority interest and cumulative effect of accounting changes.

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(in millions)			1996				1997				1998				1999				2000				2001				2002				2003				2004				2005				2006
Net Reserves Held			$	20,496			$	20,901			$	25,418			$	25,636			$	25,684			$	26,005			$	29,347			$	36,228			$	47,254			$	57,476			$	62,630
Discount (in Reserves Held)				393				619				897				1,075				1,287				1,423				1,499				1,516				1,553				2,110				2,264
Net Reserves Held (Undiscounted)				20,889				21,520				26,315				26,711				26,971				27,428				30,846				37,744				48,807				59,586				64,894
Paid (Cumulative) as of:
	One year later			5,712				5,607				7,205				8,266				9,709				11,007				10,775				12,163				14,910				15,326
	Two years later			9,244				9,754				12,382				14,640				17,149				18,091				18,589				21,773				24,377
	Three years later			11,943				12,939				16,599				19,901				21,930				23,881				25,513				28,763
	Four years later			14,152				15,484				20,263				23,074				26,090				28,717				30,757
	Five years later			16,077				17,637				22,303				25,829				29,473				32,685
	Six years later			17,551				18,806				24,114				28,165				32,421
	Seven years later			18,415				19,919				25,770				30,336
	Eight years later			19,200				21,089				27,309
	Nine years later			20,105				22,177
	Ten years later			20,972

(in millions)			1996				1997				1998				1999				2000				2001				2002				2003				2004				2005				2006
Net Reserves Held (undiscounted)			$	20,889			$	21,520			$	26,315			$	26,711			$	26,971			$	27,428			$	30,846			$	37,744			$	48,807			$	59,586			$	64,894
Undiscounted Liability as of:
	One year later			20,795				21,563				25,897				26,358				26,979				31,112				32,913				40,931				53,486				59,533
	Two years later			20,877				21,500				25,638				27,023				30,696				33,363				37,583				49,463				55,009
	Three years later			20,994				21,264				26,169				29,994				32,732				37,964				46,179				51,497
	Four years later			20,776				21,485				28,021				31,192				36,210				45,203				48,427
	Five years later			20,917				22,405				28,607				33,910				41,699				47,078
	Six years later			21,469				22,720				30,632				38,087				43,543
	Seven years later			21,671				24,209				33,861				39,597
	Eight years later			22,986				26,747				34,986
	Nine years later			25,264				27,765
	Ten years later			26,091
Net Redundancy/(Deficiency)				(5,202	)			(6,245	)			(8,671	)			(12,886	)			(16,572	)			(19,650	)			(17,581	)			(13,753	)			(6,202	)			53
Remaining Reserves (Undiscounted)				5,119				5,588				7,677				9,261				11,122				14,393				17,670				22,734				30,632				44,207
Remaining Discount				360				427				517				623				748				894				1,079				1,265				1,484				1,809
Remaining Reserves				4,759				5,161				7,160				8,638				10,374				13,499				16,591				21,469				29,148				42,398

(in millions)		1996				1997				1998				1999				2000				2001				2002				2003				2004				2005				2006
Gross Liability, End of Year		$	32,605			$	32,049			$	36,973			$	37,278			$	39,222			$	42,629			$	48,173			$	53,387			$	63,431			$	79,279			$	82,263
Reinsurance Recoverable, End of Year			11,716				10,529				10,658				10,567				12,251				15,201				17,327				15,643				14,624				19,693				17,369
Net Liability, End of Year			20,889				21,520				26,315				26,711				26,971				27,428				30,846				37,744				48,807				59,586				64,894
Reestimated Gross Liability			41,685				43,993				53,004				58,320				63,768				67,554				68,657				69,007				70,895				78,946
Reestimated Reinsurance Recoverable			15,594				16,227				18,018				18,723				20,224				20,476				20,229				17,511				15,886				19,413
Reestimated Net Liability			26,091				27,766				34,986				39,597				43,544				47,078				48,428				51,496				55,009				59,533
Cumulative Gross Redundancy/ (Deficiency)			(9,080	)			(11,944	)			(16,031	)			(21,042	)			(24,546	)			(24,925	)			(20,484	)			(15,620	)			(7,464	)			333

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(in millions)			1996				1997				1998				1999				2000				2001				2002				2003				2004				2005				2006
Net Reserves Held			$	19,753			$	20,113			$	24,554			$	24,745			$	24,829			$	25,286			$	28,650			$	35,559			$	45,742			$	55,227			$	60,451
Discount (in Reserves Held)				393				619				897				1,075				1,287				1,423				1,499				1,516				1,553				2,110				2,264
Net Reserves Held (Undiscounted)				20,146				20,732				25,451				25,820				26,116				26,709				30,149				37,075				47,295				57,336				62,715
Paid (Cumulative) as of:
	One year later			5,603				5,467				7,084				8,195				9,515				10,861				10,632				11,999				14,718				15,047
	Two years later			8,996				9,500				12,190				14,376				16,808				17,801				18,283				21,419				23,906
	Three years later			11,582				12,618				16,214				19,490				21,447				23,430				25,021				28,129
	Four years later			13,724				14,972				19,732				22,521				25,445				28,080				29,987
	Five years later			15,460				16,983				21,630				25,116				28,643				31,771
	Six years later			16,792				18,014				23,282				27,266				31,315
	Seven years later			17,519				18,972				24,753				29,162
	Eight years later			18,149				19,960				26,017
	Nine years later			18,873				20,779
	Ten years later			19,471

(in millions)			1996				1997				1998				1999				2000				2001				2002				2003				2004				2005				2006
Net Reserves Held (undiscounted)			$	20,146			$	20,732			$	25,451			$	25,820			$	26,116			$	26,709			$	30,149			$	37,075			$	47,295			$	57,336			$	62,715
Undiscounted Liability as of:
	One year later			19,904				20,576				24,890				25,437				26,071				30,274				32,129				39,261				51,048				57,077
	Two years later			19,788				20,385				24,602				26,053				29,670				32,438				35,803				46,865				52,364
	Three years later			19,777				20,120				25,084				28,902				31,619				36,043				43,467				48,691
	Four years later			19,530				20,301				26,813				30,014				34,102				42,348				45,510
	Five years later			19,633				21,104				27,314				31,738				38,655				44,018
	Six years later			20,070				21,336				28,345				34,978				40,294
	Seven years later			20,188				21,836				30,636				36,283
	Eight years later			20,515				23,441				31,556
	Nine years later			21,858				24,261
	Ten years later			22,486
Net Redundancy/(Deficiency)				(2,340	)			(3,529	)			(6,105	)			(10,463	)			(14,178	)			(17,309	)			(15,361	)			(11,616	)			(5,069	)			259
Remaining Reserves (undiscounted)				3,015				3,482				5,539				7,121				8,979				12,247				15,523				20,562				28,458				42,030
Remaining Discount				360				427				517				623				748				894				1,079				1,265				1,484				1,809
Remaining Reserves				2,655				3,055				5,022				6,498				8,231				11,353				14,444				19,297				26,974				40,221

(in millions)		1996				1997				1998				1999				2000				2001				2002				2003				2004				2005				2006
Gross Liability, End of Year		$	30,302			$	29,740			$	34,474			$	34,666			$	36,777			$	40,400			$	46,036			$	51,363			$	59,897			$	73,912			$	77,211
Reinsurance Recoverable, End of Year			10,156				9,008				9,023				8,846				10,661				13,691				15,887				14,288				12,602				16,576				14,495
Net Liability, End of Year			20,146				20,732				25,451				25,820				26,116				26,709				30,149				37,075				47,295				57,336				62,715
Reestimated Gross Liability			32,186				34,940				44,281				50,004				55,974				60,289				61,735				62,488				64,772				73,241
Reestimated Reinsurance Recoverable			9,699				10,679				12,725				13,722				15,680				16,270				16,225				13,797				12,409				16,164
Reestimated Net Liability			22,487				24,261				31,556				36,282				40,294				44,019				45,510				48,691				52,363				57,077
Cumulative Gross Redundancy/(Deficiency)			(1,884	)			(5,200	)			(9,807	)			(15,338	)			(19,197	)			(19,889	)			(15,699	)			(11,125	)			(4,875	)			671

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		Annual Average Cash and Invested Assets
		Cash
		(including												Return on				Return on
Years Ended December 31,		short-term				Invested								Average Cash				Average
(in millions)		investments)				Assets(a)(b)				Total				and Assets(c)				Assets(d)
General Insurance:
2006		$	3,201			$	102,231			$	105,432				5.4	%			5.6	%
2005			2,450				86,211				88,661				4.5				4.7
2004			2,012				73,338				75,350				4.2				4.4
2003			1,818				59,855				61,673				4.2				4.3
2002			1,537				47,477				49,014				4.8				5.0
Life Insurance & Retirement Services:
2006		$	7,205			$	384,724			$	391,929				5.0	%			5.1	%
2005			6,180				352,250				358,430				5.1				5.1
2004			5,089				307,659				312,748				4.9				5.0
2003			4,680				247,608				252,288				5.1				5.2
2002			3,919				199,750				203,669				5.5				5.6

(a)	Including investment income due and accrued and real estate.
(b)	Includes collateral assets invested under the securities lending program.
(c)	Net investment income divided by the annual average sum of cash and invested assets.
(d)	Net investment income divided by the annual average invested assets.

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						Served as
						Director or
Name		Title		Age		Officer Since
Marshall A. Cohen		Director		71		1992
Martin S. Feldstein		Director		67		1987
Ellen V. Futter		Director		57		1999
Stephen L. Hammerman		Director		68		2005
Richard C. Holbrooke		Director		65		2001
Fred H. Langhammer		Director		63		2006
George L. Miles, Jr.		Director		65		2005
Morris W. Offit		Director		70		2005
James F. Orr III		Director		63		2006
Virginia M. Rometty		Director		49		2006
Martin J. Sullivan		Director, President and Chief Executive Officer		52		2002
Michael H. Sutton		Director		66		2005
Edmund S. W. Tse		Director, Senior Vice Chairman – Life Insurance		69		1996
Robert B. Willumstad		Director and Chairman		61		2006
Frank G. Zarb		Director		72		2001
Jacob A. Frenkel		Vice Chairman – Global Economic Strategies		63		2004
Frank G. Wisner		Vice Chairman – External Affairs		68		1997
Steven J. Bensinger		Executive Vice President and Chief Financial Officer		52		2002
Anastasia D. Kelly		Executive Vice President, General Counsel and Senior Regulatory and Compliance Officer		57		2006
Rodney O. Martin, Jr.		Executive Vice President – Life Insurance		54		2002
Kristian P. Moor		Executive Vice President – Domestic General Insurance		47		1998
Win J. Neuger		Executive Vice President and Chief Investment Officer		57		1995
Robert M. Sandler		Executive Vice President – Domestic Personal Lines		64		1980
Nicholas C. Walsh		Executive Vice President – Foreign General Insurance		56		2005
Jay S. Wintrob		Executive Vice President – Retirement Services		49		1999
William N. Dooley		Senior Vice President – Financial Services		54		1992
David L. Herzog		Senior Vice President and Comptroller		47		2005
Robert E. Lewis		Senior Vice President and Chief Risk Officer		55		1993
Brian T. Schreiber		Senior Vice President – Strategic Planning		41		2002

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	•	widespread claim costs associated with property, workers compensation, mortality and morbidity claims;
	•	loss resulting from the cash flows from invested assets being less than the cash flows required to meet the policy and contract liabilities; or
	•	loss resulting from the actual policy experience adversely emerging in comparison to the assumptions made in the product pricing associated with mortality, morbidity, termination and expenses.

---

 

	•	increasing AIG’s interest expense;
	•	reducing AIGFP’s ability to compete in the structured products and derivatives businesses;
	•	reducing the competitive advantage of AIG’s insurance subsidiaries, which may result in reduced product sales and/or lower prices;
	•	adversely affecting relationships with agents and sales representatives; and
	•	in the case of a downgrade of AGF or ILFC, increasing their interest expense and reducing their ability to compete in their respective businesses.

---

 

---

 

---

 

---

 

---

 

		2006												2005
										Dividends												Dividends
		High				Low				Paid				High				Low				Paid
First quarter		$	70.83			$	65.35			$	0.150			$	73.46			$	54.18			$	0.125
Second quarter			66.54				58.67				0.150				58.94				49.91				0.125
Third quarter			66.48				57.76				0.165				63.73				56.00				0.150
Fourth quarter			72.81				66.30				0.165				64.40				60.43				0.150

Maximum

Number of

Total

Shares

Number of

that May

Shares

Yet Be

Purchased

Purchased

Average

as Part of

Under the

Price

Publicly

Plans or

Total Number

Paid

Announced

Programs

of Shares

per

Plans or

at End of

Period

Purchased(a)(b)

Share

Programs

Month(b)

October 1 - 31, 2006

—

$

—

—

36,542,700

November 1 - 30, 2006

—

—

—

36,542,700

December 1 - 31, 2006

—

—

—

36,542,700

Total

—

$

—

—

(a)	Does not include 165,190 shares delivered or attested to in satisfaction of the exercise price by holders of AIG employee stock options exercised during the three months ended December 31, 2006 or 17,000 shares purchased by ILFC to satisfy obligations under employee benefit plans.
(b)	On July 19, 2002, AIG announced that its Board of Directors had authorized the open market purchase of up to 10 million shares of common stock. On February 13, 2003, AIG announced that its Board of Directors had expanded the existing program through the authorization of an additional 50 million shares. The purchase program has no set expiration or termination date. In February 2007, AIG’s Board of Directors increased the repurchase program by authorizing the repurchase of shares with an aggregate purchase price of $8 billion.

---

 

		2001				2002				2003				2004				2005				2006
AIG		$	100.00			$	73.07			$	84.04			$	83.61			$	87.67			$	92.97
S&P 500			100.00				77.90				100.25				111.15				116.61				135.03
New Peer Group			100.00				86.49				109.07				126.05				155.01				179.36
Old Peer Group			100.00				88.84				111.14				134.80				164.51				196.58

---

 

Years Ended December 31,
(in millions, except per share data)				2006				2005				2004				2003				2002
Revenues(a)(b)(c):
	Premiums and other considerations			$	74,083			$	70,209			$	66,625			$	54,802			$	44,289
	Net investment income				25,292				22,165				18,465				15,508				13,593
	Realized capital gains (losses)				106				341				44				(442	)			(1,653	)
	Other income				13,713				16,190				12,532				9,553				9,942
Total revenues					113,194				108,905				97,666				79,421				66,171
Benefits and expenses:
	Incurred policy losses and benefits				59,706				63,558				58,212				46,034				40,005
	Insurance acquisition and other operating expenses				31,801				30,134				24,609				21,480				18,358
Total benefits and expenses					91,507				93,692				82,821				67,514				58,363
Income before income taxes, minority interest and cumulative effect of accounting changes (b)(c)(d)(e)					21,687				15,213				14,845				11,907				7,808
Income taxes					6,537				4,258				4,407				3,556				1,919
Income before minority interest and cumulative effect of accounting changes					15,150				10,955				10,438				8,351				5,889
Minority interest					(1,136	)			(478	)			(455	)			(252	)			(160	)
Income before cumulative effect of accounting changes					14,014				10,477				9,983				8,099				5,729
Cumulative effect of accounting changes, net of tax					34				—				(144	)			9				—
Net income					14,048				10,477				9,839				8,108				5,729
Earnings per common share:
	Basic
		Income before cumulative effect of accounting changes			5.38				4.03				3.83				3.10				2.20
		Cumulative effect of accounting changes, net of tax			0.01				—				(0.06	)			—				—
		Net income			5.39				4.03				3.77				3.10				2.20
	Diluted
		Income before cumulative effect of accounting changes			5.35				3.99				3.79				3.07				2.17
		Cumulative effect of accounting changes, net of tax			0.01				—				(0.06	)			—				—
		Net income			5.36				3.99				3.73				3.07				2.17
Dividends declared per common share					0.65				0.63				0.29				0.24				0.18
Total assets					979,414				853,051				801,007				675,602				561,131
Long-term debt and commercial paper(f)
	Guaranteed by AIG				17,126				10,425				8,498				7,469				7,144
	Liabilities connected to trust preferred stock				1,440				1,391				1,489				1,682				—
	Matched/not guaranteed by AIG				130,113				98,033				86,912				71,198				63,866
Total liabilities					877,546				766,548				721,135				606,180				500,696
Shareholders’ equity				$	101,677			$	86,317			$	79,673			$	69,230			$	58,303

(a)	Represents the sum of General Insurance net premiums earned, Life Insurance & Retirement Services GAAP premiums and net investment income, Financial Services interest, lease and finance charges, Asset Management net investment income from spread-based products and advisory and management fees, and realized capital gains (losses).
(b)	Includes the effect of hedging activities that did not qualify for hedge accounting treatment under FAS 133, including the related foreign exchange gains and losses. For 2006, 2005, 2004, 2003 and 2002, respectively, the effect was $(1.86) billion, $2.02 billion, $385 million, $(1.50) billion and $(216) million in revenues and $(1.86) billion, $2.02 billion, $671 million, $(1.22) billion and $(58) million in operating income. These amounts result primarily from interest rate and foreign currency derivatives that are economically hedging available for sale securities and borrowings.
(c)	Includes the effect of out of period adjustments related to the accounting for certain interests in unit investment trusts. For 2006 the effect was an increase of $490 million in both revenues and operating income for General Insurance and an increase of $240 million and $169 million in revenues and operating income, respectively, for Life Insurance & Retirement Services.

(d)	Includes current year catastrophe-related losses of $3.28 billion in 2005 and $1.16 billion in 2004. There were no significant catastrophe-related losses in 2006.

(e)	Operating income was reduced by fourth quarter charges of $1.8 billion, $850 million and $2.1 billion for 2005, 2004 and 2002, respectively, related to the annual review of General Insurance loss and loss adjustment reserves. In 2006, 2005 and 2004, changes in estimates for asbestos and environmental reserves were $198 million, $873 million and $850 million, respectively.

(f)	Including that portion of long-term debt maturing in less than one year. See also Note 9 of Notes to Consolidated Financial Statements.

---

 

Index			Page
Cautionary Statement Regarding Projections and Other Information About Future Events				25
Overview of Operations and Business Results				26
Outlook				26
Consolidated Results				27
Segment Results				29
Capital Resources				30
Liquidity				30
Critical Accounting Estimates				30
Operating Review				31
General Insurance Operations				31
	General Insurance Results			32
	Reserve for Losses and Loss Expenses			37
Life Insurance & Retirement Services Operations				51
	Life Insurance & Retirement Services Results			52
	Deferred Policy Acquisition Costs
Financial Services Operations				63
	Financial Services Results			63
	Aircraft Leasing			63
	Capital Markets			64
	Consumer Finance			65
Asset Management Operations				67
Other Operations				68
Capital Resources and Liquidity				69
Borrowings				69
Shareholders’ Equity				76
Liquidity				77
Invested Assets				79
Risk Management				86
Overview				86
Corporate Risk Management				86
	Credit Risk Management			87
	Market Risk Management			88
	Operational Risk Management			89
	Insurance Risk Management			90
Segment Risk Management				91
	Insurance Operations			91
	Financial Services			94
	Asset Management			97
Economic Capital				97
Recent Accounting Standards				98

---

 

---

 

Years Ended December 31,
(in millions)		2006				2005				2004
Total revenues		$	113,194			$	108,905			$	97,666
Income before income taxes, minority interest and cumulative effect of accounting changes			21,687				15,213				14,845
Net income		$	14,048			$	10,477			$	9,839

---

 

(in millions)		2005				2004
Pretax*		$	3,280			$	1,155
Net of tax and minority interest			2,109				729

*	Includes $312 million and $96 million in catastrophe-related losses from partially owned companies in 2005 and 2004, respectively.

---

 

(in millions)			2006				2005				2004
Revenues(a):
	General Insurance(b)(c)		$	49,206			$	45,174			$	41,961
	Life Insurance & Retirement Services(c)(d)			50,163				47,376				43,402
	Financial Services(e)(f)			8,010				10,525				7,495
	Asset Management(g)			5,814				5,325				4,714
	Other(h)			1				505				94
Total			$	113,194			$	108,905			$	97,666
Operating Income(a)(i)(j):
	General Insurance(c)		$	10,412			$	2,315			$	3,177
	Life Insurance & Retirement Services(c)			10,032				8,904				7,925
	Financial Services(f)			524				4,276				2,180
	Asset Management			2,346				2,253				2,125
	Other(h)(k)			(1,627	)			(2,535	)			(562	)
Total			$	21,687			$	15,213			$	14,845

(a)

Includes the effect of hedging activities that did not qualify for hedge accounting treatment under FAS 133, including the related foreign exchange gains and losses. For 2006, 2005 and 2004, respectively, the effect was $(1.86) billion, $2.02 billion and $385 million in revenues and $(1.86) billion, $2.02 billion and $671 million in operating income. These amounts result primarily from interest rate and foreign currency derivatives that are hedging available for sale securities and borrowings.

(b)	Represents the sum of General Insurance net premiums earned, net investment income and realized capital gains (losses).
(c)	Includes the effect of out of period adjustments related to the accounting for certain interests in unit investment trusts. For 2006, the effect was an increase of $490 million in both revenues and operating income for General Insurance and an increase of $240 million and $169 million in revenues and operating income, respectively, for Life Insurance & Retirement Services.
(d)	Represents the sum of Life Insurance & Retirement Services GAAP premiums, net investment income and realized capital gains (losses). Included in realized capital gains (losses) and operating income is the effect of hedging activities that did not qualify for hedge accounting treatment under FAS 133 and the application of FAS 52, of $355 million, $(495) million and $(140) million for 2006, 2005 and 2004, respectively.
(e)	Represents interest, lease and finance charges.
(f)	Includes the effect of hedging activities that did not qualify for hedge accounting treatment under FAS 133, including the related foreign exchange gains and losses. For 2006, 2005 and 2004, respectively, the effect was $(1.82) billion, $2.01 billion, and $(122) million in both revenues and operating income for Capital Markets. These amounts result primarily from interest rate and foreign currency derivatives that are economically hedging available for sale securities and borrowings. For 2004, the effect was $(27) million in operating income for Aircraft Leasing. During 2006 and 2005, Aircraft Leasing derivative gains and losses were reported as part of AIG’s Other category, and were not reported in Aircraft Leasing operating income.
(g)	Represents net investment income with respect to spread-based products and management and advisory fees.

(h)	Includes consolidation and elimination adjustments which increased revenues and operating income by $296 million and $74 million, respectively, in 2006.

(i)	Represents income before income taxes, minority interest, and cumulative effect of accounting changes.
(j)	Includes current year catastrophe-related losses of $3.28 billion and $1.16 billion in 2005 and 2004, respectively. There were no significant catastrophe-related losses in 2006. Includes additional losses incurred and net reinstatement premiums related to prior year catastrophes of $165 million and $292 million in 2006 and 2005, respectively.
(k)	Includes current year catastrophe-related losses from unconsolidated subsidiaries of $312 million and $96 million in 2005 and 2004. There were no significant catastrophe-related losses in 2006.

---

 

•	Loss trend factors: used to establish expected loss ratios for subsequent accident years based on premium rate adequacy and the projected loss ratio with respect to prior accident years.
•	Expected loss ratios for the latest accident year: in this case, accident year 2006 for the year end 2006 loss reserve analysis. For low-frequency, high-severity classes such as excess casualty, expected loss ratios generally are utilized for at least the three most recent accident years.
•	Loss development factors: used to project the reported losses for each accident year to an ultimate amount.
•	Reinsurance recoverable on unpaid losses: the expected recoveries from reinsurers on losses that have not yet been reported and/or settled.

•	Interest rates: which vary by geographical region, year of issuance and products.
•	Mortality, morbidity and surrender rates: based upon actual experience by geographical region modified to allow for variation in policy form, risk classification and distribution channel.

•

Estimated gross profits: to be realized over the estimated duration of the contracts (investment-oriented products) affect the carrying value of DAC, unearned revenue liability and associated amortization patterns under FAS 97 and Sales Inducement Assets under SOP 03-1. Estimated gross profits include investment income and gains and losses on investments less required interest, actual mortality and other expenses.

---

 

•	Recoverability: based on current and future expected profitability, which is affected by interest rates, foreign exchange rates, mortality experience, and policy persistency.

•	Recoverability and eligibility: based upon the current terms and profitability of the underlying insurance contracts.

•	SD Valuation models: utilizing factors, such as market liquidity and current interest, foreign exchange and volatility rates.
•	Market price data: AIG attempts to secure reliable and independent current market price data, such as published exchange rates from external subscription services such as Bloomberg or Reuters or third-party broker quotes for use in its models. When such data is not available, AIG uses an internal methodology, which includes interpolation and extrapolation from verifiable prices from trades occurring on dates nearest to the dates of the transactions.

•	Trading at a significant (25 percent or more) discount to par or amortized cost (if lower) for an extended period of time (nine months or longer);
•	The occurrence of a discrete credit event resulting in the debtor defaulting or seeking bankruptcy or insolvency protection or voluntary reorganization; or
•	The probability of non-realization of a full recovery on its investment, irrespective of the occurrence of one of the foregoing events.

    At each balance sheet date, AIG evaluates its securities holdings in an unrealized loss position. Where AIG does not intend to hold such securities until they have fully recovered their carrying value, based on the circumstances present at the date of evaluation, AIG records the unrealized loss in income. If events or circumstances change, such as unexpected changes in the creditworthiness of the obligor, unanticipated changes in interest rates, tax laws, statutory capital positions and unforeseen liquidity events, among others, AIG revisits its intent. Further, if a loss is recognized from a sale subsequent to a balance sheet date pursuant to these unexpected changes in circumstances, the loss is recognized in the period in which the intent to hold the securities to recovery no longer existed.

•	Expected undiscounted future net cash flows: based upon current lease rates, projected future lease rates and estimated terminal values of each aircraft based on third party information.

---

 

(in millions, except ratios)				2006				2005				2004
Net premiums written:
	Domestic General
		DBG		$	24,345			$	23,128			$	22,506
		Transatlantic			3,633				3,466				3,749
		Personal Lines			4,654				4,653				4,354
		Mortgage Guaranty			866				628				607
	Foreign General(a)				11,368				9,997				9,407
Total				$	44,866			$	41,872			$	40,623
Net premiums earned:
	Domestic General
		DBG		$	23,936			$	22,602			$	21,215
		Transatlantic			3,604				3,385				3,661
		Personal Lines			4,645				4,634				4,291
		Mortgage Guaranty			740				533				539
	Foreign General(a)				10,526				9,655				8,831
Total				$	43,451			$	40,809			$	38,537
Net investment income(b):
	Domestic General
		DBG		$	3,411			$	2,403			$	1,965
		Transatlantic			435				343				307
		Personal Lines			225				217				186
		Mortgage Guaranty			140				123				120
		Intercompany adjustments and eliminations — net			1				1				—
	Foreign General				1,484				944				618
Total				$	5,696			$	4,031			$	3,196
Realized capital gains (losses)				$	59			$	334			$	228
Operating income (loss)(b)(c)(d):
	Domestic General
		DBG		$	5,985			$	(646	)		$	777
		Transatlantic			589				(39	)			282
		Personal Lines			432				195				357
		Mortgage Guaranty			328				363				399
	Foreign General(e)				3,088				2,427				1,344
Reclassifications and eliminations					(10	)			15				18
Total				$	10,412			$	2,315			$	3,177
Statutory underwriting profit (loss)(c)(d)(g):
	Domestic General
		DBG		$	2,450			$	(3,227	)		$	(1,500	)
		Transatlantic			129				(434	)			(77	)
		Personal Lines			204				(38	)			136
		Mortgage Guaranty			188				249				234
	Foreign General(e)				1,437				1,285				643
Total				$	4,408			$	(2,165	)		$	(564	)

(continued)

---

 

(in millions, except ratios)			2006				2005				2004
Domestic General(c)(d):
	Loss ratio			69.1				89.6				83.9
	Expense ratio			21.5				21.0				19.2
Combined ratio				90.6				110.6				103.1
Foreign General(c)(d):
	Loss ratio(a)			50.5				53.7				61.6
	Expense ratio(e)(f)			33.2				31.9				29.2
Combined ratio				83.7				85.6				90.8
Consolidated(c)(d):
	Loss ratio			64.6				81.1				78.8
	Expense ratio			24.5				23.6				21.5
Combined ratio				89.1				104.7				100.3

(a)	Income statement accounts expressed in non-functional currencies are translated into U.S. dollars using average exchange rates.
(b)	Includes the effect of out of period adjustments related to the accounting for certain interests in unit investment trusts in 2006. For DBG, the effect was an increase of $66 million, and for Foreign General, the effect was an increase of $424 million.
(c)	Catastrophe-related losses increased the consolidated General Insurance combined ratio for 2005 and 2004 by 7.06 points and 2.74 points, respectively. There were no significant catastrophe-related losses in 2006. Catastrophe-related losses for 2005 and 2004 by reporting unit were as follows:

		2005								2004
		Insurance				Net				Insurance				Net
		Related				Reinstatement				Related				Reinstatement
(in millions)		Losses				Premium Cost				Losses				Premium Cost
Reporting Unit:
DBG		$	1,747			$	122			$	582			$	—
Transatlantic			463				45				215				—
Personal Lines			112				2				25				—
Mortgage Guaranty			10				—				—				—
Foreign General			293				94				232				—
Total		$	2,625			$	263			$	1,054			$	—

(d)	Includes additional losses incurred and net reinstatement premiums related to prior year catastrophes of $199 million and $277 million, in 2006 and 2005, respectively.

(e)	Includes the results of wholly owned Foreign General agencies.

(f)	Includes amortization of advertising costs.
(g)	Statutory underwriting profit (loss) is a measure that U.S. domiciled insurance companies are required to report to their regulatory authorities. The following table reconciles statutory underwriting profit (loss) to operating income for General Insurance for the years ended December 31, 2006, 2005 and 2004:

		Domestic
		Brokerage								Personal				Mortgage				Foreign				Reclassifications
(in millions)		Group				Transatlantic				Lines				Guaranty				General				and Eliminations				Total
2006:
Statutory underwriting profit (loss)		$	2,450			$	129			$	204			$	188			$	1,437			$	—			$	4,408
Increase (decrease) in DAC			26				14				2				3				204				—				249
Net investment income			3,411				435				225				140				1,484				1				5,696
Realized capital gains (losses)			98				11				1				(3	)			(37	)			(11	)			59
Operating income (loss)		$	5,985			$	589			$	432			$	328			$	3,088			$	(10	)		$	10,412
2005:
Statutory underwriting profit (loss)		$	(3,227	)		$	(434	)		$	(38	)		$	249			$	1,285			$	—			$	(2,165	)
Increase (decrease) in DAC			(23	)			14				19				(8	)			113				—				115
Net investment income			2,403				343				217				123				944				1				4,031
Realized capital gains (losses)			201				38				(3	)			(1	)			85				14				334
Operating income (loss)		$	(646	)		$	(39	)		$	195			$	363			$	2,427			$	15			$	2,315
2004:
Statutory underwriting profit (loss)		$	(1,500	)		$	(77	)		$	136			$	234			$	643			$	—			$	(564	)
Increase (decrease) in DAC			160				30				24				44				59				—				317
Net investment income			1,965				307				186				120				618				—				3,196
Realized capital gains (losses)			152				22				11				1				24				18				228
Operating income (loss)		$	777			$	282			$	357			$	399			$	1,344			$	18			$	3,177

---

 

		2006				2005
Growth in original currency*			7.4	%			2.6	%
Foreign exchange effect			(0.2	)			0.5
Growth as reported in U.S. dollars			7.2	%			3.1	%

---

 

---

 

---

 

(in millions)		2006				2005
Other liability occurrence		$	19,156			$	18,116
Workers compensation			13,465				11,630
Other liability claims made			12,394				12,447
Property			6,663				7,217
Auto liability			5,931				6,569
International			5,810				4,939
Reinsurance			2,960				2,886
Medical malpractice			2,308				2,363
Products liability			2,168				1,937
Accident and health			1,649				1,678
Commercial multiple peril			1,621				1,359
Aircraft			1,562				1,844
Fidelity/surety			1,127				1,072
Other			3,185				3,112
Total		$	79,999			$	77,169

*	Presented by lines of business pursuant to statutory reporting requirements as prescribed by the National Association of Insurance Commissioners (NAIC).

(in millions)		2006				2005
DBG(a)		$	43,998			$	40,782
Transatlantic			6,207				5,690
Personal Lines(b)			2,440				2,578
Mortgage Guaranty			460				340
Foreign General(c)			9,525				8,086
Total Net Loss Reserve		$	62,630			$	57,476

(a)	At December 31, 2006 and 2005, respectively, DBG loss reserves include approximately $3.33 billion and $3.77 billion ($3.66 billion and $4.26 billion, respectively, before discount), related to business written by DBG but ceded to AIRCO and reported in AIRCO’s statutory filings. DBG loss reserves also include approximately $535 million and $407 million related to business included in AIUO’s statutory filings at December 31, 2006 and 2005, respectively.
(b)	At December 31, 2006 and 2005, respectively, Personal Lines loss reserves include $861 million and $878 million related to business ceded to DBG and reported in DBG’s statutory filings.
(c)	At December 31, 2006 and 2005, respectively, Foreign General loss reserves include approximately $2.87 billion and $2.15 billion related to business reported in DBG’s statutory filings.

---

 

(in millions)			2006				2005				2004
Net reserve for losses and loss expenses at beginning of year			$	57,476			$	47,254			$	36,228
Foreign exchange effect				741				(628	)			524
Acquisition(a)				55				—				—
Losses and loss expenses incurred:
Current year				27,805				28,426				26,793
Prior years, other than accretion of discount				(53	)			4,680	(b)			3,187	(c)
Prior years, accretion of discount				300				(15	)			377
Losses and loss expenses incurred				28,052				33,091				30,357
Losses and loss expenses paid:
	Current year			8,368				7,331				7,692
	Prior years			15,326				14,910				12,163
Losses and loss expenses paid				23,694				22,241				19,855
Net reserve for losses and loss expenses at end of year			$	62,630			$	57,476			$	47,254

(a)	Reflects the opening balance with respect to the acquisition of the Central Insurance Co., Ltd. in the third quarter of 2006.
(b)	Includes fourth quarter charge of $1.8 billion.
(c)	Includes fourth quarter charge of $850 million attributable to the change in estimate for asbestos and environmental exposures.

(in millions)		2006				2005				2004
Prior Accident Year Development by Reporting Unit:
DBG		$	110			$	4,871			$	2,857
Personal Lines			(111	)			14				75
UGC			(115	)			(103	)			(102	)
Foreign General			(118	)			(371	)			40
Sub total			(234	)			4,411				2,870
Transatlantic			181				269				317
Prior years, other than accretion of discount		$	(53	)		$	4,680			$	3,187

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(in millions)		2006				2005				2004
Prior Accident Year Development by Major Class of Business:
Excess casualty (DBG)		$	102			$	1,191			$	1,240
D&O and related management liability (DBG)			(20	)			1,627				930
Excess workers compensation (DBG)			74				983				279
Reinsurance (Transatlantic)			181				269				317
Asbestos and environmental (primarily DBG)			208				930				1,006
All other, net			(598	)			(320	)			(585	)
Prior years, other than accretion of discount		$	(53	)		$	4,680			$	3,187

		Calendar Year
Accident Year
(in millions)		2006				2005				2004
Prior Accident Year Development by Accident Year:
2005		$	(1,576	)
2004			(511	)		$	(3,853	)
2003			(212	)			(63	)		$	(1,483	)
2002			373				1,360				69
2001			29				1,749				1,123
2000			338				1,323				760
1999			382				944				693
1998			41				605				536
1997			197				281				174
1996 & Prior			886				2,334				1,315
Prior years, other than accretion of discount		$	(53	)		$	4,680			$	3,187

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•	Loss trend factors which are used to establish expected loss ratios for subsequent accident years based on the projected loss ratio for prior accident years.
•	Expected loss ratios for the latest accident year (i.e., accident year 2006 for the year-end 2006 loss reserve analysis) and, in some cases for accident years prior to the latest accident year. The expected loss ratio generally reflects the projected loss ratio from prior accident years, adjusted for the loss trend (see above) and the effect of rate changes and other quantifiable factors on the loss ratio. For low-frequency, high-severity classes such as excess casualty, expected loss ratios generally are used for at least the three most recent accident years.
•	Loss development factors which are used to project the reported losses for each accident year to an ultimate basis. Generally, the actual loss development factors observed from prior accident years would be used as a basis to determine the loss development factors for the subsequent accident years.

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•	The long latency period between asbestos exposure and disease manifestation and the resulting potential for involvement of multiple policy periods for individual claims;
•	The increase in the volume of claims by currently unimpaired plaintiffs;
•	Claims filed under the non-aggregate premises or operations section of general liability policies;
•	The number of insureds seeking bankruptcy protection and the effect of prepackaged bankruptcies;
•	Diverging legal interpretations; and
•	With respect to environmental claims, the difficulty in estimating the allocation of remediation cost among various parties.

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			2006								2005								2004
(in millions)			Gross				Net				Gross				Net				Gross				Net
Asbestos:
	Reserve for losses and loss expenses at beginning of year		$	4,441			$	1,840			$	2,559			$	1,060			$	1,235			$	386
	Losses and loss expenses incurred(a)			571				267				2,207	(b)			903	(b)			1,595	(b)			772	(b)
	Losses and loss expenses paid(a)			(548	)			(218	)			(325	)			(123	)			(271	)			(98	)
Reserve for losses and loss expenses at end of year			$	4,464			$	1,889			$	4,441			$	1,840			$	2,559			$	1,060
Environmental:
	Reserve for losses and loss expenses at beginning of year		$	926			$	410			$	974			$	451			$	789			$	283
	Losses and loss expenses incurred(a)			(232	)			(59	)			47	(c)			27	(c)			314	(c)			234	(c)
	Losses and loss expenses paid(a)			(106	)			(61	)			(95	)			(68	)			(129	)			(66	)
Reserve for losses and loss expenses at end of year			$	588			$	290			$	926			$	410			$	974			$	451
Combined:
	Reserve for losses and loss expenses at beginning of year		$	5,367			$	2,250			$	3,533			$	1,511			$	2,024			$	669
	Losses and loss expenses incurred(a)			339				208				2,254	(d)			930	(d)			1,909	(d)			1,006	(d)
	Losses and loss expenses paid(a)			(654	)			(279	)			(420	)			(191	)			(400	)			(164	)
Reserve for losses and loss expenses at end of year			$	5,052			$	2,179			$	5,367			$	2,250			$	3,533			$	1,511

(a)	All amounts pertain to policies underwritten in prior years, primarily to policies issued in 1984 and prior.
(b)	Includes increases to gross losses and loss expense reserves of $2.0 billion and $1.2 billion in the fourth quarter of 2005 and 2004, respectively, and increases to net losses and loss expense reserves of $843 million and $650 million for the fourth quarter of 2005 and 2004, respectively.
(c)	Includes increases to gross losses and loss expense reserves of $56 million and $250 million in the fourth quarter of 2005 and 2004, respectively, and increases to net losses and loss expense reserves of $30 million and $200 million for the fourth quarter of 2005 and 2004, respectively.
(d)	Includes increases to gross losses and loss expense reserves of $2.0 billion and $1.5 billion in the fourth quarter of 2005 and 2004, respectively, and increases to net losses and loss expense reserves of $873 million and $850 million for the fourth quarter of 2005 and 2004, respectively.

		2006								2005								2004
(in millions)		Gross				Net				Gross				Net				Gross				Net
Asbestos		$	3,212			$	1,469			$	3,401			$	1,465			$	2,033			$	876
Environmental			340				173				586				266				606				284
Combined		$	3,552			$	1,642			$	3,987			$	1,731			$	2,639			$	1,160

			2006												2005												2004
			Asbestos				Environmental				Combined				Asbestos				Environmental				Combined				Asbestos				Environmental				Combined
Claims at beginning of year				7,293				9,873				17,166				7,575				8,216				15,791				7,474				8,852				16,326
Claims during year:
	Opened			643				1,383				2,026				854				5,253	*			6,107				909				2,592				3,501
	Settled			(150	)			(155	)			(305	)			(67	)			(219	)			(286	)			(100	)			(279	)			(379	)
	Dismissed or otherwise resolved			(908	)			(1,659	)			(2,567	)			(1,069	)			(3,377	)			(4,446	)			(708	)			(2,949	)			(3,657	)
Claims at end of year				6,878				9,442				16,320				7,293				9,873				17,166				7,575				8,216				15,791

*	The opened claims count increased substantially during 2005 compared to 2004 because a court ruling led AIG to report separate opened claims for previously pending cases relating to alleged MTBE exposures that AIG previously had counted in the aggregate as only a single claim on the assumption that the cases would be consolidated into a single federal court proceeding.

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			Gross				Net
2006
Survival ratios:
	Asbestos			11.7				12.9
	Environmental			5.3				4.5
	Combined			10.3				10.3
2005
Survival ratios:
	Asbestos			15.9				19.8
	Environmental			6.9				6.2
	Combined			13.0				14.2
2004
Survival ratios:
	Asbestos			10.7				13.5
	Environmental			6.5				6.8
	Combined			9.1				10.5

	•	ALICO
	•	AIG Star Life
	•	AIG Edison Life

	•	AIA
	•	Nan Shan
	•	AIRCO
	•	Philamlife

•	AIG American General
•	USLIFE
•	AGLA

•	VALIC
•	AIG Annuity
•	AIG SunAmerica

*	Japan and Other consists of all operations in Japan and the operations of ALICO and its subsidiaries worldwide.

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								Net				Realized
				GAAP				Investment				Capital Gains				Total				Operating
(in millions)				Premiums				Income				(Losses)				Revenues				Income
2006
	Foreign Life Insurance & Retirement Services			$	24,036			$	9,173			$	707			$	33,916			$	6,792
	Domestic Life Insurance				5,543				3,778				(215	)			9,106				917
	Domestic Retirement Services				1,057				6,488				(404	)			7,141				2,323
		Total		$	30,636			$	19,439			$	88			$	50,163			$	10,032
2005
	Foreign Life Insurance & Retirement Services			$	23,016			$	8,175			$	84			$	31,275			$	5,245
	Domestic Life Insurance				5,447				3,733				35				9,215				1,495
	Domestic Retirement Services				937				6,226				(277	)			6,886				2,164
		Total		$	29,400			$	18,134			$	(158	)		$	47,376			$	8,904
2004
	Foreign Life Insurance & Retirement Services			$	21,917			$	5,834			$	372			$	28,123			$	4,848
	Domestic Life Insurance				5,376				3,459				(120	)			8,715				1,023
	Domestic Retirement Services				795				5,976				(207	)			6,564				2,054
		Total		$	28,088			$	15,269			$	45			$	43,402			$	7,925

			Years Ended December 31,
(in millions)			2006				2005				2004
Foreign			$	1,162,699			$	1,027,682			$	1,085,843
Domestic*				907,901				825,151				772,251
	Total		$	2,070,600			$	1,852,833			$	1,858,094

*	Domestic insurance in-force for 2005 includes the effect of the non-renewal of a single large group life case of $36 billion.

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								Net				Realized
				GAAP				Investment				Capital Gains				Total				Operating
(in millions)				Premiums				Income				(Losses)				Revenues				Income
2006
Japan and Other:
	Life insurance(a)			$	4,769			$	1,696			$	316			$	6,781			$	1,725
	Personal accident				3,957				162				49				4,168				1,122
	Group products				1,740				541				13				2,294				272
	Individual fixed annuities				337				1,930				28				2,295				553
	Individual variable annuities				173				325				—				498				60
		Total		$	10,976			$	4,654			$	406			$	16,036			$	3,732
Asia:
	Life insurance(b)			$	10,949			$	4,188			$	258			$	15,395			$	2,516
	Personal accident				1,561				123				6				1,690				337
	Group products				486				107				34				627				178
	Individual fixed annuities				63				97				3				163				27
	Individual variable annuities				1				4				—				5				2
		Total		$	13,060			$	4,519			$	301			$	17,880			$	3,060
Total Foreign Life Insurance & Retirement Services:
	Life insurance(a)(b)			$	15,718			$	5,884			$	574			$	22,176			$	4,241
	Personal accident				5,518				285				55				5,858				1,459
	Group products				2,226				648				47				2,921				450
	Individual fixed annuities				400				2,027				31				2,458				580
	Individual variable annuities				174				329				—				503				62
		Total		$	24,036			$	9,173			$	707			$	33,916			$	6,792
2005
Japan and Other:
	Life insurance			$	4,852			$	1,752			$	(52	)		$	6,552			$	1,280
	Personal accident				3,788				137				(15	)			3,910				1,051
	Group products				1,473				535				(34	)			1,974				191
	Individual fixed annuities				292				1,672				29				1,993				390
	Individual variable annuities				97				767				—				864				47
		Total		$	10,502			$	4,863			$	(72	)		$	15,293			$	2,959
Asia:
	Life insurance			$	10,779			$	3,056			$	146			$	13,981			$	1,907
	Personal accident				1,214				118				(15	)			1,317				241
	Group products				452				78				25				555				131
	Individual fixed annuities				69				56				—				125				8
	Individual variable annuities				—				4				—				4				(1	)
		Total		$	12,514			$	3,312			$	156			$	15,982			$	2,286
Total Foreign Life Insurance & Retirement Services:
	Life insurance			$	15,631			$	4,808			$	94			$	20,533			$	3,187
	Personal accident				5,002				255				(30	)			5,227				1,292
	Group products				1,925				613				(9	)			2,529				322
	Individual fixed annuities				361				1,728				29				2,118				398
	Individual variable annuities				97				771				—				868				46
		Total		$	23,016			$	8,175			$	84			$	31,275			$	5,245

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								Net				Realized
				GAAP				Investment				Capital Gains				Total				Operating
(in millions)				Premiums				Income				(Losses)				Revenues				Income
2004
Japan and Other:
	Life insurance			$	4,469			$	1,371			$	(134	)		$	5,706			$	1,079
	Personal accident				3,307				96				16				3,419				932
	Group products				1,229				378				(42	)			1,565				133
	Individual fixed annuities				312				1,011				4				1,327				236
	Individual variable annuities				68				142				—				210				13
		Total		$	9,385			$	2,998			$	(156	)		$	12,227			$	2,393
Asia:
	Life insurance			$	10,469			$	2,676			$	497			$	13,642			$	2,098
	Personal accident				994				83				17				1,094				260
	Group products(c)				986				53				14				1,053				90
	Individual fixed annuities				83				23				—				106				7
	Individual variable annuities				—				1				—				1				—
		Total		$	12,532			$	2,836			$	528			$	15,896			$	2,455
Total Foreign Life Insurance & Retirement Services:
	Life insurance			$	14,938			$	4,047			$	363			$	19,348			$	3,177
	Personal accident				4,301				179				33				4,513				1,192
	Group products(c)				2,215				431				(28	)			2,618				223
	Individual fixed annuities				395				1,034				4				1,433				243
	Individual variable annuities				68				143				—				211				13
		Total		$	21,917			$	5,834			$	372			$	28,123			$	4,848

(a)	Includes the effect of out of period adjustments related to the accounting for certain interests in unit investment trusts. For 2006, the effect was an increase of $32 million in both net investment income and operating income.
(b)	Includes the effect of out of period adjustments related to the accounting for certain interests in unit investment trusts. For 2006, the effect was an increase of $208 million and $137 million in net investment income and operating income, respectively. Operating income also includes an out of period reduction in participating policyholder dividend reserves of $163 million, primarily as a result of tax remediation adjustments.
(c)	Revenues include approximately $640 million of premiums from a single reinsurance transaction involving terminal funding business, which is offset by a similar increase of benefit reserves.

		2006				2005
Growth in original currency*			6.4	%			2.5%
Foreign exchange effect			(2.0	)			2.5
Growth as reported in U.S. dollars			4.4	%			5.0%

*	Computed using a constant exchange rate for each period.

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								Net				Realized								Operating
				GAAP				Investment				Capital Gains				Total				Income
(in millions)				Premiums				Income				(Losses)				Revenues				(Loss)
2006
	Life insurance(a)			$	2,127			$	1,377			$	(83	)		$	3,421			$	654
	Home service				790				630				(38	)			1,382				282
	Group life/health				995</