PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 3, 2000)
$210,000,000
AMERICAN INTERNATIONAL GROUP, INC.
0.5% CASH EXCHANGEABLE EQUITY-LINKED SENIOR NOTES
DUE MAY 15, 2007
-------------------
We will issue the notes in minimum denominations of $1,000. The minimum initial
purchase is $100,000. The notes will pay interest at the rate of 0.5% per year
on the principal amount of each note. Interest will be paid semi-annually on
each May 15 and November 15, beginning November 15, 2000, and at maturity.
Beginning on June 12, 2000, you will have the right to exchange your notes for
cash. At any one time, you must exchange at least $100,000 principal amount of
notes or, if you own less than $100,000 principal amount of notes, all of your
notes. If you exchange your notes, you will receive for each $1,000 principal
amount of notes the cash equivalent of 7.17523 shares of our common stock,
based on the arithmetic average of the closing prices of our common stock on
the 3 trading days from and including the day your notice is effective.
If you exchange your notes, you will not receive any accrued but unpaid
interest. This right to exchange your notes terminates at 11:00 a.m. (New York
City time) on the earlier of (1) the trading day prior to the day on which we
exercise our right to call the notes and (2) the fifteenth scheduled trading
day prior to May 15, 2007. If you exchange your notes on the fifteenth
scheduled trading day prior to May 15, 2007, the amount of cash you will
receive will be based on the arithmetic average of the closing prices of our
common stock over a 10 trading day period instead of a 3 trading day period.
Beginning on May 15, 2003, we will have the right to call all of the notes and
pay to you for each $1,000 principal amount of notes the greater of (1) the
cash equivalent of the arithmetic average of the closing prices of 7.17523
shares of our common stock on the 20 trading days from and including the day we
send our call notice to you and (2) the principal amount of each note, plus, in
either case, any accrued but unpaid interest up to, but not including, the call
date. If we decide to call the notes, we will give you at least 30 but not more
than 45 days' notice before the call date specified in the notice.
The notes mature on May 15, 2007. If you hold notes to maturity and have not
exchanged your notes, we will pay to you the principal amount of each note plus
any accrued but unpaid interest up to, but not including, the maturity date.
We do not intend to list the notes on any securities exchange or quotation
system.
You should read the more detailed description of the notes in this prospectus
supplement. In particular, you should review and understand the descriptions in
'Summary of Prospectus Supplement' and 'Description of Notes.'
-------------------
THE NOTES INVOLVE RISKS NOT ASSOCIATED WITH AN INVESTMENT IN CONVENTIONAL DEBT
SECURITIES. SEE 'RISK FACTORS' BEGINNING ON PAGE S-7.
-------------------
PRICE 100% AND ACCRUED INTEREST, IF ANY
-------------------
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS COMPANY
-------- --------------- ------------
Per Note................................................ 100% 2% 98%
Total................................................... $210,000,000 $4,200,000 $205,800,000
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved of these securities, or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
We have granted Morgan Stanley & Co. Incorporated the right to purchase up to an
additional $30,000,000 principal amount of notes to cover over-allotments.
Morgan Stanley & Co. Incorporated expects to deliver the notes to purchasers on
May 11, 2000.
-------------------
MORGAN STANLEY DEAN WITTER
May 8, 2000
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT PAGE
--------------------- ----
Summary of Prospectus Supplement...... S-3
Risk Factors.......................... S-7
Description of Notes.................. S-12
Information about AIG................. S-22
Historical Price Information Regarding
AIG Stock........................... S-22
Use of Proceeds....................... S-23
Hedging Transactions by AIG........... S-23
Global Notes and DTC.................. S-24
United States Taxation................ S-24
Underwriting.......................... S-27
Validity of the Debt Securities....... S-28
Experts............................... S-28
Official Notice of Exchange........... A-1
PROSPECTUS PAGE
---------- ----
About this Prospectus................. 3
American International Group, Inc. ... 3
Use of Proceeds....................... 3
Consolidated Ratios of Earnings to
Fixed Charges....................... 3
Description of Debt Securities AIG May
Offer............................... 4
Legal Ownership....................... 5
Global Securities..................... 6
Overview of Remainder of this
Description......................... 7
Plan of Distribution.................. 13
Validity of the Debt Securities....... 14
Experts............................... 14
Where You Can Find More Information... 14
S-2
SUMMARY OF PROSPECTUS SUPPLEMENT
The following summary describes the notes we are offering to you in general
terms only. You should read the summary together with the more detailed
information that is contained in the rest of this prospectus supplement and in
the accompanying prospectus. You should carefully consider, among other things,
the matters set forth in 'Risk Factors.'
In making your investment decision, you should rely only on the information
contained in or incorporated by reference in this prospectus supplement and the
accompanying prospectus. We have not authorized anyone to provide you with any
other information. If you receive any unauthorized information, you should not
rely on it. We are offering to sell the notes only in places where sales are
permitted. You should not assume that the information contained in this
prospectus supplement or the accompanying prospectus is accurate as of any date
other than the date on the front of those documents.
THE NOTES
We, American International Group, Inc., or AIG, are offering
our 0.5% Cash Exchangeable Equity-Linked Senior Notes due
May 15, 2007. The notes will be issued in minimum
denominations of $1,000. The minimum initial purchase is
$100,000. Beginning on June 12, 2000, you may exchange each
note for cash as described below under 'Your Exchange
Right.' Beginning on May 15, 2003, we may call all the
notes, as described below under 'Our Call Right.' If you
hold the notes to maturity, which is May 15, 2007, we will
pay to you the principal amount of each note plus any
accrued but unpaid interest up to, but not including, the
maturity date.
0.5% INTEREST ON THE We will pay cash interest on the notes, at the rate of 0.5%
PRINCIPAL AMOUNT of the principal amount per year, semi-annually on each
May 15 and November 15, beginning November 15, 2000, and at
maturity; provided, however, that if any such date is not a
business day, payment will be made on the first following
day that is a business day. The record date for each
interest payment will be fifteen days before the relevant
interest payment date, whether or not that record date is a
business day. The amount of interest payable on each
interest payment date will be calculated on the basis of a
360-day year consisting of twelve 30-day months.
YOUR EXCHANGE RIGHT Beginning on June 12, 2000, you may exchange each note for
cash after giving notice to the calculation agent, as agent
on our behalf. At any one time, you must exchange at least
$100,000 principal amount of notes or, if you own less than
$100,000 principal amount of notes, all of your notes.
If you exchange a note, you will receive for each $1,000
principal amount of notes the cash equivalent of the
arithmetic average of the closing prices of 7.17523 shares
of AIG common stock over a period of trading days from and
including the day your notice is effective. If you exercise
your exchange right on the fifteenth scheduled trading day
prior to maturity, which is the last day on which you may do
so, the calculation period will be 10 trading days. In all
other cases, the calculation period will be 3 trading days.
See ' -- Effect of a Market Disruption' below. When you
exchange your notes, the calculation agent will
S-3
determine the amount of cash you will receive. See
' -- Calculation Agent' below.
We refer to AIG common stock as AIG Stock. The exchange
ratio of 7.17523 shares of AIG Stock per $1,000 principal
amount of notes will be adjusted for some types of corporate
events that could affect the price of AIG Stock. The
calculation agent will determine these adjustments.
To exchange a note, you must instruct your broker or other
person with whom you hold your notes to take the following
steps through normal clearing system channels on a trading
day:
fill out an Official Notice of Exchange in the form
attached as Annex A to this prospectus supplement;
deliver your Official Notice of Exchange to the
calculation agent, as agent on our behalf, before 11:00
a.m. (New York City time) on that day; and
deliver your note certificate to The Bank of New York,
the trustee for our debt securities, before 2:00 p.m. on
that day.
If you deliver to the calculation agent, as agent on our
behalf, your Official Notice of Exchange on a day that is
not a trading day, or after 11:00 a.m. (New York City time)
on any trading day, or your note certificate is not received
by The Bank of New York prior to 2:00 p.m. on that day, your
notice will not become effective until the next trading day.
If you exchange your notes, we will pay you on the third
business day after the calculation agent determines the
amount due to you. We will not pay any accrued but unpaid
interest if you exercise your right to exchange your notes.
Your right to exchange your notes will terminate at 11:00
a.m. (New York City time) on the earlier of (1) the trading
day prior to the day on which we exercise our right to call
the notes and (2) the fifteenth scheduled trading day prior
to maturity.
OUR CALL RIGHT Beginning on May 15, 2003, we will have the right to call
all of the notes and pay to you on the call date for each
$1,000 principal amount of notes the greater of (1) the cash
equivalent of the arithmetic average of the closing prices
of 7.17523 shares of AIG Stock on the 20 trading days from
and including the day we send our call notice to you and
(2) the principal amount of each note, plus, in either case,
any accrued but unpaid interest up to, but not including,
the call date. If we call the notes, we will do the
following:
send a notice announcing that we have decided to call
the notes; and
specify in the notice a call date when you will receive
payment in exchange for delivering your notes to the
trustee.
If we decide to call the notes, we will give you at least 30
but not more than 45 days' notice before the call date
specified in the notice.
S-4
AIG STOCK IS CURRENTLY The last reported sale price of AIG Stock on the New York
$115 9/16 A SHARE Stock Exchange, Inc. on the date of this prospectus
supplement was $115 9/16 per share. You can review the
publicly-reported prices of AIG Stock for the last three
years in the 'Historical Price Information Regarding AIG
Stock' section of this prospectus supplement.
EFFECT OF A MARKET DISRUPTION When the calculation agent calculates the closing price or
the arithmetic average of the closing prices of AIG Stock
over a number of trading days, it will not include the
closing price on any trading day during which a closing
price could not be determined due to a market disruption
event, except in the case of certain market disruption
events. Instead, the closing price on the next trading day
without a market disruption will be utilized. Where an
average over a number of trading days is being calculated,
the calculation period will be extended by the number of
days on which a closing price could not be determined, but
not beyond the second scheduled trading day prior to the
maturity of the notes or, in the event we exercise our right
to call the notes, the call date. See 'Description of
Notes -- Settlement Price' in this prospectus supplement.
Circumstances that constitute a market disruption event are
described in this prospectus supplement under the heading
'Description of Notes -- Market Disruption Event.'
If a market disruption event delays the determination of a
closing price or the arithmetic average of the closing
prices of AIG Stock over a number of trading days, there
will also be a corresponding delay in payment for your
notes, but in no case will such delay extend beyond the call
date or the maturity date, as the case may be.
RANKING The notes will be senior notes, ranking equally with all of
our other unsecured, unsubordinated debt. The notes will not
be secured by any collateral.
NO MANDATORY REDEMPTION The notes are not subject to any mandatory redemption or
OR SINKING FUND sinking fund.
CALCULATION AGENT Pursuant to a calculation agency agreement, we have
appointed Morgan Stanley & Co. Incorporated to act as
calculation agent with respect to the notes. The calculation
agent will determine the amount of cash that you will
receive if you exercise your right to exchange your notes or
if we exercise our right to call the notes. The calculation
agent will also adjust the exchange ratio for some types of
corporate events that could affect the price of the AIG
Stock and that we describe below in the section called
'Description of Notes -- Antidilution Adjustments to the
Exchange Ratio' in this prospectus supplement. Pursuant to
the calculation agency agreement, we will have the right to
concur in or challenge the calculations and determinations
of the calculation agent. See 'Description of
Notes -- Calculation Agent' in this prospectus supplement.
USE OF PROCEEDS We estimate that the net proceeds from this offering will be
approximately $205,800,000. We intend to use these net
proceeds for general corporate purposes.
S-5
BOOK-ENTRY SECURITIES The notes will be issued only in the form of 'book-entry
securities' held through The Depository Trust Company.
MORE INFORMATION ON THE NOTES These notes are debt securities issued by AIG. You can find
a general description of our debt securities in the
accompanying prospectus dated March 3, 2000.
BECAUSE THIS IS A SUMMARY, IT DOES NOT CONTAIN ALL OF THE
INFORMATION THAT MAY BE IMPORTANT TO YOU, INCLUDING THE
SPECIFIC REQUIREMENTS FOR THE EXERCISE OF YOUR RIGHT TO
EXCHANGE YOUR NOTES AND OF OUR RIGHT TO CALL THE NOTES. YOU
SHOULD READ THE 'DESCRIPTION OF NOTES' SECTION IN THIS
PROSPECTUS SUPPLEMENT FOR A MORE DETAILED DESCRIPTION OF THE
TERMS OF THE NOTES. YOU SHOULD ALSO READ ABOUT SOME OF THE
RISKS INVOLVED IN INVESTING IN THE NOTES IN THE SECTION
CALLED 'RISK FACTORS.' WE URGE YOU TO CONSULT WITH YOUR
INVESTMENT, LEGAL, ACCOUNTING AND OTHER ADVISORS WITH
REGARDS TO ANY INVESTMENT IN THE NOTES.
YOU AND EACH PERSON WHO OWNS THE NOTES REPRESENTS TO US THAT
YOU HAVE A VALID BUSINESS PURPOSE FOR INVESTING IN THE
NOTES, AND THAT INVESTING IN THE NOTES DOES NOT VIOLATE ANY
LEGAL RULE OR AGREEMENT APPLICABLE TO YOU AND IS CONSISTENT
WITH ANY INVESTMENT GUIDELINES APPLICABLE TO YOU AND WITH
YOUR OVERALL INVESTMENT STRATEGY.
HOW TO REACH US You may contact us at our principal executive offices at
70 Pine Street, New York, New York 10270 (telephone number
(212) 770-7000).
S-6
RISK FACTORS
The notes are not secured debt and are more risky than ordinary debt
securities. This section describes the most significant risks relating to the
notes. You should carefully consider whether the notes are suited to your
particular circumstances before you decide to purchase them.
YIELD TO MATURITY LESS THAN INTEREST ON The notes pay interest at the rate of 0.5% of the
ORDINARY NOTES principal amount per year. This interest rate is lower
than the interest rate that we would pay on ordinary
debt securities issued and maturing at the same time as
the notes.
NOTES MAY NOT BE ACTIVELY TRADED There may be little or no secondary market for the
notes. We do not intend to list the notes on any
securities exchange or quotation system. Even if there
is a secondary market, it may not provide enough
liquidity to allow you to trade or sell the notes
easily. The underwriter currently intends to act as a
market maker for the notes, but is not required to do
so. The spread between bid and asked prices for the
notes in any such market may be different than the
spread between bid and asked prices of AIG Stock.
MARKET PRICE OF NOTES INFLUENCED BY MANY There are factors, many of which are beyond our control,
UNPREDICTABLE FACTORS that will influence the value of the notes, including:
the market price of AIG Stock;
the volatility (frequency and magnitude of changes
in price) of AIG Stock;
the dividend rate on AIG Stock;
economic, financial, political and regulatory or
judicial events that affect securities markets
generally and which may affect the market price of
AIG Stock;
interest and yield rates in the market;
the time remaining until (1) you can exercise your
right to exchange your notes, (2) we can exercise
our right to call the notes and (3) the notes
mature; and
our creditworthiness.
The market price and volatility of AIG Stock will also
depend on many factors, many of which are also beyond
our control, including:
our financial results and prospects;
regulatory developments; and
other economic, financial, political, and regulatory
or judicial events as described above.
These factors will influence the price that you will
receive if you sell your notes prior to maturity. For
example, you may have to sell your notes at a
substantial discount from the issue price if the market
price of AIG Stock at the time you sell is at, below or
not sufficiently above the price of AIG Stock when we
agreed to sell the notes to the underwriter. These
factors will also influence the price that
S-7
you will receive if you exchange your notes, because the
price of AIG Stock may decline during the 3 or 10 day
period after you exercise your right to exchange your
notes, which may result in you receiving less cash for
your notes than you expected, including less than the
principal amount of your notes.
The future performance of AIG Stock cannot be predicted
based on its historical performance.
YOU HAVE NO SHAREHOLDER RIGHTS The notes do not entitle you to receive shares of AIG
Stock. The notes are payable and exchangeable only for
cash. Furthermore, as a holder of notes, you will not
have the right to vote or receive dividends or other
distributions or any other rights with respect to AIG
Stock. The price of AIG Stock serves solely as an index
used to determine the amount of cash you will receive if
you exercise your right to exchange your notes or if we
exercise our right to call the notes.
LIMITED ANTIDILUTION ADJUSTMENTS The calculation agent will adjust the exchange ratio for
some types of corporate events that could affect the
price of AIG Stock, such as stock splits, stock
dividends, and certain other corporate actions involving
AIG, such as mergers. In addition, the calculation agent
may, but is not required to, make adjustments for
corporate events that can affect AIG Stock other than
those described in this prospectus supplement. All of
these adjustments will be made to reflect the
consequences of those events and not with the aim of
changing the relative investment risk involved in
holding the notes. The determination by the calculation
agent to adjust, or not to adjust, the exchange ratio
may materially and adversely affect the market price of
the notes.
The calculation agent is not required to make an
adjustment for every corporate event that could affect
the market price of AIG Stock. For example, the
calculation agent is not required to make any
adjustments if AIG or anyone else makes a partial tender
offer or a partial exchange offer for AIG Stock. If an
event occurs that does not require the calculation agent
to adjust the exchange ratio, the market price of the
notes may be materially and adversely affected.
All of the calculations and determinations of the
calculation agent are subject to our challenge, as
further described in this prospectus supplement under
the heading 'Description of Notes -- Calculation Agent.'
HEDGING TRANSACTIONS AND OTHER AIG has entered into hedging arrangements with Morgan
TRANSACTIONS MAY AFFECT THE VALUE OF THE Stanley & Co. International Limited, an affiliate of the
NOTES underwriter, in connection with AIG's obligations under
the notes. We refer to Morgan Stanley & Co.
International Limited as MSIL. In connection with these
hedging arrangements, the underwriter has taken
positions in AIG Stock and other instruments on behalf
of MSIL in
S-8
secondary market transactions at or before the time the
underwriter agreed to purchase the notes from us. Such
hedging arrangements could have increased the price of
AIG Stock, and therefore effectively have increased the
level to which AIG Stock must rise before you would
receive an amount of cash greater than the principal
amount of your notes. MSIL, directly or through its
affiliates, is likely to modify its hedge position
throughout the life of the notes by purchasing and
selling shares of AIG Stock, other securities of AIG,
listed or over-the-counter options on AIG Stock, or
other instruments it may wish to use in connection with
such hedging. MSIL, directly or through its affiliates,
is also likely to sell shares of AIG Stock, such other
securities, options or instruments, or liquidate any
related hedge positions during any period for which
Morgan Stanley & Co. Incorporated is calculating or
determining the price of AIG Stock. No assurance can be
made that such activity will not affect the market price
of AIG Stock.
Furthermore, as in the past, AIG intends to continue its
practice of acquiring AIG Stock to satisfy its
obligations under various employee benefit plans and for
other corporate purposes. Therefore, AIG expects to
acquire shares of AIG Stock and enter into other
transactions related to AIG Stock during the term of the
notes. To the extent that AIG or one or more of its
subsidiaries has a position in AIG Stock or transactions
related to AIG Stock or AIG continues its past practice
of acquiring AIG Stock, AIG or one or more of its
subsidiaries may reduce a portion of these positions or
AIG may acquire AIG Stock during any period for which
Morgan Stanley & Co. Incorporated is calculating or
determining the price of AIG Stock. Depending on, among
other things, future market conditions, the aggregate
amount and the composition of such positions and the
aggregate amount of any such acquisitions are likely to
vary over time.
In addition, during the life of the notes, the
underwriter and its affiliates may engage in trading in
AIG Stock for their proprietary accounts, for other
accounts under their management and to facilitate
transactions (including block transactions) on behalf of
customers. Such trading, issuance or underwriting could
affect the market price of AIG Stock and the notes. The
underwriter also acts from time to time as an
underwriter or initial purchaser of securities issued by
AIG and its subsidiaries.
The effect, if any, of any of these transactions and
activities on the market price of AIG Stock or the notes
will depend in part upon market conditions and cannot be
ascertained at this time, but any of these activities
could materially and adversely affect the value of AIG
Stock, the value of the notes and, as a result, the
amount of cash you will receive if you exercise your
right to exchange your notes or if we exercise our right
to call the notes.
S-9
POTENTIAL CONFLICTS OF INTEREST AMONG YOU, As calculation agent, Morgan Stanley & Co. Incorporated
US, THE CALCULATION AGENT AND OUR will calculate how much cash you will receive if you
SUBSIDIARIES exercise your right to exchange your notes or if we
exercise our right to call the notes and what
adjustments should be made to the exchange ratio to
reflect some types of corporate events, subject to our
right to concur in or challenge these calculations and
determinations, as further described in this prospectus
supplement under the heading 'Description of
Notes -- Calculation Agent.'
In addition, AIG, MSIL, directly or through its
affiliates, and subsidiaries of AIG will carry out
hedging activities related to the notes and may also
enter into other transactions and arrangements relating
to AIG Stock or such other securities, options or
instruments as described above.
Any of these activities could influence the calculations
and determinations of Morgan Stanley & Co. Incorporated
as calculation agent and our exercise of our right to
concur in or challenge these calculations or
determinations, and, accordingly, the amount of cash
that you will receive if you exercise your right to
exchange your notes or if we exercise our right to call
the notes. In addition, these activities could
potentially affect the value of AIG Stock, the value of
the notes and, as a result, the amount of cash you will
receive if you exercise your right to exchange your
notes or if we exercise our right to call the notes.
EXCHANGE NOTICE DEADLINE; If you give notice to exchange your notes on a day that
PAYMENT UPON EXCHANGE is not a trading day or after 11:00 a.m. (New York City
time) on a trading day, or your note certificate is not
received by The Bank of New York prior to 2:00 p.m. on
that day, your notice will not be effective until the
next trading day, provided that the next trading day is
a trading day on which you may exercise your right to
exchange notes. See ' -- Termination of Exchange Right'
below. Therefore, the amount of cash you will receive
will be based on the arithmetic average price per share
of AIG Stock at the close of the 3 or 10 trading days
from and including the trading day after you gave notice
instead of the 3 or 10 trading days beginning with the
day you give notice. As a result, you could receive less
cash for your notes than you would have received had
your notice been given on a trading day prior to the
11:00 a.m. (New York City time) deadline.
EFFECT OF MARKET MOVEMENTS AFTER WE CALL After you give notice to exchange your notes, or we
THE NOTES OR YOUR DECISION TO EXCHANGE exercise our right to call the notes, the amount of cash
YOUR NOTES you will receive will be based on the average price per
share of AIG Stock at the close of the 3, 10 or 20
trading days, as the case may be, from and including the
trading day on which your notice is effective or, if we
exercise our right to call the notes, the trading day on
which we exercise our right to call the notes. The price
of AIG Stock may decline during that 3, 10 or 20 day
period, which may result in
S-10
your receiving less cash for your notes than you
expected, including, in the case of your exercise of
your exchange right, less than the principal amount of
your notes.
VALIDITY OF AN EXCHANGE NOTICE To be valid, when you give notice to exchange your
notes, your notice must be in the form attached as
Annex A to this prospectus supplement and must be given
precisely as required. Exchange notices must be given to
the calculation agent, as agent on our behalf, who will
provide a copy to us and the trustee, The Bank of New
York. Exchange notices which do not conform to the
requirements of the form of notice attached as Annex A
to this prospectus supplement will not be valid. Any
questions as to the validity of an exchange notice will
be determined by the calculation agent in its sole
discretion.
TERMINATION OF EXCHANGE RIGHT Your right to exchange your notes will terminate at
11:00 a.m. (New York City time) on the earlier of:
the trading day prior to the day on which we
exercise our right to call the notes; and
the fifteenth scheduled trading day prior to
May 15, 2007.
If you give notice to exchange notes after 11:00 a.m.
(New York City time) on the final day on which you may
exchange notes, or your note certificate is not received
by The Bank of New York prior to 2:00 p.m. on that day,
your notes will not be exchanged. Once your right to
exercise your notes terminates, you will no longer have
the option under the notes to take advantage of any
increase in the price of AIG Stock and will receive
either:
(1) if we call the notes, the greater of (a) the
cash equivalent of the arithmetic average of the
closing prices of 7.17523 shares of AIG Stock on
the 20 days from and including the day we send
our call notice to you and (b) the principal
amount of each note; or
(2) the principal amount of your notes in cash at
maturity
plus, in either case, any accrued but unpaid interest up
to, but not including, the call date or the maturity
date, as the case may be.
S-11
DESCRIPTION OF NOTES
The following is a description of the Notes and, as used in this prospectus
supplement, the term 'Notes' refers to the 0.5% Cash Exchangeable Equity-Linked
Senior Notes due May 15, 2007. In this prospectus supplement, the terms 'AIG,'
'we,' 'us' and 'our' refer to American International Group, Inc.
Aggregate Principal Amount............. $210,000,000
Maturity Date.......................... May 15, 2007
Issue Price............................ 100%
Interest Rate.......................... 0.5% per annum
Interest Payment Dates................. May 15 and November 15, beginning November 15, 2000, and
on the Maturity Date; provided, however, that if any
such Interest Payment Date is not a Business Day,
payment will be made on the first following day that is
a Business Day.
Record Date............................ Fifteen days before each Interest Payment Date, whether
or not a Business Day.
Original Issue Date
(Settlement Date)...................... May 11, 2000
CUSIP.................................. 026874AN7
Minimum Denominations.................. $1,000. The minimum initial purchase is $100,000.
Book Entry Notes....................... The Notes will be delivered in global form through the
book-entry delivery system of The Depository Trust
Company. We refer to The Depository Trust Company as
DTC.
Senior Notes........................... The Notes will be senior notes of AIG, ranking equally
with all of AIG's other unsecured, unsubordinated debt.
The Notes will not be secured by any collateral.
Exchange Ratio......................... 7.17523, subject to adjustment for certain corporate
events that could affect the price of AIG stock. See
' -- Antidilution Adjustments to the Exchange Ratio'
below.
Exchange Date.......................... Any Trading Day that falls during the period beginning
on June 12, 2000 and ending at 11:00 a.m. (New York City
time) on the earlier of (1) the Trading Day prior to the
AIG Notice Date and (2) the fifteenth scheduled Trading
Day prior to the Maturity Date.
Holder's Exchange Right................ On any Exchange Date, you can exchange each Note for
cash; however, at any one time you must exchange at
least $100,000 principal amount of Notes or, if you own
less than $100,000 principal amount of Notes, all of
your Notes.
If you exchange a Note, you will be entitled, for each
$1,000 principal amount of Notes, upon:
(1) your completion and delivery to the Calculation
Agent, as agent on our behalf, of an Official Notice
of Exchange (in the form attached as Annex A
hereto) before 11:00 a.m. (New York City time) on
such date;
(2) delivery on such date of such Notes to the Trustee
prior to 2:00 p.m. (New York City time); and
(3) payment of any interest amount as described below,
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to receive cash in an amount equal to the Settlement
Price (as determined over a Calculation Period of 3
Trading Days, except in the event of certain Market
Disruption Events). However, if you exercise your
Holder's Exchange Right on the fifteenth scheduled
Trading Day prior to the Maturity Date, which is the
last date on which you can exercise this right, the
Settlement Price will be determined over a Calculation
Period of 10 Trading Days, except in the event of
certain Market Disruption Events.
Upon any such exchange, we will pay to you the
Settlement Price in cash 3 business days after the
Calculation Agent makes its final determination of the
Settlement Price. However, if you exercise your Holder's
Exchange Right on the fifteenth scheduled Trading Day
prior to the Maturity Date, we will pay to you the
Settlement Price on the Maturity Date.
Upon any exercise of your Holder's Exchange Right, you
will not receive any accrued but unpaid interest. If you
exchange your Notes after a Record Date for the payment
of interest and prior to the next succeeding Interest
Payment Date, the Notes that you exchange must be
accompanied by funds equal to the interest payable on
the succeeding Interest Payment Date on the principal
amount of Notes that you exchange.
Because the Notes will be represented by a note in
global form, the nominee of DTC will be the holder of
the Notes and therefore will be the only entity that can
exercise the Holder's Exchange Right. In order to ensure
that DTC's nominee will timely exercise the Holder's
Exchange Right with respect to a particular Note or any
portion of a particular Note, the beneficial owner of
such Note must instruct the broker or other direct or
indirect participant through which such beneficial owner
holds an interest in that Note to notify DTC of its
desire to exercise the Holder's Exchange Right with
respect to its Note or any portion of its Note.
Different firms have different deadlines for accepting
instructions from their customers. Each beneficial owner
should consult the broker or other participant through
which such beneficial owner holds an interest in a Note
in order to ascertain the deadline for ensuring that
timely notice will be delivered to DTC.
AIG Call Right......................... Beginning on May 15, 2003, we may exercise our right to
call the Notes, in whole but not in part, for mandatory
redemption at the Call Price.
AIG Notice Date........................ The scheduled Trading Day on which we issue our notice
of mandatory redemption, which will be at least 30 but
not more than 45 days prior to the Call Date.
Call Date.............................. The scheduled Trading Day on or after May 15, 2003
specified by us in our notice of mandatory redemption on
which we will pay cash to holders of the Notes called
for mandatory redemption.
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Call Price............................. For each $1,000 principal amounts of Notes, the greater
of (1) the Settlement Price (as determined over a
Calculation Period of 20 Trading Days) and (2) $1,000,
plus, in each case, any accrued but unpaid interest up
to, but not including, the Call Date.
Calculation Period..................... (1) Following an exercise of the Holder's Exchange Right
(other than on the fifteenth scheduled Trading Day prior
to the Maturity Date), the 3 immediately succeeding
Trading Days from and including the Exchange Date;
(2) following an exercise of the Holder's Exchange Right
on the fifteenth scheduled Trading Day prior to the
Maturity Date, the 10 immediately succeeding Trading
Days from and including the Exchange Date; and
(3) following the exercise of the AIG Call Right, the 20
immediately succeeding Trading Days from and including
the AIG Notice Date;
provided that no Calculation Period shall extend beyond
the second scheduled Trading Day prior to (x) the
Maturity Date, or (y) in the case of a Calculation
Period described in clause (1) or (3) above, the Call
Date.
Settlement Price....................... The Settlement Price will be determined by the
Calculation Agent and will equal the sum, for each of
the 3, 10 or 20 scheduled Trading Days during the
applicable Calculation Period (each a 'Determination
Date'), of the products (each a 'Daily Value') of Parity
and the Weighting (as defined below) for such
Determination Date. The Weighting for each Determination
Date will initially be 1/3, 1/10 or 1/20, depending on
(and each denominator corresponding to) the number of
Trading Days in the applicable Calculation Period;
provided that, if a Market Disruption Event (as defined
below) occurs on any such Determination Date
(consequently, a 'Non-Determination Date'), then the
Calculation Agent shall not compute a Daily Value for
such Non-Determination Date and will instead compute the
Daily Value on the next Trading Day when a Market
Disruption Event does not preclude the determination of
a Market Closing Price. If, however, there are less than
the required number of scheduled Trading Days remaining
in any Calculation Period, the Calculation Agent will
weight the Daily Value for each succeeding Determination
Date during the Calculation Period to ratably distribute
the intended weight of such Non-Determination Date
across the remaining Determination Dates.
Accordingly, if a Market Disruption Event occurs during
the Calculation Period, the Daily Values will be
calculated as follows:
(A) the Daily Value for each Determination Date
preceding the first Market Disruption Event will be
calculated using a Weighting of 1/3, 1/10 or 1/20,
as applicable; and
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(B) the Daily Value for each Determination Date
following a Market Disruption Event will be
calculated using a Weighting that equals a fraction
(i) the numerator of which will be the fraction that
equals 1 minus the sum of the Weightings for all
preceding Determination Dates and (ii) the
denominator of which will be the lesser of (x) the
original denominator and (y) the number of scheduled
Determination Dates from and including such
Determination Date to and including the last
scheduled Determination Date in the applicable
Calculation Period.
If, following a Market Disruption Event, there is no
succeeding Trading Day on which a Market Disruption
Event does not exist, a final Daily Value will be
determined on the last scheduled Trading Day in the
Calculation Period notwithstanding the occurrence of a
Market Disruption Event on such Trading Day. The value
of Parity used to determine that Daily Value will be the
product of the Exchange Ratio for such day and the mean,
as determined by the Calculation Agent, of the bid
prices for one share of AIG Stock (or any other
security) obtained from as many dealers in such stock,
but not exceeding three, as will make such bid prices
available to the Calculation Agent.
Parity................................. With respect to any Determination Date, an amount equal
to the product of (a) the Exchange Ratio and (b) the
Market Closing Price of AIG Stock, each as determined on
such Determination Date.
Market Closing Price................... If AIG Stock (or any other security for which a Market
Closing Price must be determined for purposes of the
Notes) is listed on a national securities exchange, is a
security of the Nasdaq National Market, or is included
in the OTC Bulletin Board Service ('OTC Bulletin Board')
operated by the National Association of Securities
Dealers, Inc. (the 'NASD'), the Market Closing Price for
one share of AIG Stock (or one unit of any such other
security) on any Trading Day means:
(1) the last reported sale price, regular way, on such
day on the principal United States securities
exchange registered under the Securities Exchange
Act of 1934, as amended (the 'Exchange Act'), on
which AIG Stock (or such other security) is listed
or admitted to trading (without taking into account
any extended or after-hours trading session); or
(2) if not listed or admitted to trading on any such
securities exchange or if such last reported sale
price is not obtainable (even if AIG Stock (or such
other security) is listed or admitted to trading on
such securities exchange), the last reported sale
price on the over-the-counter market as reported on
the Nasdaq National Market or OTC Bulletin Board on
such day
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(without taking into account any extended or after-
hours trading session).
In each case, the Market Closing Price or other
calculations and determinations described above will be
made by the Calculation Agent, subject to our right to
concur in or challenge these calculations and
determinations, as further described under the heading
' -- Calculation Agent' in this prospectus supplement.
A 'security of the Nasdaq National Market' shall include
a security included in any successor to such system, and
the term 'OTC Bulletin Board Service' shall include any
successor service thereto.
Trading Day............................ A day, as determined by the Calculation Agent, on which
trading is generally conducted on the New York Stock
Exchange, Inc. ('NYSE'), the American Stock Exchange,
Inc., the Nasdaq National Market, the Chicago Mercantile
Exchange, the Chicago Board of Options Exchange and in
the over-the-counter market for equity securities in the
United States and on which a Market Disruption Event has
not occurred.
Business Day........................... Means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions
in New York City are authorized or obligated by law to
close.
Trustee................................ The Bank of New York
Calculation Agent...................... Morgan Stanley & Co. Incorporated will be the
Calculation Agent. All calculations and determinations
made by the Calculation Agent will be made pursuant to a
Calculation Agency Agreement between the Calculation
Agent and us, pursuant to which we will have certain
rights to concur in or challenge the calculations and
determinations of the Calculation Agent pursuant to the
procedures outlined below.
The Calculation Agent will provide us with prior notice
of all calculations and determinations it makes relating
to the Notes. These calculations and determinations, or
any decision by the Calculation Agent not to make any
calculation or determination, will be subject to our
review and agreement. The Calculation Agent and we will
each use our reasonable efforts to resolve expeditiously
any disagreement concerning these calculations and
determinations. If the Calculation Agent and we cannot
reach an agreement regarding any calculation or
determination, then we agree to jointly appoint four
independent leading dealers in the relevant market each
to make the calculation or determination. In the case of
a calculation, the calculation will be the arithmetic
average of the calculations of the appointed dealers
without regard to the calculations having the highest
and lowest values. In the case of a determination, the
determination will be the agreement of at least three of
the four dealers. If fewer than four dealers provide a
calculation or if three dealers
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do not agree on a determination, then the Calculation
Agent and we will jointly appoint additional independent
dealers until we receive four calculations or three
dealers agree on a determination as described above.
All calculations and determinations made in accordance
with the Calculation Agency Agreement will, in absence
of manifest error, be conclusive and binding on you and
us, subject to our right to challenge these calculations
or determinations. See ' -- Calculation Agent' above.
Antidilution Adjustments to the
Exchange Ratio......................... The Exchange Ratio will be adjusted by the Calculation
Agent under circumstances described below as follows:
(1) If AIG Stock is subject to a stock split or
reverse stock split, then once such split has become
effective, the Exchange Ratio will be adjusted to
equal the product of the prior Exchange Ratio,
and the number of shares issued in such stock
split or reverse stock split with respect to one
share of AIG Stock.
(2) If AIG Stock is subject (i) to a stock dividend
(issuance of additional shares of AIG Stock) that
is given ratably to all holders of shares of AIG
Stock or (ii) to a distribution of AIG Stock as a
result of the triggering of any provision of the
corporate charter of AIG, then once the dividend
has become effective and AIG Stock is trading
ex-dividend, the Exchange Ratio will be adjusted
so that the new Exchange Ratio shall equal the
prior Exchange Ratio plus the product of (i) the
number of shares issued with respect to one share
of AIG Stock and (ii) the prior Exchange Ratio.
(3) There will be no adjustments to the Exchange
Ratio to reflect cash dividends or other distributions
paid with respect to AIG Stock other than
distributions described in paragraph 5 below and
Extraordinary Dividends as described below. A
cash dividend or other distribution with respect
to AIG Stock will be deemed to be an
'Extraordinary Dividend' if such dividend or
other distribution exceeds the immediately
preceding non-Extraordinary Dividend for AIG
Stock (as adjusted for any subsequent corporate
event requiring an adjustment hereunder, such as
a stock split or reverse stock split) by an
amount equal to at least 10% of the Market Price
of AIG Stock on the Trading Day preceding the ex-
dividend date for the payment of such
Extraordinary Dividend (the 'ex-dividend date').
If an Extraordinary Dividend occurs with respect
to AIG Stock, the Exchange Ratio with respect to
AIG Stock will be adjusted on the ex-dividend
date with respect to such Extraordinary Dividend
so that the new Exchange Ratio will equal the
product of (i)
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the then current Exchange Ratio and (ii) a
fraction, the numerator of which is the Market
Price on the Trading Day preceding the
ex-dividend date, and the denominator of which is
the amount by which the Market Price on the
Trading Day preceding the ex-dividend date
exceeds the Extraordinary Dividend Amount. The
'Extraordinary Dividend Amount' with respect to
an Extraordinary Dividend for AIG Stock will
equal (i) in the case of cash dividends or other
distributions that constitute quarterly
dividends, the amount per share of such
Extraordinary Dividend minus the amount per share
of the immediately preceding non-Extraordinary
Dividend for AIG Stock or (ii) in the case of
cash dividends or other distributions that do not
constitute quarterly dividends, the amount per
share of such Extraordinary Dividend. To the
extent an Extraordinary Dividend is not paid in
cash, the value of the non-cash component will be
determined by the Calculation Agent, whose
determination shall be conclusive (subject to our
right to challenge this determination). A
distribution on the AIG Stock described in
paragraph 5 below that also constitutes an
Extraordinary Dividend shall only cause an
adjustment to the Exchange Ratio pursuant to
paragraph 5 below.
(4) If there occurs any reclassification or change of
AIG Stock, including, without limitation, as a result
of the issuance of tracking stock by AIG, or if
AIG has been subject to a merger, combination or
consolidation and is not the surviving entity, or
if there occurs a sale or conveyance to another
corporation of the property and assets of AIG as
an entirety or substantially as an entirety, in
each case as a result of which the holders of AIG
Stock shall be entitled to receive stock, other
securities or other property or assets
(including, without limitation, cash or other
classes of stock of AIG) ('Exchange Property')
with respect to or in exchange for such AIG
Stock, then the holders of the Notes then
outstanding will be entitled thereafter to
exchange such Notes into the cash value, as
determined by the Calculation Agent, of the kind
and amount of Exchange Property that a holder of
AIG Stock would have been entitled to receive
upon such reclassification, change, merger,
combination, consolidation, sale or conveyance
immediately prior to any such corporate event,
but without interest thereon. At such time, no
adjustment will be made to the Exchange Ratio.
(5) If AIG issues to all of its shareholders equity
securities of an issuer other than AIG (other
than in a transaction described in paragraph 4
above), then the holders of the Notes then
outstanding will be
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entitled to receive the cash equivalent of a
number of such new equity securities upon
exchange of such Notes. The Exchange Ratio for
such new equity securities will equal the product
of the Exchange Ratio in effect for AIG Stock at
the time of the issuance of such new equity
securities times the number of shares of the new
equity securities issued with respect to one
share of AIG Stock.
(6) No adjustments to the Exchange Ratio will be
required other than those specified above.
However, we and the Calculation Agent may agree
to make additional changes to the Exchange Ratio
upon the occurrence of corporate or other similar
events that affect or could potentially affect
market prices of, or shareholders' rights in, AIG
Stock (or other Exchange Property) but only to
reflect such changes, and not with the aim of
changing relative investment risk.
No antidilution adjustments to the Exchange Ratio will
be required unless such adjustment would require a
change of at least 0.1% in the Exchange Ratio then in
effect. The Exchange Ratio resulting from any of the
adjustments specified above will be rounded to the
nearest one hundred-thousandth with five one-millionths
being rounded upward.
The Calculation Agent shall be responsible for the
determination and calculation of any adjustments to the
Exchange Ratio and of any related determinations and
calculations with respect to the cash equivalent of any
distributions of stock, other securities or other
property or assets (including cash) in connection with
any corporate event described in paragraph 4 or 5 above,
and its determinations and calculations with respect
thereto shall be conclusive for all purposes and be
binding on you and us, subject to our right to challenge
these calculations or determinations. See
' -- Calculation Agent' in this prospectus supplement.
The Calculation Agent will provide information as to any
adjustments to the Exchange Ratio upon written request
by any holder of the Notes.
Market Disruption Event................ A 'Market Disruption Event' means, with respect to AIG
Stock, the occurrence or existence of any of the
following, as determined by the Calculation Agent:
a suspension, absence or material limitation of
trading of AIG Stock on the primary market for AIG
Stock for more than two hours of trading or during the
one-half hour period preceding the close of trading in
such market;
a breakdown or failure in the price and trade
reporting systems of the primary market for AIG Stock
as a result of which the reported trading prices for
AIG
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Stock during the last one-half hour preceding the
closing of trading in such market are materially
inaccurate; or
the suspension, absence or material limitation on the
primary market for trading in options contracts
related to AIG Stock, if available, during the
one-half hour period preceding the close of trading in
the applicable market;
and, in the case of any of these three alternatives,
a determination by the Calculation Agent (subject to
our right to concur in or challenge these calculations
and determinations, as further described under the
heading ' -- Calculation Agent' in this prospectus
supplement) that any event described above materially
interfered with the ability of MSIL or any of its
affiliates to unwind all or a material portion of the
hedge with respect to the Notes.
For purposes of determining whether a Market Disruption
Event has occurred:
a limitation on the hours or number of days of trading
will not constitute a Market Disruption Event if it
results from an announced change in the regular
business hours of the relevant exchange;
a decision to permanently discontinue trading in the
relevant option contract will not constitute a Market
Disruption Event;
limitations pursuant to NYSE Rule 80A (or any
applicable rule or regulation enacted or promulgated
by the NYSE, any other self-regulatory organization or
the Securities and Exchange Commission (the
'Commission') of similar scope as determined by the
Calculation Agent) on trading during significant
market fluctuations shall constitute a suspension,
absence or material limitation of trading;
a suspension of trading in options contracts related
to AIG Stock by the primary securities market trading
in such options by reason of (x) a price change
exceeding limits set by such securities exchange or
market, (y) an imbalance of orders relating to such
contracts or (z) a disparity in bid and ask quotes
relating to such contracts will constitute a
suspension, absence or material limitation of trading
in options contracts related to AIG Stock;
a suspension, absence or material limitation of
trading on the primary securities market on which
options contracts related to AIG Stock are traded will
not include any time when such securities market is
itself closed for trading under ordinary
circumstances; and
any after-hours or extended trading session will be
disregarded.
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Alternate Exchange Calculation in Case
of an Event of Default................. Under the heading 'Description of Debt Securities AIG
May Offer -- Events of Default' in the accompanying
prospectus is a description of when an Event of Default
is deemed to have occurred in respect of the Notes. In
case an Event of Default with respect to the Notes shall
have occurred and be continuing, the amount declared due
and payable upon any acceleration of any Note shall be
determined by the Calculation Agent (subject to our
right to concur in or challenge these calculations or
determinations -- see ' -- Calculation Agent' in this
prospectus supplement), and shall be equal to the
principal amount of the Note plus any accrued and unpaid
interest at the rate of 0.5% per year up to, but not
including, the date of acceleration; provided that, if
the holder of a Note has submitted an Official Notice of
Exchange to us in accordance with its Holder's Exchange
Right prior to the date of acceleration, the amount
declared due and payable for each $1,000 principal
amount of Notes upon acceleration shall be an amount
equal to the Settlement Price (as determined over a
Calculation Period of 3 or 10 Trading Days as the case
may be) from and including the day its Notice of
Exchange was effective (or if the date of acceleration
occurs prior to any such Trading Day, on the date of
acceleration), as determined by the Calculation Agent
(subject to our right to concur in or challenge these
calculations or determinations -- see 'Calculation
Agent' in this prospectus supplement), and shall not
include any accrued but unpaid interest thereon.
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INFORMATION ABOUT AIG
AIG, a Delaware corporation, is a holding company which through its
subsidiaries is engaged in a broad range of insurance and insurance-related
activities in the United States and abroad. AIG's primary activities include
both general and life insurance operations. Other significant activities are
financial services and investment management. AIG Stock is registered under the
Securities Exchange Act of 1934 (the 'Exchange Act'). Companies with securities
registered under the Exchange Act are required to file periodically certain
financial and other information specified by the Commission. Information
provided to or filed with the Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549 or at its Regional Offices
located at Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661 and at Seven World Trade Center, 13th Floor, New York, New York
10048, and copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549. In addition, information provided to or filed with the Commission
electronically can be accessed through a website maintained by the Commission.
The address of the Commission's website is http://www.sec.gov. Information
provided to or filed with the Commission by AIG pursuant to the Exchange Act can
be located by reference to Commission file number 1-8787.
HISTORICAL PRICE INFORMATION REGARDING AIG STOCK
The following table sets forth the published high and low closing prices of
AIG Stock on the NYSE, as well as dividends paid, during 1997, 1998, 1999 and a
portion of 2000. We obtained the closing prices listed below from the NYSE
Composite Tape as reported by the National Quotation Bureau, Incorporated, and
we believe such information to be accurate. These prices and dividends have been
adjusted to reflect:
the 5-for-4 stock split in the form of a 25% common stock dividend, paid
July 30, 1999;
the 3-for-2 stock split in the form of a 50% common stock dividend, paid
July 31, 1998; and
the 3-for-2 stock split in the form of a 50% common stock dividend, paid
July 25, 1997.
You should not take the historical prices of AIG Stock as an indication of
future performance. We cannot give any assurance that the price of AIG Stock
will increase sufficiently to cause holders of the Notes to receive an amount in
excess of the principal amount on any Exchange Date.
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AIG STOCK
(CUSIP 0268741073)
CASH
HIGH LOW DIVIDENDS
---- --- ---------
1997
First Quarter............................... $ 45 1/2 $ 38 1/4 $ 0.036
Second Quarter.............................. 53 7/16 40 9/16 0.036
Third Quarter............................... 56 13/16 50 3/8 0.040
Fourth Quarter.............................. 59 1/2 52 1/4 0.040
1998
First Quarter............................... $ 69 $ 53 5/8 $ 0.040
Second Quarter.............................. 77 7/8 65 7/16 0.040
Third Quarter............................... 81 9/16 61 0.045
Fourth Quarter.............................. 80 11/16 53 1/4 0.045
1999
First Quarter............................... $ 98 1/8 $ 78 $ 0.045
Second Quarter.............................. 106 3/8 89 3/16 0.045
Third Quarter............................... 99 3/4 84 1/2 0.050
Fourth Quarter.............................. 111 11/16 82 0.050
2000
First Quarter............................... $114 1/16 $ 81 7/16 $ 0.050
Second Quarter (through May 8, 2000)........ 117 5/8 101 5/8 --
The Market Closing Price of AIG Stock on the NYSE on the date of this
prospectus supplement was $115 9/16.
We make no representation as to the amount of dividends, if any, that AIG
will pay in the future. In any event, as an owner of a Note, you will not be
entitled to receive dividends, if any, that may be payable on AIG Stock.
USE OF PROCEEDS
The net proceeds we receive from the sale of the Notes will be used for
general corporate purposes. See also 'Use of Proceeds' in the accompanying
prospectus.
HEDGING TRANSACTIONS BY AIG
AIG has entered into hedging arrangements with Morgan Stanley & Co.
International Limited, an affiliate of the underwriter, in connection with AIG's
obligations under the Notes. We refer to Morgan Stanley & Co. International
Limited as MSIL. In connection with these hedging arrangements, the underwriter
has taken positions in AIG Stock and other instruments on behalf of MSIL in
secondary market transactions at or before the time the underwriter agreed to
purchase the Notes from us. MSIL, directly or through its affiliates, is likely
to modify its hedge position throughout the life of the Notes by purchasing and
selling shares of AIG Stock, other securities of AIG, listed or over-the-counter
options on AIG Stock or other instruments it may wish to use in connection with
such hedging. MSIL, directly or through its affiliates, is also likely to sell
shares of AIG Stock, or such other securities, options or instruments, or
liquidate any related hedge positions during any period for which Morgan Stanley
& Co. Incorporated is calculating and determining the price of AIG Stock.
Furthermore, as in the past, AIG intends to continue its practice of
acquiring AIG Stock to satisfy its obligations under various employee benefit
plans and for other corporate purposes. Therefore, AIG expects to acquire shares
of AIG Stock and enter into transactions relating to AIG Stock during the term
of the Notes. To the extent that AIG or one or more of its subsidiaries has a
position in AIG Stock or AIG continues its past practice of acquiring AIG Stock,
AIG or one or more of its subsidiaries may reduce a portion of these positions
or AIG
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may acquire AIG Stock during any period for which Morgan Stanley & Co.
Incorporated is calculating or determining the price of AIG Stock. Depending on,
among other things, future market conditions, the aggregate amount and the
composition of such positions and the aggregate amount of any such acquisitions
are likely to vary over time.
The effect, if any, of any of these transactions and activities on the
market price of AIG Stock or the Notes will depend in part on market conditions
and cannot be ascertained at this time, but any of these activities could
materially and adversely affect the value of AIG Stock, the value of the Notes
and, as a result, the amount of cash you will receive if you exercise your
Holders' Exchange Right or we exercise the AIG Call Right.
GLOBAL NOTES AND DTC
AIG will make payments on global notes in accordance with the applicable
policies of DTC as in effect from time to time. Currently, under DTC's policies,
AIG will pay interest and principal directly to DTC or its nominee, and not to
any indirect holders who own beneficial interests in global notes. DTC will
allocate and make payments to the holders of the Notes in accordance with its
existing procedures. An indirect holder's right to receive those payments will
be governed by the rules and practices of DTC and the banks or brokers through
which the indirect holder holds a beneficial interest in the global notes.
Neither AIG nor the trustee have any responsibility or liability for such
payments by the DTC or the banks or brokers.
DTC has advised AIG that DTC is a limited-purpose trust company organized
under the New York Banking Law, a 'banking organization' within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a 'clearing
corporation' within the meaning of the New York Uniform Commercial Code, and a
'clearing agency' registered under the Securities Exchange Act of 1934. DTC was
created to hold the securities of its participants and to facilitate the
clearance and settlement of securities transactions among its participants in
such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations some of
whom, and/or their representatives, own DTC. Access to DTC's book-entry system
is also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
either directly or indirectly.
UNITED STATES TAXATION
This section describes the material United States federal income tax
consequences of owning a Note. It is the opinion of Sullivan & Cromwell, counsel
to us. It applies to you only if you are a United States holder of Notes who
acquires Notes in the offering at the issue price and you hold your Note as a
capital asset for tax purposes. This section does not apply to you if you are a
member of a class of holders subject to special rules, such as:
a dealer in securities or currencies;
a trader in securities that elects to use a mark-to-market method of
accounting for your securities holdings;
a bank;
a life insurance company;
a tax-exempt organization;
a person that owns a Note that is a hedge or that is hedged against
interest rate risks;
a person that owns a Note as part of a straddle or conversion transaction
for tax purposes; or
a person whose functional currency for tax purposes is not the U.S. dollar.
This section is based on the Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed regulations under the Internal
Revenue Code, published rulings and court
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decisions, all as currently in effect. These laws are subject to change,
possibly on a retroactive basis.
TAX CONSEQUENCES OF RECEIVING INTEREST AND THE PURCHASE, SALE AND RETIREMENT OF
NOTES
UNITED STATES HOLDERS
This subsection describes the tax consequences to a United States holder.
You are a United States holder if you are a beneficial owner of a Note and you
are:
a citizen or resident of the United States;
a domestic corporation;
an estate whose income is subject to United States federal income tax
regardless of its source; or
a trust if a United States court can exercise primary supervision over the
trust's administration and one or more United States persons are authorized
to control all substantial decisions of the trust.
If you are not a United States holder, this section does not apply to you, and
you should refer to ' -- United States Alien Holders' below.
Although the amounts to be received under the Notes are contingent upon the
value of AIG Stock, you will not be subject to the special tax rules governing
contingent payment debt obligations because those rules do not apply to debt
instruments like your Note that provide for an option to convert the debt
instrument into cash in an amount equal to the approximate value of the stock of
the issuer. Instead, you should include any interest payment in income at the
time you receive it or are required to accrue it, depending on your method of
accounting for federal income tax purposes. You will generally recognize gain or
loss on the sale, exchange or retirement of your Note equal to the difference
between the amount you realize on the sale, exchange or retirement and the
amount that you paid for your Note. You will recognize capital gain or loss when
you sell or retire your Note, except to the extent attributable to accrued but
unpaid interest. Capital gain of a noncorporate United States holder is
generally taxed at a maximum rate of 20% where the property is held more than
one year.
UNITED STATES ALIEN HOLDERS
This subsection describes the tax consequences to a United States alien
holder. You are a United States alien holder if you are the beneficial owner of
a Note and are, for United States federal income tax purposes:
a nonresident alien individual;
a foreign corporation;
a foreign partnership; or
an estate or trust that in either case is not subject to United States
federal income tax on a net income basis on income or gain from a Note.
If you are a United States holder, this section does not apply to you.
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below, if you are a United States alien
holder of a Note:
we and other payors will not be required to deduct United States
withholding tax from payments of principal and interest to you if, in the
case of interest:
1. you do not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of AIG entitled to vote,
2. you are not a controlled foreign corporation that is related to AIG
through stock ownership, and
S-25
3. you certify to us or a U.S. payor, under penalties of perjury, that you
are not a United States holder and provide your name and address, or a
non-U.S. securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of
its trade or business and holds the Note certifies to us or a U.S.
payor, under penalties of perjury, that a similar statement has been
received from you by it or by a similar financial institution between
it and you and furnishes the payor with a copy thereof.
no deduction for any United States federal withholding tax will be made
from any gain that you realize on the sale or exchange of your Note.
Further, a Note held by an individual who at death is not a citizen or resident
of the United States will not be includible in the individual's gross estate for
United States federal estate tax purposes if:
the decedent did not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of AIG entitled to vote
at the time of death; and
the income on the Note would not have been effectively connected with a
United States trade or business of the decedent at the same time.
If you receive a payment after December 31, 2000, recently finalized
Treasury withholding regulations will apply. Under these final withholding
regulations, after December 31, 2000, you may use an alternative method to
satisfy the certification requirement described above. Additionally, if you are
a partner in a foreign partnership, after December 31, 2000, you, in addition to
the foreign partnership, must provide the certification described above and the
partnership must provide certain information. The Internal Revenue Service will
apply a look-through rule in the case of tiered partnerships.
BACKUP WITHHOLDING AND INFORMATION REPORTING
UNITED STATES HOLDERS
In general, if you are a noncorporate United States holder, we and other
payors are required to report to the Internal Revenue Service all payments of
principal and interest on your Note. In addition, the proceeds of the sale of
your Note before maturity within the United States will be reported to the
Internal Revenue Service. Additionally, backup withholding at a rate of 31% will
apply to any payments if you fail to provide an accurate taxpayer identification
number, or you are notified by the Internal Revenue Service that you have failed
to report all interest and dividends required to be shown on your federal income
tax returns.
UNITED STATES ALIEN HOLDERS
You are generally exempt from backup withholding and information reporting
with respect to any payments of principal or interest made by us and other
payors if you provide the certification described under 'Tax Consequences of
Receiving Interest and the Purchase, Sale and Retirement of Notes -- United
States Alien Holders' and the payor does not have actual knowledge that you are
a United States person. See ' -- United States Alien Holders' above for a
discussion of the rules under the final withholding regulations. We and other
payors, however, may report payments of interest on your Notes on Internal
Revenue Service Form 1042-S.
In general, payment of the proceeds from the sale of Notes to or through a
United States office of a broker is subject to both United States backup
withholding and information reporting. If, however, you are a United States
alien holder, you will not be subject to information reporting and backup
withholding if you certify as to your non-United States status, under penalties
of perjury, or otherwise establish an exemption. Payments of the proceeds from
the sale by a United States alien holder of a Note made to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding. However, information reporting, but not backup
S-26
withholding, may apply to a payment made outside the United States of the
proceeds of a sale of a Note through an office outside the United States if the
broker is:
a United States person;
a controlled foreign corporation for United States tax purposes;
a foreign person 50% or more of whose gross income is effectively connected
with a United States trade or business for a specified three-year period;
or
with respect to payments made after December 31, 2000, a foreign
partnership, if at any time during its tax year:
1. one or more of its partners are 'U.S. persons,' as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership; or
2. such foreign partnership is engaged in a United States trade or
business;
unless the broker has documentary evidence in its records that you are a
non-U.S. person and does not have actual knowledge that you are a U.S. person,
or you otherwise establish an exemption.
UNDERWRITING
We have entered into an underwriting agreement with the underwriter relating
to the offering and sale of the Notes. In the underwriting agreement, we have
agreed to sell to the underwriter, and the underwriter has agreed to purchase
from us, $210,000,000 principal amount of Notes.
The obligations of the underwriter under the underwriting agreement are
subject to the satisfaction of the conditions in the underwriting agreement. The
underwriter has agreed to purchase all of the Notes (other than those covered by
the over-allotment option) if they purchase any of the Notes.
AIG has granted to the underwriter an option, exercisable for 30 days from
the date of this prospectus, to purchase up to an additional $30,000,000
principal amount of the Notes at the public offering price set forth on the
cover page hereof, less underwriting discounts and commissions. The underwriter
may exercise such option solely for the purpose of covering over-allotments, if
any, made in connection with this offering. If the underwriter's option is
exercised in full, the total price to the public would be $240,000,000, the
total underwriter's discounts and commissions would be $4,800,000, and total
proceeds to AIG would be $235,200,000.
The underwriter proposes to offer the Notes directly to the public at the
initial public offering price set forth on the cover page of this prospectus
supplement and to certain dealers at such price, less a commission not in excess
of 1.2% of the principal amount. The offering of the Notes is made for delivery
when, as and if accepted by the underwriter and subject to prior sale and to
withdrawal, cancellation or modification of the offer without notice. The
underwriter reserves the right to reject any offer for the purchase of the
Notes. After the initial public offering, the public offering price and other
selling terms may be changed by the underwriter.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
The Notes will constitute a new issue of securities with no established
trading market. We do not intend to list the Notes on any securities exchange or
quotation system or to seek the admission of the Notes to trading in the Nasdaq
National Market System. We have been advised by the underwriter that the
underwriter presently intends to make a market in the Notes following completion
of the offering. However, the underwriter is not obligated to do so and any
market-making activities with respect to the Notes may be discontinued at any
time without notice. Accordingly, no assurance can be given that an active
market will develop for the Notes or as to the liquidity of or the trading
market for the Notes. If a trading market does not develop or is not maintained,
holders of the Notes may experience difficulty in reselling the Notes or may be
unable to sell them at all. If a market for the Notes develops, any such market
may be
S-27
discontinued at any time. If a public trading market develops for the Notes,
future trading prices of the Notes (which could be at a discount to the
principal amount of the Notes) will depend on many factors, including, among
other things, prevailing interest rates, our results of operations and financial
conditions and the market for similar securities.
Morgan Stanley & Co. Incorporated and its affiliates have in the past and
may in the future provide financial advisory and other services to AIG and its
subsidiaries. MSIL is entering into the hedging transactions with AIG described
above under 'Hedging Transactions by AIG.' Morgan Stanley & Co. Incorporated is
also the Calculation Agent under the Notes. In addition, during the life of the
Notes, the underwriter and its affiliates may engage in trading in AIG Stock for
their proprietary accounts, for other accounts under their management and to
facilitate transactions (including block transactions) on behalf of customers.
Morgan Stanley & Co. Incorporated, acting as broker-dealer, may choose, but
is not in any way obligated, to enter into transactions with or for holders who
wish to purchase shares of AIG Stock at then prevailing market prices with the
cash amounts such holders receive upon an exchange following the exercise of the
Holder's Exchange Right or our exercise of the AIG Call Right.
In connection with the offering, the underwriter may engage in
over-allotment, stabilizing transactions and syndicate covering transactions.
Over-allotment involves sales in excess of the offering size, which creates a
short position for the underwriter. Stabilizing transactions involve bids to
purchase the Notes in the open market for the purpose of pegging, fixing or
maintaining the price of the Notes. Syndicate covering transactions involve
purchases of the Notes in the open market after the distribution has been
completed in order to cover short positions. Such stabilizing transactions and
syndicate covering transactions may cause the price of the Notes to be higher
than it would otherwise be in the absence of such transactions. If the
underwriter engages in stabilizing or syndicate covering transactions, it may
discontinue them at any time.
VALIDITY OF THE DEBT SECURITIES
The validity of the Notes will be passed upon for AIG by Sullivan &
Cromwell, New York, New York. M. Bernard Aidinoff, a member of the Board of
Directors of AIG, is Senior Counsel to Sullivan & Cromwell and beneficially owns
25,413 shares of AIG common stock and options to purchase 36,155 shares of AIG
common stock. Partners of Sullivan & Cromwell involved in the representation of
AIG beneficially own approximately 5,415 shares of AIG common stock. Davis Polk
& Wardwell will pass upon some legal matters relating to the Notes for the
underwriter.
EXPERTS
The consolidated financial statements and financial statement schedules of
AIG and its subsidiaries incorporated into the prospectus accompanying this
prospectus supplement by reference to AIG's Annual Report on Form 10-K for the
year ended December 31, 1999 have been so incorporated in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of that firm as experts in auditing and accounting.
S-28
ANNEX A
OFFICIAL NOTICE OF EXCHANGE
Dated: [On or after June 12, 2000]
American International Group, Inc.
c/o Morgan Stanley & Co. Incorporated,
as Calculation Agent
1585 Broadway
New York, New York 10036
Fax No.: (212) 761-0674
(Attn: William Threadgill)
Ladies and Gentlemen:
The undersigned holder of 0.5% Cash Exchangeable Equity-Linked Senior Notes
due May 15, 2007 of American International Group, Inc. (CUSIP No. 026874AN7)
(the 'Notes') hereby irrevocably elects to exercise with respect to the
principal amount of the Notes indicated below, as of the date hereof (or, if
this letter is received after 11:00 a.m. (New York City time) on any Trading
Day, as of the next Trading Day), provided that such day is an Exchange Date,
the Holder's Exchange Right as described in the prospectus supplement dated
May 8, 2000 to the prospectus dated March 3, 2000 related to Registration
Statement No. 333-31024. Terms not defined herein have the meanings given to
such terms in the prospectus supplement. Please date and acknowledge receipt of
this notice in the place provided below on the date of receipt, and fax a copy
to the fax number indicated, whereupon AIG will deliver cash 3 business days
after there is a final determination of the amount payable (or on the Maturity
Date, if this letter is received before 11:00 a.m. (New York City time), or is
otherwise deemed effective, on the fifteenth scheduled Trading Day prior to the
Maturity Date), in accordance with the terms of the Notes, as described in the
prospectus supplement.
Very truly yours,
.....................................
[Name of Holder]
By:
..................................
[Name]
...................................
Title
...................................
Fax No.
$ ....................................
Principal Amount of Notes surrendered
for exchange*
Receipt of the above Official
Notice of Exchange is hereby acknowledged
AMERICAN INTERNATIONAL GROUP, INC., as Issuer
MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent
By: MORGAN STANLEY & CO. INCORPORATED, as Calculation Agent
By:
..................................
Title:
Date and time of acknowledgment: _____
- ---------
* At any one time, the holder must exchange at least $100,000 principal amount
of Notes or, if the holder owns less than $100,000 principal amount of Notes,
all of its Notes.
A-1
(This page intentionally left blank)
PROSPECTUS
$1,000,000,000
AMERICAN INTERNATIONAL GROUP, INC.
DEBT SECURITIES
-------------------
American International Group, Inc. may offer its debt securities from time
to time and in one or more series. These debt securities will have an initial
public offering price or purchase price of up to $1,000,000,000 or will have the
foreign currency or composite currency equivalent of this amount.
AIG may issue all or a portion of these debt securities in the form of one
or more permanent global certificates.
At the time of sale, an accompanying prospectus supplement will describe the
terms of the debt securities, and will include for each series of debt
securities the initial public offering price, designation, aggregate principal
amount (including whether determined by reference to an index), currency,
denomination, premium, maturity, interest rate (whether fixed or floating), time
of payment of any interest and any terms for mandatory or optional redemption.
-------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE DEBT SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
AIG may sell these debt securities to or through underwriters or dealers,
and also to other purchasers or through agents. The names of any underwriters,
dealers or agents will be set forth in an accompanying prospectus supplement.
-------------------
The date of this prospectus is March 3, 2000.
TABLE OF CONTENTS
PAGE
----
About this Prospectus....................................... 3
American International Group, Inc. ......................... 3
Use of Proceeds............................................. 3
Consolidated Ratios of Earnings to Fixed Charges............ 3
Description of Debt Securities AIG May Offer................ 4
Legal Ownership............................................. 5
Global Securities........................................... 6
Overview of the Remainder of this Description............... 7
Plan of Distribution........................................ 13
Validity of the Debt Securities............................. 14
Experts..................................................... 14
Where You Can Find More Information......................... 14
-------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT OR INFORMATION CONTAINED IN DOCUMENTS WHICH YOU ARE
REFERRED TO BY THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. AIG HAS NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT CONTAINED
IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. AIG IS OFFERING TO SELL THE
DEBT SECURITIES ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE
INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS
ACCURATE ONLY AS OF THE DATE ON THE FRONT OF THOSE DOCUMENTS, REGARDLESS OF THE
TIME OF DELIVERY OF THE DOCUMENTS OR ANY SALE OF THE DEBT SECURITIES.
2
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that AIG filed with the
SEC utilizing a shelf registration process. Under this shelf process, AIG may
sell the securities described in this prospectus in one or more offerings up to
a total dollar amount of $1,000,000,000. This prospectus provides you with a
general description of the debt securities AIG may offer.
Each time AIG sells debt securities, AIG will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described in the
section entitled 'Where You Can Find More Information.'
To see more detail, you should read our registration statement and the
exhibits filed with our registration statement.
AMERICAN INTERNATIONAL GROUP, INC.
AIG, a Delaware corporation, is a holding company which through its
subsidiaries is primarily engaged in a broad range of insurance and
insurance-related activities and financial services in the United States and
abroad.
AIG's principal executive offices are located at 70 Pine Street, New York,
New York 10270, and its telephone number is 212-770-7000.
USE OF PROCEEDS
Unless otherwise indicated in any prospectus supplement, AIG intends to add
the net proceeds from the sale of the debt securities to AIG's general funds.
The funds will be used by AIG and its subsidiaries for general corporate
purposes.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed
charges of AIG and its consolidated subsidiaries for the periods indicated:
NINE MONTHS
ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31,
- ------------------------------------------ -----------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
4.28 3.87 3.82 3.64 3.53 3.35 3.13
Earnings represent
Income from operations before income taxes and adjustments for minority
interest
plus
Fixed charges other than capitalized interest
Amortization of capitalized interest
The distributed income of equity investees
less
The minority interest in pre-tax income of subsidiaries that do not have
fixed charges.
Fixed charges include
Interest, whether expensed or capitalized
Amortization of debt issuance costs
One third of rental expense. Management of AIG believes this is
representative of the interest factor.
3
DESCRIPTION OF DEBT SECURITIES AIG MAY OFFER
As required by federal law for all bonds and notes of companies that are
publicly offered, the debt securities are governed by a document called the
indenture. The indenture is a contract, dated as of July 15, 1989, between AIG
and The Bank of New York, which acts as trustee.
The trustee has two main roles:
1. The trustee can enforce your rights against AIG if AIG defaults on
its obligations under the terms of the indenture or the debt securities.
There are some limitations on the extent to which the trustee acts on your
behalf, described later on page 12 under 'Remedies If an Event of Default
Occurs'.
2. The trustee performs administrative duties for AIG, such as sending
you interest payments, transferring your debt securities to a new buyer if
you sell and sending you notices.
The indenture and its associated documents contain the full legal text of
the matters described in this section. The indenture and the debt securities are
governed by New York law. A copy of the indenture is an exhibit to AIG's
registration statement. See 'Where You Can Find More Information' on page 14 for
information on how to obtain a copy.
AIG may issue as many distinct series of debt securities under the indenture
as it wishes.
This section summarizes the material terms of the debt securities that are
common to all series, although the prospectus supplement which describes the
terms of each series of debt securities may also describe differences with the
material terms summarized here.
Because this section is a summary, it does not describe every aspect of the
debt securities. This summary is subject to and qualified in its entirety by
reference to all the provisions of the indenture, including definitions of
certain terms used in the indenture. In this summary, AIG describes the meaning
of only some of the more important terms. For your convenience, AIG also
includes references in parentheses to certain sections of the indenture.
Whenever AIG refers to particular sections or defined terms of the indenture in
this prospectus or in the prospectus supplement, those sections or defined terms
are incorporated by reference here or in the prospectus supplement. You must
look to the indenture for the most complete description of what AIG describes in
summary form in this prospectus.
This summary also is subject to and qualified by reference to the
description of the particular terms of your series described in the prospectus
supplement. Those terms may vary from the terms described in this prospectus.
The prospectus supplement relating to each series of debt securities will be
attached to the front of this prospectus. There may also be a further prospectus
supplement, known as a pricing supplement, which contains the precise terms of
debt securities you are offered.
AIG may issue the debt securities as original issue discount securities,
which will be offered and sold at a substantial discount below their stated
principal amount. (Section 101) The prospectus supplement relating to the
original issue discount securities will describe federal income tax consequences
and other special considerations applicable to them. The debt securities may
also be issued as indexed securities or securities denominated in foreign
currencies or currency units, as described in more detail in the prospectus
supplement relating to any of the particular debt securities. The prospectus
supplement relating to specific debt securities will also describe any special
considerations and certain additional tax considerations applicable to such debt
securities.
In addition, the specific financial, legal and other terms particular to a
series of debt securities are described in the prospectus supplement and the
pricing supplement relating to the series, if applicable. The prospectus
supplement relating to a series of debt securities will describe the following
terms of the series:
the title of the series of debt securities;
any limit on the aggregate principal amount of the series of debt
securities;
the person to whom interest on a debt security is payable, if other than
the holder on the regular record date;
4
the date or dates on which the series of debt securities will mature;
the rate or rates, which may be fixed or variable per annum at which the
series of debt securities will bear interest, if any, and the date or dates
from which that interest, if any, will accrue;
the place or places where the principal of (and premium, if any) and
interest on the debt securities is payable;
the dates on which interest, if any, on the series of debt securities will
be payable and the regular record dates for the interest payment dates;
any mandatory or optional sinking funds or similar provisions or provisions
for redemption at the option of the issuer;
the date, if any, after which and the price or prices at which the series
of debt securities may, in accordance with any optional or mandatory
redemption provisions, be redeemed and the other detailed terms and
provisions of those optional or mandatory redemption provisions, if any;
if other than denominations of $1,000 and any of its integral multiples,
the denominations in which the series of debt securities will be issuable;
the currency of payment of principal, premium, if any, and interest on the
series of debt securities;
if the currency of payment for principal, premium, if any, and interest on
the series of debt securities is subject to the election of AIG or a
holder, the currency or currencies in which payment can be made and the
period within which, and the terms and conditions upon which, the election
can be made;
any index used to determine the amount of payment of principal or premium,
if any, and interest on the series of debt securities;
the applicability of the provisions described under 'Defeasance' on
page 11;
any event of default under the series of debt securities if different from
those described under 'What is an Event of Default' on page 12;
if the series of debt securities will be issuable only in the form of
global security, the depository or its nominee with respect to the series
of debt securities and the circumstances under which the global security
may be registered for transfer or exchange in the name of a person other
than the depositary or the nominee; and
any other special feature of the series of debt securities.
LEGAL OWNERSHIP
STREET NAME AND OTHER INDIRECT HOLDERS
Investors who hold debt securities in accounts at banks or brokers will
generally not be recognized by AIG as legal holders of debt securities. This is
called holding in street name. Instead, AIG would recognize only the bank or
broker, or the financial institution the bank or broker uses to hold its debt
securities. These intermediary banks, brokers and other financial institutions
pass along principal, interest and other payments on the debt securities, either
because they agree to do so in their customer agreements or because they are
legally required to. If you hold debt securities in street name, you should
check with your own institution to find out:
How it handles securities payments and notices.
Whether it imposes fees or charges.
How it would handle voting if ever required.
Whether and how you can instruct it to send you debt securities registered
in your own name so you can be a direct holder as described below.
5
How it would pursue rights under the debt securities if there were a
default or other event triggering the need for holders to act to protect
their interests.
DIRECT HOLDERS
AIG's obligations, as well as the obligations of the trustee and those of
any third parties employed by AIG or the trustee, run only to persons who are
registered as holders of debt securities. As noted above, AIG does not have
obligations to you if you hold in street name or other indirect means, either
because you choose to hold debt securities in that manner or because the debt
securities are issued in the form of global securities as described below. For
example, once AIG makes payment to the registered holder, AIG has no further
responsibility for the payment even if that holder is legally required to pass
the payment along to you as a street name customer but does not do so.
GLOBAL SECURITIES
What is a Global Security? A global security is a special type of indirectly
held security, as described above under 'Street Name and Other Indirect
Holders'. If AIG chooses to issue debt securities in the form of global
securities, the ultimate beneficial owners can only be indirect holders. AIG
does this by requiring that the global security be registered in the name of a
financial institution it selects and by requiring that the debt securities
included in the global security not be transferred to the name of any other
direct holder unless the special circumstances described below occur. The
financial institution that acts as the sole direct holder of the global security
is called the depositary. Any person wishing to own a debt security must do so
indirectly by virtue of an account with a broker, bank or other financial
institution that in turn has an account with the depositary. The prospectus
supplement indicates whether your series of securities will be issued only in
the form of global securities.
Special Investor Considerations for Global Securities. As an indirect
holder, an investor's rights relating to a global security will be governed by
the account rules of the investor's financial institution and of the depositary,
as well as general laws relating to securities transfers. AIG does not recognize
this type of investor as a holder of debt securities and instead deals only with
the depositary that holds the global security.
If you are an investor, you should be aware that if debt securities are
issued only in the form of global securities:
You cannot get debt securities registered in your own name.
You cannot receive physical certificates for your interest in the debt
securities.
You will be a street name holder and must look to your own bank or broker
for payments on the debt securities and protection of your legal rights
relating to the debt securities. See 'Street Name and Other Indirect
Holders' on page 5.
You may not be able to sell interests in the debt securities to some
insurance companies and other institutions that are required by law to own
their securities in the form of physical certificates.
The depositary's policies will govern payments, transfers, exchange and
other matters relating to your interest in the global security. AIG and the
trustee have no responsibility for any aspect of the depositary's actions
or for its records of ownership interests in the global security. AIG and
the trustee also do not supervise the depositary in any way.
Special Situations When Global Security Will Be Terminated. In a few special
situations described later, the global security will terminate and interests in
it will be exchanged for physical certificates representing debt securities.
After that exchange, the choice of whether to hold debt securities directly or
in street name will be up to you. You must consult your own bank or brokers to
find out how to have your interests in debt securities transferred to your own
name, so that you will be a direct holder. The rights of street name investors
and direct holders in the debt
6
securities have been previously described in the subsections entitled 'Street
Name and Other Indirect Holders' on page 5 and 'Direct Holders' on page 6.
The special situations for termination of a global security are:
When the depositary notifies AIG that it is unwilling, unable or no longer
qualified to continue as depositary.
When AIG notifies the trustee that it wishes to terminate the global
security.
When an event of default on the securities has occurred and has not been
cured. (Defaults are discussed later under 'Events of Default' on
page 12.)
The prospectus supplement may also list additional situations for terminating a
global security that would apply only to the particular series of debt
securities covered by the prospectus supplement. When a global security
terminates, the depositary (and not AIG or the trustee) is responsible for
deciding the names of the institutions that will be the initial direct holders.
(Sections 204 and 305)
IN THE REMAINDER OF THIS DESCRIPTION, 'YOU' MEANS DIRECT HOLDERS AND NOT
STREET NAME OR OTHER INDIRECT HOLDERS OF DEBT SECURITIES. INDIRECT HOLDERS
SHOULD READ THE PREVIOUS SUBSECTION ON PAGE 5 ENTITLED 'STREET NAME AND OTHER
INDIRECT HOLDERS'.
OVERVIEW OF THE REMAINDER OF THIS DESCRIPTION
The remainder of this description summarizes:
ADDITIONAL MECHANICS relevant to the debt securities under normal
circumstances, such as how you transfer ownership and where AIG makes
payments;
Your rights in several SPECIAL SITUATIONS, such as if AIG merges with
another company or if AIG wants to change a term of the debt securities;
Promises AIG makes to you about how it will run its business, or a business
action AIG promises not to take known as a RESTRICTIVE COVENANT; and
Your rights if AIG DEFAULTS or experiences other financial difficulties.
ADDITIONAL MECHANICS
FORM, EXCHANGE AND TRANSFER
The debt securities will be issued:
only in fully registered form
without interest coupons
in denominations that are even multiples of $1,000. (Section 302)
You may have your debt securities broken into more debt securities of
smaller denominations of not less than $1,000 or combined into fewer debt
securities of larger denominations, as long as the total principal amount is not
changed. (Section 305) This is called an exchange.
You may exchange or transfer debt securities at the office of the trustee.
The trustee acts as AIG's agent for registering debt securities in the names of
holders and transferring debt securities. AIG may change this appointment to
another entity or perform it itself. The entity performing the role of
maintaining the list of registered holders is called the security registrar. It
will also perform transfers. (Section 305)
You will not be required to pay a service charge to transfer or exchange
debt securities, but you may be required to pay for any tax or other
governmental charge associated with the exchange or transfer. The transfer or
exchange will only be made if the security registrar is satisfied with your
proof of ownership.
7
If AIG designates additional transfer agents, they will be named in the
prospectus supplement. AIG may cancel the designation of any particular transfer
agent. AIG may also approve a change in the office through which any transfer
agent acts. (Section 1002)
If the debt securities are redeemable and AIG redeems less than all of the
debt securities of a particular series, AIG may block the transfer or exchange
of debt securities during the period beginning 15 days before the day AIG mails
the notice of redemption and ending on the day of that mailing, in order to
freeze the list of holders to prepare the mailing. AIG may also refuse to
register transfers or exchanges of debt securities selected for redemption,
except that AIG will continue to permit transfers and exchanges of the
unredeemed portion of any debt security being partially redeemed. (Section 305)
PAYMENT AND PAYING AGENTS
AIG will pay interest to you if you are a direct holder listed in the
trustee's records at the close of business on a particular day in advance of
each due date for interest, even if you no longer own the debt security on the
interest due date. That particular day, usually about two weeks in advance of
the interest due date, is called the regular record date and will be stated in
the prospectus supplement. (Section 307) Holders buying and selling debt
securities must work out between them how to compensate for the fact that AIG
will pay all the interest for an interest period to the one who is the
registered holder on the regular record date. The most common manner is to
adjust the sales price of the securities to pro rate interest fairly between
buyer and seller. This pro rated interest amount is called accrued interest.
AIG will pay interest, principal and any other money due on the debt
securities at the corporate trust office of the Trustee in New York City. That
office is currently located at 101 Barclay Street, Floor 21W, New York, New York
10286. You must make arrangements to have your payments picked up at or wired
from that office. AIG may also choose to pay interest by mailing checks.
STREET NAME AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS
FOR INFORMATION ON HOW THEY WILL RECEIVE PAYMENTS.
AIG may also arrange for additional payment offices, and may cancel or
change these offices, including its use of the trustee's corporate trust office.
These offices are called paying agents. AIG may also choose to act as its own
paying agent. AIG must notify you of changes in the paying agents for any
particular series of debt securities. (Section 1002)
NOTICES
AIG and the trustee will send notices regarding the debt securities only to
direct holders, using their addresses as listed in the trustee's records.
(Sections 101 and 106)
Regardless of who acts as paying agent, all money paid by AIG to a paying
agent that remains unclaimed at the end of three years after the amount is due
to direct holders will be repaid to AIG. After that three-year period, you must
look to AIG for payment and not to the trustee or any other paying agent.
(Section 1003)
SPECIAL SITUATIONS
MERGERS AND SIMILAR EVENTS
AIG is generally permitted to consolidate or merge with another company or
firm. AIG is also permitted to sell or lease substantially all of its assets to
another firm, or to buy or lease substantially all of the assets of another
firm. However, AIG may not take any of these actions unless all the following
conditions are met:
Where AIG merges out of existence or sells or leases its assets, the other
firm may not be organized under a foreign country's laws, that is, it must
be a corporation, partnership or
8
trust organized under the laws of a state of the United States or the
District of Columbia or under federal law, and it must agree to be legally
responsible for the debt securities.
The merger, sale of assets or other transaction must not cause a default on
the debt securities, and AIG must not already be in default (unless the
merger or other transaction would cure the default). For purposes of this
no-default test, a default would include an event of default that has
occurred and not been cured. A default for this purpose would also include
any event that would be an event of default if the requirements for giving
AIG default notice or AIG's default having to exist for a specific period
of time were disregarded.
It is possible that the merger, sale of assets or other transaction would
cause some of the voting stock of AIG's designated subsidiaries to become
subject to a mortgage or other legal mechanism giving lenders preferential
rights in that voting stock over the holders of the debt securities if they
are not paid back. AIG and its designated subsidiaries have promised to
limit these preferential rights on the voting stock of AIG's designated
subsidiaries, called liens, as discussed later on page 10 under
'Restriction on Liens.' If a merger or other transaction would create any
liens on the voting stock of our designated subsidiaries, AIG and its
designated subsidiaries must comply with that restrictive covenant. AIG and
its designated subsidiaries would do this by following the requirements of
the restrictive covenant to grant an equivalent or higher-ranking lien on
the voting stock of AIG's designated subsidiaries to you and the other
direct holders of the debt securities. (Section 801)
MODIFICATION AND WAIVER
There are three types of changes AIG can make to the indenture and the debt
securities.
Changes Requiring Your Approval. First, there are changes that cannot be
made to your debt securities without your specific approval. Following is a list
of those types of changes:
change the stated maturity of the principal or interest on a debt security
reduce any amounts due on a debt security
reduce the amount of principal payable upon acceleration of the maturity of
a debt security (including the amount payable on an original issue discount
security) following a default
change the place or currency of payment on a debt security
impair your right to sue for payment
reduce the percentage of holders of debt securities whose consent is needed
to modify or amend the indenture
reduce the percentage of holders of debt securities whose consent is needed
to waive compliance with certain provisions of the indenture or to waive
certain defaults
modify any other aspect of the provisions dealing with modification and
waiver of the indenture (Section 902)
Changes Requiring a Super-Majority Vote or Majority Vote. The second type of
change to the indenture and the debt securities is the kind that requires a vote
in favor by holders of debt securities owning 66 2/3% of the principal amount of
the particular series affected. Most changes fall into this category, except for
clarifying changes and certain other changes that would not adversely affect
holders of the debt securities. (Section 902) The same vote would be required
for AIG to obtain a waiver of all or part of the restrictive covenant described
later on page 10. (Section 1008) AIG may obtain a waiver of a past default from
the holders of debt securities owning a majority of the principal amount of the
particular series affected. However, AIG cannot obtain a waiver of a payment
default or any other aspect of the indenture or the debt securities listed in
the first category described previously on page 9 under 'Changes Requiring Your
Approval' unless AIG obtains your individual consent to the waiver.
(Section 513)
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Changes Not Requiring Approval. The third type of change does not require
any vote by holders of debt securities. This type is limited to clarifications
and certain other changes that would not adversely affect holders of the debt
securities. (Section 901)
Further Details Concerning Voting. When taking a vote, AIG will use the
following rules to decide how much principal amount to attribute to a debt
security:
For original issue discount securities, AIG will use the principal amount
that would be due and payable on the voting date if the maturity of the
debt securities were accelerated to that date because of a default.
For debt securities whose principal amount is not known (for example,
because it is based on an index), AIG will use a special rule for that debt
security described in the prospectus supplement.
For debt securities denominated in one or more foreign currencies or
currency units, AIG will use the U.S. dollar equivalent.
Debt securities will not be considered outstanding, and therefore not
eligible to vote, if AIG has deposited or set aside in trust for you money for
their payment or redemption. Debt securities will also not be eligible to vote
if they have been fully defeased as described later on page 11 under 'Full
Defeasance.' (Section 101)
AIG will generally be entitled to set any day as a record date for the
purpose of determining the holders of outstanding debt securities that are
entitled to vote or take other action under the indenture. In certain limited
circumstances, the trustee will be entitled to set a record date for action by
holders. If AIG or the trustee set a record date for a vote or other action to
be taken by holders of a particular series, that vote or action may be taken
only by persons who are holders of outstanding securities of that series on the
record date and must be taken within 90 days following the record date.
(Sections 501, 512, 902 and 1008)
STREET NAME AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS
FOR INFORMATION ON HOW APPROVAL MAY BE GRANTED OR DENIED IF AIB SEEKS TO CHANGE
THE INDENTURE OR THE DEBT SECURITIES OR REQUEST A WAIVER.
RESTRICTIVE COVENANT
COVENANT
Restriction on Liens. Some of the voting stock of certain of AIG's
designated subsidiaries may be subject to a mortgage or other legal mechanism
that gives lenders preferential rights in that voting stock of AIG's designated
subsidiaries over the holders of the debt securities if they are not paid back.
These preferential rights are called LIENS. Except as otherwise specified in any
prospectus supplement, AIG promises that neither it nor its designated
subsidiaries will become obligated on any new debt that is secured by a lien on
any shares of voting stock of any of AIG's designated subsidiaries, unless you
and the other direct holders of the securities (and, if AIG elects, any other
holders of debt issued by AIG) are granted an equivalent or higher-ranking lien
on the same property. (Section 1006)
Certain Definitions Relating to our Restrictive Covenant. Following are the
meanings of the terms that are important in understanding the restrictive
covenant previously described.
Designated subsidiary means American Home Assurance Company, National Union
Fire Insurance Company of Pittsburgh, Pa., and any subsidiary the assets of
which, determined as of the last day of the most recent calendar quarter ended
at least 30 days prior to the date of determination and in accordance with
generally accepted accounting principles as in effect on the last day of that
calendar quarter, exceed 20% of the consolidated assets of AIG. As of September
30, 1999, there were no subsidiaries of AIG with assets, determined in
accordance with generally accepted accounting principle as in effect on that
date, in excess of 20% of the consolidated assets of AIG. (Section 101)
10
Subsidiary means a corporation, partnership or trust in which AIG and/or one
or more of its other subsidiaries owns at least 50% of the voting stock, which
is a kind of stock that ordinarily permits its owners to vote for election of
directors. (Section 101)
Consolidated assets of AIG means the assets of AIG and its consolidated
subsidiaries, to be determined as of the last day of the most recent calendar
quarter ended at least 30 days prior to the date of the determination and in
accordance with generally accepted accounting principles as in effect on the
last day of that calendar quarter. (Section 101)
DEFEASANCE
The following discussion of full defeasance and covenant defeasance will be
applicable to your series of debt securities only if AIG chooses to have them
apply to that series. If AIG does so choose, it will state that in the
prospectus supplement. (Section 1301)
Full Defeasance. If there is a change in federal tax law, as described
below, AIG can legally release itself from any payment or other obligations on
the debt securities, called full defeasance, if AIG puts in place the following
other arrangements for you to be repaid:
AIG must deposit in trust for your benefit and the benefit of all other
direct holders of the debt securities a combination of money and U.S.
government or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal and any other payments on the debt
securities on their various due dates.
There must be a change in current federal tax law or an IRS ruling that
lets AIG make the above deposit without causing you to be taxed on the debt
securities any differently than if AIG did not make the deposit and just
repaid the debt securities itself. (Under current federal tax law, the
deposit and AIG's legal release from the debt securities would be treated
as though it took back your debt securities and gave you your share of the
cash and notes or bonds deposited in trust. In that event, you could
recognize gain or loss on the debt securities you give back to AIG.)
AIG must deliver to the trustee a legal opinion of AIG's counsel confirming
the tax law change described above. (Sections 1302 and 1304)
If AIG ever did accomplish full defeasance, as described above, you would
have to rely solely on the trust deposit for repayment on the debt securities.
You could not look to AIG for repayment in the unlikely event of any shortfall.
Covenant Defeasance. Under current federal tax law, AIG can make the same
type of deposit described above and be released from the restrictive covenant in
the debt securities. This is called covenant defeasance. In that event, you
would lose the protection of that restrictive covenant but would gain the
protection of having money and securities set aside in trust to repay the debt
securities. In order to achieve covenant defeasance, AIG must do the following:
AIG must deposit in trust for your benefit and the benefit of all other
direct holders of the debt securities a combination of money and U.S.
government or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal and any other payments on the debt
securities on their various due dates.
AIG must deliver to the trustee a legal opinion of its counsel confirming
that under current federal income tax law AIG may make the above deposit
without causing you to be taxed on the debt securities any differently than
if AIG did not make the deposit and just repaid the debt securities itself.
If AIG accomplishes covenant defeasance, the following provisions of the
indenture and the debt securities would no longer apply:
AIG's promises regarding conduct of its business previously described on
page 10 under 'Covenant,' and any other covenants applicable to the series
of debt securities and described in the prospectus supplement.
11
The condition regarding the treatment of liens when AIG merges or engages
in similar transactions, as previously described on page 9 under 'Mergers
and Similar Events.'
The events of default relating to breach of covenants and acceleration of
the maturity of other debt, described later on page 12 under 'What Is an
Event of Default?'.
If AIG accomplishes covenant defeasance, you can still look to AIG for
repayment of the debt securities if there were a shortfall in the trust deposit.
In fact, if one of the remaining events of default occurred (such as a
bankruptcy of AIG) and the debt securities become immediately due and payable,
there may be such a shortfall. (Sections 1303 and 1304)
DEFAULT AND RELATED MATTERS
RANKING
The debt securities are not secured by any of AIG's property or assets.
Accordingly, your ownership of debt securities means you are one of AIG's
unsecured creditors. The debt securities are not subordinated to any of AIG's
other debt obligations and therefore they rank equally with all of AIG's other
unsecured and unsubordinated indebtedness.
EVENTS OF DEFAULT
You will have special rights if an event of default occurs and is not cured,
as described later in this subsection.
What Is an Event of Default? The term 'Event of Default' means any of the
following:
AIG does not pay the principal or any premium on a debt security on its due
date.
AIG does not pay interest on a debt security within 30 days of its due
date.
AIG does not deposit money in a separate account, known as a sinking fund,
when a deposit is due.
AIG remains in breach of the restrictive covenant described on page 10 or
any other term of the indenture for 60 days after it receives a notice of
default stating it is in breach. The notice must be sent by either the
trustee or holders of 25% of the principal amount of debt securities of the
affected series.
If an event of default occurs with respect to a different series of debt
securities issued under the indenture and AIG's obligation to repay such
other series of debt securities is accelerated, and this repayment
obligation remains accelerated for 30 days after AIG receives a notice of
default by the trustee or holders of 10% of the principal amount of the
affected debt securities.
AIG files for bankruptcy or certain other events of bankruptcy, insolvency
or reorganization occur.
Any other event of default described in the prospectus supplement occurs.
(Section 501)
Remedies If an Event of Default Occurs. If an event of default has occurred
and has not been cured, the trustee or the holders of at least 25% in principal
amount of the debt securities of the affected series may declare the entire
principal amount (or, in the case of original issue discount securities, the
portion of the principal amount that is specified in the terms of the affected
debt security) of all the debt securities of that series to be due and
immediately payable. This is called a declaration of acceleration of maturity.
However, a declaration of acceleration of maturity may be cancelled, but only
before a judgment or decree based on the acceleration has been obtained, by the
holders of at least a majority in principal amount of the debt securities of the
affected series. (Section 502)
Reference is made to the prospectus supplement relating to any series of
debt securities which are original issue discount securities for the particular
provisions relating to acceleration of the maturity of a portion of the
principal amount of original issue discount securities upon the occurrence of an
event of default and its continuation.
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Except in cases of default, where the trustee has some special duties, the
trustee is not required to take any action under the indenture at the request of
any holders unless the holders offer the trustee reasonable protection from
expenses and liability called an indemnity. (Section 603) If reasonable
indemnity is provided, the holders of a majority in principal amount of the
outstanding securities of the relevant series may direct the time, method and
place of conducting any lawsuit or other formal legal action seeking any remedy
available to the trustee. These majority holders may also direct the trustee in
performing any other action under the indenture. (Section 512)
Before you bypass the trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to the debt securities, the following must occur:
You must give the trustee written notice that an event of default has
occurred and remains uncured.
The holders of 25% in principal amount of all outstanding securities of the
relevant series must make a written request that the trustee take action
because of the default, and must offer reasonable indemnity to the trustee
against the cost and other liabilities of taking that action.
The trustee must have not taken action for 60 days after receipt of the
above notice and offer of indemnity. (Section 507)
However, you are entitled at any time to bring a lawsuit for the payment of
money due on your debt security on or after its due date. (Section 508)
STREET NAME AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR
INFORMATION ON HOW TO GIVE NOTICE OR DIRECTION TO OR MAKE A REQUEST OF THE
TRUSTEE AND TO MAKE OR CANCEL A DECLARATION OF ACCELERATION.
AIG will furnish to the trustee every year a written statement of certain of
its officers certifying that to their knowledge AIG is in compliance with the
indenture and the debt securities, or else specifying any default. (Section
1007)
OUR RELATIONSHIP TO THE TRUSTEE
The Bank of New York from time to time provides normal banking services to
AIG and its subsidiaries.
PLAN OF DISTRIBUTION
AIG may sell debt securities:
to or through underwriting syndicates represented by managing underwriters;
through one or more underwriters without a syndicate for them to offer and
sell to the public;
through dealers or agents; and
to investors directly in negotiated sales or in competitively bid
transactions.
Any underwriter or agent involved in the offer and sale of any series of the
debt securities will be named in the prospectus supplement.
The prospectus supplement for each series of debt securities will describe:
the terms of the offering of these debt securities, including the name of
the agent or the name or names of any underwriters;
the public offering or purchase price;
any discounts and commissions to be allowed or paid to the agent or
underwriters and all other items constituting underwriting compensation;
13
any discounts and commissions to be allowed or paid to dealers; and
other specific terms of the particular debt securities.
Only the agents or underwriters named in a prospectus supplement are agents
or underwriters in connection with the debt securities being offered by that
prospectus supplement.
Underwriters, agents and dealers may be entitled, under agreements with AIG,
to indemnification against certain civil liabilities, including liabilities
under the Securities Act of 1933.
Underwriters to whom debt securities are sold by AIG for public offering and
sale are obliged to purchase all of those particular debt securities if any are
purchased. This obligation is subject to certain conditions and may be modified
in the applicable prospectus supplement.
Underwriters, dealers or agents may engage in transactions with, or perform
services for, AIG or its subsidiaries or affiliates in the ordinary course of
business.
VALIDITY OF THE DEBT SECURITIES
Unless otherwise specified in any prospectus supplement, the validity of the
debt securities will be passed upon for AIG by Sullivan & Cromwell, New York,
New York. M. Bernard Aidinoff, a member of the Board of Directors of AIG, is
Senior Counsel to Sullivan & Cromwell and beneficially owns 26,789 shares of AIG
common stock and options to purchase 36,156 shares of AIG common stock. Partners
of Sullivan & Cromwell involved in the representation of AIG beneficially own
approximately 4,547 shares of AIG common stock.
EXPERTS
The consolidated financial statements and financial statement schedules of
AIG and its subsidiaries incorporated in this prospectus by reference to AIG's
Annual Report on Form 10-K for the year ended December 31, 1998 and AIG's
Current Report on Form 8-K dated June 3, 1999, as amended, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
AIG files annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any documents that AIG files at:
SEC Public Reference Room
450 Fifth Street, N.W.
Washington, D.C. 20549
Please call the SEC at 1-800-SEC-0330 for further information.
AIG's filings are also available to the public through:
The SEC web site at http://www.sec.gov
The New York Stock Exchange
20 Broad Street
New York, New York 10005
AIG's common stock is listed on the NYSE.
The SEC allows AIG to 'incorporate by reference' the information AIG files
with the SEC, which means that AIG can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that AIG files
with the SEC will automatically update and supersede that information as well as
the information included in this prospectus. AIG incorporates by reference the
documents listed in the accompanying box and any future filings made with the
SEC under
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Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until
all the debt securities are sold. This prospectus is part of a registration
statement AIG filed with the SEC.
- --------------------------------------------------------------------------------
Annual Report on Form 10-K for the year ended December 31, 1998.
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, June
30, 1999 and September 30, 1999.
Current Report on Form 8-K dated June 3, 1999, as amended.
- --------------------------------------------------------------------------------
AIG will provide without charge a copy of these filings, other than any
exhibits unless the exhibits are specifically incorporated by reference into
this prospectus. You may request your copy by writing or telephoning AIG at the
following address:
American International Group, Inc.
Director of Investor Relations
70 Pine Street
New York, New York 10270
(212) 770-7074
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