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                                                                     EXHIBIT 5.1

[Letterhead of Sullivan & Cromwell]


                                                     August 10, 1999


SAI Deferred Compensation Holdings, Inc.,
  70 Pine Steet,
    New York, New York 10270.


Ladies and Gentlemen:

                  In connection with the registration under the Securities Act
of 1933 (the "Act") of $200,000,000 aggregate amount of deferred compensation
obligations (the "Obligations") of SAI Deferred Compensation Holdings, Inc., a
Delaware corporation (the "Company"), guaranteed as to payment by American
International Group, Inc., a Delaware corporation (the "Guarantor"), we, as your
counsel, have examined such corporate records, certificates and other documents,
and such questions of law, as we have considered necessary or appropriate for
the purposes of this opinion.


                  Upon the basis of such examination, we advise you that, in our
opinion, when the Registration Statement has become effective under the Act and
the Obligations are issued in accordance with the Amended and Restated
Registered Representatives' Deferred Compensation Plan, substantially in the
form filed as an exhibit to the Registration Statement (the "Plan"), as
contemplated by the Registration Statement, the Obligations will constitute
valid and legally binding obligations of the Company, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.

                  The foregoing opinion is limited to the Federal laws of the
United States, the laws of the State of California and the General Corporation
Law of the State of Delaware, and we are expressing no opinion as to the effect
of the laws of any other jurisdiction.

                  We have relied as to certain matters on information obtained
from public officials, officers of the Company and the Guarantor and other
sources believed by us to be responsible.

                  We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to us under the heading
"Validity of the Securities" in the Prospectus. In giving such consent, we do
not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Act.

                                Very truly yours,




                                /s/ SULLIVAN & CROMWELL