BB99 Ebrd 25

     
BW20020811002007  20020812T035234Z UTC


( BW)(AMERICAN-INTL-GROUP)(BB99) AIG To Expense Employee Stock Option
Costs

    Business Editors
    UK REGULATORY NEWS

    NEW YORK--(BUSINESS WIRE)--Aug. 11, 2002--

American International Group, Inc. (AIG) has announced that it will
expense the fair value of all stock options granted beginning January
1, 2003, in accordance with SFAS No. 123, Accounting for Stock-Based
Compensation.

As previously disclosed in the AIG 2001 Annual Report on Form 10-K, as
well as in AIG's second quarter 2002 earnings release, all applicable
stock option compensation costs would have reduced AIG's 2001 net
income by $0.05 per share had AIG been previously utilizing SFAS No.
123.

The impact in 2003 of adopting SFAS No. 123 is estimated at less than
$0.01 per share. Assuming AIG follows its historic practice as to the
number and terms of the stock options it grants, at the current stock
price, AIG estimates an annual expense of approximately $0.05 per
share by 2008.

AIG Chairman M. R. Greenberg said, "As we have disclosed for some
time, the costs of our stock option plans are relatively modest.
Historically, dilution as a result of stock option grants at AIG has
been minimal, and we expect it will continue to be minimal in future
years.

"The compensation programs for AIG employees have contributed to our
success by enabling us to attract, retain and motivate our employees.
AIG's executive compensation programs have always been structured to
award outstanding performance that contributes meaningfully to AIG
shareholder value as measured over the long term. Stock option
programs have been an important element in our overall compensation
strategy.

"The expensing of options is not an economic issue for AIG because it
has never granted an excessive number of options. It would be
unfortunate if the result of expensing options to address the abuses
of some companies discourages the use of options as a tool to incent
management performance. The accounting profession is still divided as
to the best way to account for options. There is a legitimate concern
that expensing options is economically punitive because it causes a
company to pay two times -- once through the expense and again through
dilution. Nevertheless, despite the substantive accounting issues as
to whether companies end up paying twice, we believe that in today's
market climate, it is in the best interest of our shareholders to
expense the options AIG grants going forward."

AIG is the world's leading U.S.-based international insurance and
financial services organization, the largest underwriter of commercial
and industrial insurance in the United States, and among the
top-ranked U.S. life insurers. Its member companies write a wide range
of general insurance and life insurance products for commercial,
institutional and individual customers through a variety of
distribution channels in approximately 130 countries and jurisdictions
throughout the world. AIG's global businesses also include financial
services, retirement savings and asset management. AIG's financial
services businesses include aircraft leasing, financial products,
trading and market making, and consumer finance. AIG has one of the
largest retirement savings businesses in the United States and is a
leader in asset management for the individual and institutional
markets, with specialized investment management capabilities in
equities, fixed income, alternative investments and real estate. AIG's
common stock is listed on the New York Stock Exchange, as well as the
stock exchanges in London, Paris, Switzerland and Tokyo.

   Short Name: American Intnl Group
   Category Code: MSC
   Sequence Number: 00000611
   Time of Receipt (offset from UTC): 20020811T222058+0100

    --30--db/in*

    CONTACT: American International Group, Inc.
             Charlene Hamrah (Investment Community), 212/770-7074
             Joe Norton (News Media), 212/770-3144

    KEYWORD: NEW YORK UNITED KINGDOM INTERNATIONAL EUROPE
    INDUSTRY KEYWORD: BANKING INSURANCE
    SOURCE: American Intnl Group

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