<PAGE> 1
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-31024
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 3, 2000)
$9,454,000
AMERICAN INTERNATIONAL GROUP, INC.
7.15% NOTES DUE MARCH 28, 2002
------------------------
THE NOTES AND THE OFFERING:
- Maturity: March 28, 2002
- Interest Rate: 7.15% per annum
- Interest Payments: semi-annually on June 1 and December 1, commencing
June 1, 2000, and at maturity
- Closing: March 31, 2000
- Form: Global Security (through The Depository Trust Company)
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS 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.
------------------------
<TABLE>
<CAPTION>
PUBLIC OFFERING PROCEEDS TO
PRICE(1) DISCOUNT AIG(2)
------------------------ ------------ ------------------
<S> <C> <C> <C>
Per Note.............................. 100% 0.147% 99.853%
Total................................. 9,$454,000.00 $13,897.38 $9,440,102.62
</TABLE>
- ---------------
(1) Plus accrued interest from March 31, 2000, if any.
(2) Proceeds to AIG are before deducting the expenses of the offering of the
notes.
MORGAN STANLEY DEAN WITTER
The date of this Prospectus Supplement is March 28, 2000.
<PAGE> 2
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
DESCRIPTION OF NOTES........................................ S-3
SUPPLEMENTAL PLAN OF DISTRIBUTION........................... S-4
PROSPECTUS
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
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
supplement or the attached prospectus or information contained in documents
which you are referred to by this prospectus supplement or the attached
prospectus. AIG has not authorized anyone to provide you with information
different from that contained in this prospectus supplement or the attached
prospectus. AIG is offering to sell the notes only in jurisdictions where offers
and sales are permitted. The information contained in this prospectus supplement
and the accompanying prospectus 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 notes.
------------------------
S-2
<PAGE> 3
DESCRIPTION OF NOTES
This section summarizes the specific financial and legal terms of the
notes. This summary supplements, and is qualified by reference to, the
description of the general terms and provisions of the debt securities in the
prospectus that is attached to the back of this prospectus supplement. However,
if any particular term of the notes described here is inconsistent with any
general terms described in the prospectus, the particular term will control.
- TITLE: 7.15% Notes Due March 28, 2002
- TOTAL PRINCIPAL AMOUNT BEING ISSUED: $9,454,000.00
- DUE DATE FOR PRINCIPAL: March 28, 2002
- INTEREST RATE: 7.15% per annum; AIG will compute interest on the notes on
the basis of a 360-day year of twelve 30-day months.
- DATE INTEREST STARTS ACCRUING: March 31, 2000
- INTEREST DUE DATES: Every June 1 and December 1 and at maturity
- FIRST INTEREST DUE DATE: June 1, 2000
- REGULAR RECORD DATES FOR INTEREST: Every May 15 and November 15, whether
or not a business day.
- RANKING: The notes will rank equally with all of AIG's other unsecured,
unsubordinated debt. The notes will not be secured by any collateral.
- FORM OF NOTES: The notes will be issued as a Global Security. See "Global
Securities" on page 6 of the attached prospectus.
- NAME OF THE DEPOSITARY: The Depository Trust Company ("DTC"). DTC will be
the sole record holder of the notes. See "Legal Ownership -- Street Name
and Other Indirect Holders" on page 5 of the attached prospectus. See the
section entitled "How AIG Will Make Payments on Global Notes" below for
more information about DTC's procedures.
- PAYMENT OF PRINCIPAL AND INTEREST: See the section entitled "How AIG Will
Make Payments on Global Notes" below.
- DEFEASANCE: Full defeasance and covenant defeasance apply to the notes.
See "Defeasance" on page 11 of the attached prospectus.
- REDEMPTION: The notes are not redeemable at the option of AIG or the
holder.
- SINKING FUND: There is no sinking fund.
- TRUSTEE: AIG will issue the notes under the indenture, dated as of July
15, 1989, between AIG and the The Bank of New York, as Trustee. AIG
explains what the indenture is on page 4 of the prospectus.
HOW AIG WILL MAKE PAYMENTS ON THE GLOBAL NOTE
AIG will make payments on the global note 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 the global note. 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 note. Neither AIG
nor the trustee have any responsibility or liability for such payments by the
DTC or the banks or brokers.
S-3
<PAGE> 4
STREET NAME AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR BROKERS FOR
INFORMATION ON HOW THEY WILL RECEIVE PAYMENTS.
About DTC
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. The
depositary 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. The depositary's participants include securities
brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations some of whom, and/or their representatives, own the
depositary. Access to the depositary'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.
SUPPLEMENTAL PLAN OF DISTRIBUTION
AIG is selling the notes to Morgan Stanley & Co. Incorporated as principal
for its own account at a discount. The notes may be resold at the market price
or at other prices determined by Morgan Stanley & Co. Incorporated at the time
of resale.
In connection with any resale of the notes, Morgan Stanley & Co.
Incorporated may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933.
Morgan Stanley & Co. Incorporated may sell to dealers who may resell to
investors, and Morgan Stanley & Co. Incorporated may pay all or part of the
discount they receive from us to the dealers. Such dealers may be deemed to be
"underwriters" within the meaning of the Act.
The notes are a new issue of securities with no established trading market
and will not be listed on a securities exchange or quotation system. No
assurance can be given as to the liquidity of the trading market for the notes.
Morgan Stanley & Co. Incorporated and its affiliates have engaged in
transactions with and/or performed various services, including investment
banking services, for AIG. Morgan Stanley & Co. Incorporated and its affiliates
may in the future engage in transactions with and/or perform various services
for AIG, in the ordinary course of their businesses.
S-4
<PAGE> 5
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.
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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
PLAN OF DISTRIBUTION........................................ 13
VALIDITY OF THE DEBT SECURITIES............................. 14
EXPERTS..................................................... 14
WHERE YOU CAN FIND MORE INFORMATION......................... 14
</TABLE>
------------------------
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
<PAGE> 7
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:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEARS ENDED DECEMBER 31,
- -------------------- --------------------------------
1999 1998 1998 1997 1996 1995 1994
- --------- --------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
4.28 3.87 3.82 3.64 3.53 3.35 3.13
</TABLE>
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
<PAGE> 8
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
for 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, such 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 will 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. 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
<PAGE> 9
- 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.
5
<PAGE> 10
- 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.
- 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
6
<PAGE> 11
and direct holders in the debt 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 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)
7
<PAGE> 12
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.
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 is 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 may
look to AIG for payment and not to the trustee or any other paying agent.
(Section 1003)
8
<PAGE> 13
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 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
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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)
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 AIG 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.
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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)
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.
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- 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.
- 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
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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.
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.
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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;
- 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.
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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 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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