American International Group Inc

LETTER AGREEMENT



                                                                   Exhibit 10.3

                       American International Group, Inc.
                                 70 Pine Street
                               New York, NY 10270


                                                March 16, 2005


Mr. Steven J. Bensinger
c/o American International Group, Inc.
70 Pine Street
New York, NY 10270

Dear Mr. Bensinger:

                  The Board of Directors of American International Group, Inc.
(the "Corporation" or "AIG"), hereby appoints you, and you hereby accept
appointment as, Chief Financial Officer of AIG, with all of the duties and
authorities of chief financial officer, reporting directly to the Chief
Executive Officer.

                  The Board of Directors will cooperate fully with you to
facilitate a smooth transition to your new position and we shall make available
to you the full resources of the Corporation to assist in that regard. In
consideration of your agreeing to serve in this capacity and without limiting
any pre-existing rights that you may otherwise have, we hereby confirm that you
shall continue to be indemnified to the fullest extent permitted by law for all
actions or omissions taken by you in your service to AIG, or any of its
affiliated entities for which you perform services at the request of AIG, both
prior to the date hereof and at any future time. These rights to indemnification
shall be a contractual right that cannot be terminated or amended in any respect
without your prior written consent. You shall also have the benefit of
continuing directors' and officers' insurance coverage at levels no less
favorable than those in effect from time to time for the members of the Board of
Directors and AIG's senior management.

                  In further consideration of your accepting this position, the
Compensation Committee of the Board of Directors hereby agrees to work with you
to develop a comprehensive three year employment agreement containing terms
appropriately suited to the chief financial officer of the Corporation,
including provisions with respect to base salary, bonus, severance in the event
of a termination by AIG without cause or by you with good reason, long-term
incentives, retirement and stock-based compensation features, as well as
customary intellectual property protections and post-employment restrictive
covenants and taking into account your total compensation from all sources in
connection with your services to AIG. The Compensation Committee shall endeavor
to finalize these employment terms within a 21 day period from today.




Mr. Steven J. Bensinger
March 16, 2005
Page 2


                  In the event of your termination without cause, or by you
following a material breach of this letter by AIG, you will be entitled to a
severance payment of $5 million.

                  We look forward to a prosperous future for AIG under the new
management team and pledge our full cooperation and support to you in all future
endeavors.

                                                Sincerely,



                                                /s/ Marshall A. Cohen