This is a summary of the first quarter fiscal 2008 earnings call conducted by American International Group. (AIG: chart) on May 9, 2008

Management:

- President, CEO: Martin Sullivan
- EVP and CFO: Steven J. Bensinger
- EVP and Chief Investment Officer: Win J. Neuger
- VP and Director, IR: Charlene M. Hamrah
- Senior Vice Chairman, Life Insurance: Edmund S. W. Tse
- Vice Chairman, External Affairs: Frank G. Wisner
- President and CEO, AIG Property Casualty Group: Kristian P. Moor
- Sr. VP, Comptroller: David Herzog
- Sr. VP, Financial Services: William Dooley

Key Investor Issues:

- The firm had a loss of $7.81 billion or $3.09 per share, from income of $4.1 billion or $1.58 a share in 2007.
- It announced a plan to raise $12.5 billion in capital.
- Shareholder equity stood at $79.7 billion, a $16.1 billion decline.

First Quarter Highlights:

The firm had a loss of $7.81 billion or $3.09 per share, from income of $4.1 billion or $1.58 a share in 2007 as the continuation of the weak U.S. housing market, the disruption in the credit markets, as well as equity market volatility, had an adverse effect.

- It reported partnership income of $197 million, a $1 billion decline from the first quarter of 2007.
- Mutual Fund income also declined compared to a strong first quarter of 2007.
- AIG has been increasing its liquidity position and investing in shorter duration investments.
- Overall cash position has increased 9% from year-end 2007.
- This had a negative effect on overall investment yields, primarily in domestic life insurance and retirement services.

There was a continued unfavourable result at United Guaranty and American General Finance.

- The operating results of these businesses have been affected by continued credit quality deterioration of mortgages, a weak residential housing market and the overall US economy.
- Foreign Life Insurance and Retirement Services results included $88 million in trading account losses related to certain UK variable annuity products and an $80 million increase incurred policyholder benefits related to a close block of Japan variable life business with guaranteed benefits.
- Shareholders equity stood at $79.7 billion, a $16.1 billion decline from year-end as a result of the loss as well as a $6.8 billion in after-tax, unrealized depreciation of investments and a $1.1 billion decrease due to the adoption of FAS 157 and FAS 159.

Segmental Highlights:

- General insurance: operating income before net realized capital gains (losses) declined 45.9% to $1.61 billion compared to 2007, reflecting lower underwriting profit, principally in AIG Commercial Insurance, Mortgage Guaranty and Personal Lines, and lower net investment income.
- General Insurance net investment income declined 22.9% as increased interest and dividend income was more than offset by lower partnership and mutual fund investment income compared to the prior year.
- AIG Commercial Insurance operating income was $958 million, a decline of 48.3% , due to declines in both underwriting profit and net investment income.

Underwriting results declined as the current accident year loss ratios increased as a result of property losses, including the Atlanta tornados, and workers’ compensation.

- Personal Lines operating income was $7 million compared to $105 million in the first quarter of 2007.
- The loss ratio increased 8.53 points compared to the first quarter of 2007 due to an increase in the current accident year loss ratio and unfavorable loss reserve development on prior accident years.
- United Guaranty Corporation (UGC) reported an operating loss of $352 million compared to operating income of $7 million in the first quarter of 2007.
- Foreign General operating income declined 6.4 percent to $818 million compared to 2007 as solid core underwriting results and related premium growth were offset by decreases in partnership and mutual fund investment income.

- Life Insurance and retirement products operating income before net realized capital gains (losses) was $2.54 billion, unchanged compared to 2007.
- Domestic Life Insurance operating income was $418 million, a 17.1%, reflecting increased life insurance in-force and payout annuity reserves, favorable mortality in certain product lines and lower amortization of deferred acquisition costs (DAC) related to realized capital losses.
- Domestic Retirement Services operating income was $663 essentially unchanged though results were adversely affected by lower partnership and other yield enhancement income, as well as spread compression on base yields as a result of increased levels of cash and short-term assets.

- Financial services: reported an $8.55 billion operating loss, before net realized capital gains (losses) and the effect of economically effective hedging activities.
- Aircraft Leasing operating income was $272 million, a 40.9% increase compared to 2007 while Capital Markets reported an $8.85 billion operating loss, primarily due to $9.11 billion of unrealized market valuation losses related to AIGFP’s super senior credit default swap portfolio.
- American General Finance, Inc. (AGF) reported operating income of $11 million compared to $50 million in 2007, due to reduced residential mortgage origination volumes, lower revenues from mortgage banking activities and an increase in the allowance for loan losses.
- AIG Consumer Finance Group, Inc. reported operating income of $11 million compared to $21 million in 2007 as revenues increased 43.0% on loan growth, particularly in Poland and Latin America.

- Asset management: operating income before net realized capital gains (losses) was $154 million, compared to $778 million in 2007.
- Guaranteed Investment Contract (GIC) operating income declined due to significantly lower returns on partnership investments.

Key questions and answers from the first quarter fiscal 2008 earnings call conducted by American International Group (AIG: chart) on May 9, 2008

Nigel Dally: Can you discuss the fundamental impact across your various businesses, especially aircraft leasing?

Martin Sullivan: We have given analysis to the impact of the one-notch down grade of AIG and we do not believe that is significant to the operations. The key takeaway there is the ratings of our insurance subsidiaries which were maintained and important areas of possibility of increased funding cost to subsidiary like ILFC.

Nigel Dally: Do you have an estimate on the CS mark through the end of April?