SHARE-BASED COMPENSATION AND OTHER PLANS (Tables)

12 Months Ended

Dec. 31, 2012

SHARE-BASED COMPENSATION AND OTHER PLANS

Schedule of share-based compensation expense recognized in Consolidated Statement of Operations

Years Ended December 31, (in millions)	2012		2011			2010
Share-based compensation expense – pre-tax*	$	286	$	(16	)	$	333
Share-based compensation expense – after tax		186		(10	)		216

*        As of December 31, 2012, compensation expense for the majority of our outstanding share-based awards is attributed to liability-classified awards, the value of which are based on our share price at the reporting date. Our share price was $35.30, $23.20 and $57.62 at December 31, 2012, December 31, 2011 and December 31, 2010, respectively, and is the primary driver of the volatility in share-based compensation expense. Pre-tax share-based compensation expense related to discontinued operations for the years ended December 31, 2012, 2011 and 2010 of $15 million ($10 million after tax), ($4 million) (($3 million) after tax) and $18 million ($13 million after tax), respectively, is also included.

Schedule of stock option activity

As of or for the Year Ended December 31, 2012	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Options:
Exercisable at beginning of year		710,298		$	1,172.25		2.96
Expired		(196,053	)	$	1,284.58
Exercisable at end of year		514,245		$	1,129.42		2.49

Summary of outstanding share-settled awards under the foregoing plans

	Number of Shares/RSUs						Weighted Average Grant-Date Fair Value
As of or for the Year Ended December 31, 2012	AIG Plans(b)			SICO Plans			AIG Plans		SICO Plans
Unvested, beginning of year(c)		48,892			195,907		$	74.57	$	1,209.45
Granted		241,268			–			31.04		–
Vested		(240,765	)		(48,391	)		34.47		747.11
Forfeited		(10,146	)		(27,572	)		92.70		1,210.60
Unvested, end of year		39,249			119,944		$	48.29	$	1,197.96

(a)     Excludes DSUs and options, which are discussed under the Non-Employee Plans and Stock Options sections above.

(b)     Excludes legacy Deferred Compensation Profit Participation and Partners Plan for which the final installments (38,959 RSUs) vested on January 1, 2012.

(c)     Adjusted to reflect the Company's election in 2012 to cash-settle RSUs that were previously expected to be share-settled.

Summary of SARs (based on target amounts) and cash-settled RSUs (excluding stock salary) including the related expenses

	Number of Units
Year Ended December 31, 2012	SARs			TARP RSUs			RSUs
Unvested, beginning of year(a)		14,123,062			1,549,622			7,389
Granted(b)		1,809,842			678,188			836,355
Vested(c)		(1,864,801	)		(246,434	)		(139,169	)
Forfeited		(1,711,530	)		(91,942	)		(18,285	)
Unvested, end of year		12,356,573			1,889,434			686,290
Net compensation expense for the year (in millions)	$	84		$	31		$	17

(a)     Adjusted to reflect our election in 2012 to cash-settle RSUs that were previously expected to be share-settled.

(b)     Represents additional SARs earned as a result of the completion of the performance period for the 2010 LTIP.

(c)     Pursuant to the terms of the LTIP, vesting was accelerated for SARs awarded to employees who became retirement eligible or were deceased.

Schedule of total unrecognized compensation cost (net of expected forfeitures) related to unvested SARs and cash-settled RSUs excluding stock salary and the weighted-average periods over which those costs are expected to be recognized

At December 31, 2012 (in millions)	Unrecognized Compensation Cost		Weighted- Average Period (years)	Expected Period (years)
SARs	$	28	0.87	2
TARP RSUs		33	1.04	3
RSUs		14	1.00	2

Schedule of weighted average assumptions used to estimate the fair value of SARs

	2012
Expected dividend yield(a)		–	%
Expected volatility(b)		33.78 - 40.57	%
Weighted-average volatility		37.64	%
Risk-free interest rate(c)		0.34 - 0.40	%
Expected term(d)		1.0 - 2.0 years

(a)     The dividend yield is estimated at zero percent given our recent dividend history. See Note 17 herein for additional information.

(b)     The expected volatilities are the implied volatilities with the nearest maturity and strike price as of valuation date from actively traded stock options on AIG Common Stock.

(c)     The risk-free interest rate is the continuously compounded interest rate for the term between the valuation date and maturity date that is assumed to be constant and equal to the interpolated value between the closest data points on the USD LIBOR-Swap curve as of valuation date.

(d)     The term to maturity is specified in the contract of each SARs grant.