Aig Liquidity Corp, et al. – ‘424B5’ on 11/3/03

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Prospectus   —   Rule 424(b)(5)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B5       Filed Pursuant to Rule 424(B)(5)                      20     92K 

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                                              Filed Pursuant to Rule 424(b)(5)
                                    Registration Nos. 33-48996 and 33-48996-01

 PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 19, 2003)

U.S. $58,260,000
(SUBJECT TO REDUCTION)
AVAILABLE PRINCIPAL COMMITMENT
 AND
 U.S. $3,581,793
(SUBJECT TO REDUCTION)
 AVAILABLE INTEREST COMMITMENT

LIQUIDITY FACILITY OBLIGATIONS
OF
 AIG LIQUIDITY CORP.
 AND
 GUARANTEE OBLIGATIONS
OF
AMERICAN INTERNATIONAL GROUP, INC.

 IN SUPPORT OF THE PAYMENT OF PURCHASE PRICE OF TENDERED
PUBLIC UTILITY DISTRICT NO. 1 OF SNOHOMISH COUNTY WASHINGTON
 ADJUSTABLE TENDER GENERATION SYSTEM REVENUE BONDS DUE 2025, SERIES 1995

         In connection with the replacement of the current liquidity facility in
effect for the Adjustable Tender Generation System Revenue Bonds due 2025,      
Series 1995 issued by the Public Utility District No. 1 of Snohomish County     
Washington, which we refer to herein as the 1995 Bonds, AIG Liquidity Corp. is  
offering payment obligations under a standby purchase agreement, hereinafter    
referred to as the "Liquidity Facility Obligations." The Liquidity Facility     
Obligations are unconditionally guaranteed by AIG. The 1995 Bonds bear interest 
at a variable weekly rate and are subject to optional and mandatory tender for  
purchase to the U.S. Bank Trust National Association, the Tender Agent. We are  
entering a standby bond purchase agreement under which we will, subject to      
certain conditions, purchase the tendered 1995 Bonds at a purchase price equal  
to the aggregate principal amount of the tendered 1995 Bonds plus accrued       
interest to the purchase date.                                                  

        The Liquidity Facility Obligations under the standby agreement and the
unconditional guarantee of AIG (the "Guarantee Obligations" and together with   
the Liquidity Facility Obligations the "Obligations") are not being offered     
separately from the 1995 Bonds, which are remarketed pursuant to a separate     
Official Statement of Public Utility District No. 1 of Snohomish County,        
Washington, hereinafter referred to as the "Issuer." The Obligations will expire
on November 11, 2004 unless extended or sooner terminated as described in this  
Prospectus Supplement. The Obligations are not severable from the 1995 Bonds and
may not be separately traded. The 1995 Bonds are the obligations solely of the  
Issuer and are not issued or guaranteed by us or AIG. This Prospectus Supplement
is being delivered in connection with the replacement of the current liquidity  
facility in effect for the 1995 bonds and will be distributed in the remarketing
of 1995 Bonds by the Remarketing Agent while the Standby Agreement is in effect.
The Prospectus Supplement may also be delivered in connection with a remarketing
of 1995 Bonds purchased by us under the Standby Agreement.                      

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE 
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS  
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.  
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.                       

 REMARKETING AGENT
 CITIGROUP

 The date of this Prospectus Supplement is October 29, 2003.

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      YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE ATTACHED PROSPECTUS OR INFORMATION CONTAINED IN DOCUMENTS    
WHICH YOU ARE REFERRED TO BY THIS PROSPECTUS SUPPLEMENT OR THE ATTACHED         
PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION       
DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE ATTACHED     
PROSPECTUS. WE ARE OFFERING TO SELL THE SECURITIES ONLY IN JURISDICTIONS WHERE  
OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS    
SUPPLEMENT OR THE ATTACHED 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 SECURITIES.                                                     

 TABLE OF CONTENTS

                                                                [Download Table]

                                                     PAGE
                                                     ----
                                                         
                  PROSPECTUS SUPPLEMENT                  

Introduction......................................    S-1
Plan Of Distribution..............................    S-1
The 1995 Bonds....................................    S-1
Bonds.............................................    S-2
Redemption Of Purchased Bonds.....................    S-2
The AIG-FP Swap Agreement.........................    S-3
Standby Agreement.................................    S-3
The AIG Guarantee.................................    S-7
Validity Of Liquidity Facility Obligations And           
AIG Guarantee Obligations.........................    S-7

                        PROSPECTUS                       

Where You Can Find More Information...............      3
Incorporation of Certain Documents by Reference...      3
Description of the Obligations....................      5
AIG Liquidity Corp................................      9
American International Group, Inc.................      9
Use of Proceeds...................................     10
Plan of Distribution..............................     10
Validity of Obligations...........................     10
Experts...........................................     11
Cautionary Statement Pursuant To the Private             
Securities Litigation Reform Act of 1995..........     11

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INTRODUCTION                                                                    

       This Prospectus Supplement provides you with a summary of information
about the 1995 Bonds and information regarding our Liquidity Facility           
Obligations and the Guarantee Obligations of AIG. We are providing Liquidity    
Facility Obligations in support of $58,260,000 aggregate principal amount of the
1995 Bonds.                                                                     

         On February 8, 1995, the Issurer issued $58,260,000 aggregate principal
amount of the 1995 Bonds. Owners of the 1995 Bonds have the right to tender, and
in certain cases are required to tender, the 1995 Bonds for purchase to the     
Tender Agent. Citigroup Global Markets Inc., referred to herein as the          
Remarketing Agent, must use its best efforts to locate investors to purchase the
tendered 1995 Bonds. In connection with the issue of the 1995 Bonds, the Issuer 
entered into a standby purchase agreement with a commercial bank, hereinafter   
referred to as the "Bank". Under the agreement, the Bank is required, subject to
certain conditions, to provide funds to the tender agent for the purchase of    
tendered 1995 Bonds that the Remarketing Agent was not able to sell to new      
investors.                                                                      

 As permitted under the Bond Resolution and the standby purchase
agreement with the Bank, the Issuer has entered a replacement standby purchase  
agreement, which we refer to as the Standby Agreement, with us, which will      
become effective November 12, 2003. Beginning on the effective date of the      
Standby Agreement we will be required, subject to certain conditions, to        
purchase 1995 Bonds tendered voluntarily by the holders or tendered pursuant to 
certain mandatory tender for purchase requirements, in the event that the       
Remarketing Agent cannot sell the tendered 1995 Bonds to new investors. 1995    
Bonds that are tendered after November 12, 2003 will be subject to the purchase 
under the Standby Agreement.                                                    

PLAN OF DISTRIBUTION                                                            

    The Obligations are not being sold separately from the 1995 Bonds,
which are being remarketed pursuant to the Official Statement of the Issuer,    
dated January 30, 1995, as supplemented, hereinafter referred to as the         
"Official Statement." Neither we nor AIG had any role in preparing the Official 
Statement and neither we nor AIG undertakes any responsibility with respect to  
the accuracy or completeness of the Official Statement or any information set   
forth therein.                                                                  

   This Prospectus Supplement was not prepared by the Issuer and the
Issuer undertakes no responsibility for its contents. This Prospectus Supplement
is not intended to supplement the Issuer's official statements with respect to  
the bonds.                                                                      

THE 1995 BONDS                                                                  

       The 1995 Bonds were issued on February 8, 1995 pursuant to Resolution
No. 3902, dated January 28, 1993 and supplemental resolution No. 4251, dated    
February 7, 1995, together referred to as the Bond Resolution.                  

        The 1995 Bonds bear interest at an interest rate that is adjusted each
week by the Remarketing Agent. The interest rate is set at the rate at which the
Remarketing Agent determines it can sell the 1995 Bonds at a price of 100% of   
their principal amount plus any accrued interest. The 1995 Bonds will not bear  
an interest rate of more than 12% per annum, except in the case of Purchased    
Bonds, which are described in the next section and which may bear a maximum     
interest rate of 25% per annum. The Issuer may, subject to certain conditions   
specified in the Bond Resolution, elect to convert the interest rate on the 1995
Bonds to a long-term interest rate that is not adjusted on a weekly basis.      
Neither we nor AIG will participate in the determination of either the weekly   
interest rate or any applicable long-term interest rate. The Remarketing Agent's
determination of the weekly interest rate and the long-term interest rate is    
subject to approval by the Issuer, but is otherwise conclusive and binding upon 
the Remarketing Agent, AIG-LC as the Standby Purchaser, the Issuer, the Bond    
Registrar, the Tender Agent and the owners of the 1995 Bonds.                   

         The 1995 Bonds may be redeemed in whole or in part at the option of the
Issuer at any time that the 1995 Bonds are subject to the weekly interest rate. 
The redemption price is 100% of the principal amount of the 1995 Bonds plus     
accrued interest. In the event that the 1995 Bonds are converted to pay interest
at the long-term interest rate, the Issuer may redeem the 1995 Bonds in         
accordance with the provisions of the Bond Resolution. The 1995 Bonds are also  

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subject to a sinking fund provision, which causes mandatory redemption of a     
certain principal amount of the 1995 Bonds no later than January 1 of each year 
from 2014 to 2025. Purchased Bonds are subject to optional redemption by the    
Issuer at any time and are subject to mandatory redemption on the date five     
years after the Bank purchased such Purchased Bonds                             

       Payments of principal and interest on the 1995 Bonds are insured by a
Municipal Bond Insurance Policy, which we refer to as the Policy, provided by   
the MBIA Insurance Corporation, which unconditionally guarantees scheduled      
payments of principal (when due at maturity or upon payment pursuant to the     
sinking fund provisions in the Indenture) and of interest on the 1995 Bonds. The
Policy does not guarantee payment of the purchase price of 1995 Bonds tendered  
for purchase.                                                                   

  Neither we nor AIG is responsible for payment of principal of or
interest due on the 1995 Bonds.                                                 

PURCHASED BONDS                                                                 

        Any 1995 Bonds purchased by us that are not subsequently remarketed by
the Remarketing Agent are classified as "Purchased Bonds." A Purchased Bond     
bears interest at a rate determined in accordance with the Standby Agreement    
until such Bond is no longer classified as a Purchased Bond. The Purchased Bonds
will bear interest at the Base Rate, which will be equal to the higher of the   
prime rate, as determined by a bank chosen in good faith by us, or the Federal  
Funds Rate +0.5% per annum except (i) when there is an event of default under   
the Standby Agreement, (ii) a Purchased Bond has been a Purchased Bond for sixty
(60) days or more or (iii) when our duty to purchase bonds has ceased. In such  
circumstances, the Purchased Bond interest rate will be the Base Rate plus two  
(2) percent. In no event shall the interest rate on the Purchased Bonds exceed  
25 percent.                                                                     

 In the event that interest on the Purchased Bonds as calculated
pursuant to the paragraph above would be greater than 25% in the absence of the 
of the 25% interest rate limit, then the amount of interest that would have     
accrued in the absence of the 25% limitation will be considered the Excess Bond 
Interest Amount. If when calculated according to the paragraph above the        
Purchased Bond interest rate is below 25% on any date, and on that date there is
a positive Excess Bond Interest Amount, then the interest rate on the Purchased 
Bonds will be 25% on the date on which the interest would otherwise have been   
below 25%, provided, however, that if application of an interest rate of 25% on 
such date will reduce the Excess Bond Interest Amount to less than zero, then   
the interest rate will be such interest rate that will result in a reduction of 
the Excess Bond Interest Amount to zero. The obligation of the Issuer to pay the
Excess Bond Interest Amount is subordinate in right to the obligation of the    
Issuer to pay interest and principal on the 1995 Bonds under the Bond           
Resolution.                                                                     

      1995 Bonds will cease to be Purchased Bonds when they are sold by us
pursuant to a remarketing of the 1995 Bonds by the Remarketing Agent, or if we  
or a subsequent purchaser directly from us elects not to sell the Purchased     
Bonds pursuant to a remarketing arrangement by the Remarketing Agent.           

REDEMPTION OF PURCHASED BONDS                                                   

On the ninetieth (90th) day following the day that we purchase
Purchased Bonds and every three months thereafter, until all of the Purchased   
Bonds we purchased on that day have been repaid by the Issuer, the Issuer will  
pay to us an aggregate principal amount equal to the lesser of the 1/20 of the  
aggregate principal amount of the Purchased Bonds we purchased on such day, or  
the remaining aggregate principal amount of the bonds we purchased on such day. 
The Issuer will pay us an amount equal to the aggregate principal amount of such
bonds it is repaying on that day plus accrued and unpaid interest on the        
principal amount so paid.                                                       

 In the event that the Issuer enters into a new standby purchase
agreement or some other Alternate Liquidity Facility, as defined in the Bond    
Resolution, then it will cause to be paid all outstanding Purchased Bonds not   
remarketed on the effective date of the new standby agreement.                  

The obligation of the Issuer to pay for the Purchased Bonds as
described in this section is subordinate in right to the obligation of the      
Issuer to make payments of interest and                                         

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principal on the 1995 Bonds under the Bond Resolution.                          

THE AIG-FP SWAP AGREEMENT                                                       

      The Issuer has entered into an interest rate swap agreement with AIG
Financial Products Corp., a Delaware corporation, which we refer to as AIG-FP.  
Under the agreement the Issuer is paying to AIG-FP a fixed rate equal to 6.2% of
the outstanding principal amount of the bonds, subject to certain conditions.   
AIG-FP is paying the Issuer a variable rate equal to the interest on the bonds. 
AIG-FP's payment obligations under the swap agreement are guaranteed by AIG.    

STANDBY AGREEMENT                                                               

AVAILABLE COMMITMENT; PURCHASE PERIOD                                           

       AIG-LC is obligated to make available $61,841,793 for purchase of the
1995 Bonds, $58,260,000 of which is the aggregate principal amount of the 1995  
Bonds outstanding, which we refer to as the "Available Principal Commitment,"   
and $3,581,793 of which is an amount which represents 187 days of accrued       
interest on such outstanding 1995 Bonds, which we refer to as the "Available    
Interest Commitment." The Available Principal Commitment will be decreased by   
the aggregate principal amount of 1995 Bonds that have been redeemed and are no 
longer outstanding under the Bond Resolution.                                   

  The obligation of AIG-LC to provide funds to purchase 1995 Bonds
tendered to the Tender Agent will be effective from November 12, 2003, until the
earliest of:                                                                    

-    November 11, 2003 or such later expiry date as may become effective
pursuant to the terms of the Standby Agreement;               

 -    the date we receive a certificate signed by an officer of the Tender
        Agent stating that the period during which we are required to purchase
      tendered 1995 Bonds has been terminated pursuant to the terms of the
 Bond Resolution because either a new standby agreement has been
   provided under the Bond Resolution and as provided in the Standby
Agreement, or no 1995 Bonds remain outstanding;               

-    the close of business on the day after we receive notice from an   
        officer of the Tender Agent that the 1995 Bonds have been converted to
        a long-term interest rate or the day such after interest rate has gone
into effect whichever is last;                                

    -    the close of business on the date that the Issuer provides notice to us
         that the Issuer has elected to terminate the Standby Agreement due to a
         change in the Moody's or Standard and Poor's ratings of the 1995 Bonds;

-    the date of termination of the Available Principal and Available   
         Interest Commitments and AIG-LC's obligation to purchase 1995 Bonds due
 as a result of an event of default under the Standby Agreement.

        We refer to this period as the " Purchase Period." The Purchase Period
will not be extended without our consent.                                       

FUNDING OF PURCHASE OF TENDERED BONDS BY THE TENDER AGENT FOR THE ACCOUNT OF    
AIG-LC                                                                          

         Tender Agent will provide us notice of the principal amount of the 1995
Bonds for which it receives notice of tender. No later than 3:00 p.m., New York 
time, on the day before the Tender Agent must purchase bonds that have been     
tendered, the Remarketing Agent must inform the Tender Agent of the principal   
amount of 1995 Bonds for which it has received an indication of interest from   
prospective purchasers. No later than 4:00 p.m. New York, time on the day before
the Tender Agent must purchase the 1995 Bonds, the Tender Agent must notify us  
of the principal amount of the 1995 Bonds that were remarketed. No later than   
11:30 a.m., New York time, on the business day on which the 1995 Bonds must be  
purchased by the Tender Agent, which we refer to as the "Purchase Date," the    
Tender Agent must provide us with notice of the aggregate purchase price        
(consisting of the aggregate principal amount of such 1995 Bonds plus accrued   
interest) of those 1995 Bonds that we must purchase.                            

        After the receipt of such notice, we will, by no later than 3:00 p.m.,
New York time, on the Purchase Date make available to the Tender                

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Agent in immediately available funds, the purchase price of such 1995 Bonds.    

SALES OF PURCHASED BONDS BY AIG-LC                                              

     We may sell Purchased Bonds at any time subject to the terms of the
Standby Agreement. Such sales (other than those following a remarketing of the  
Purchased Bonds by the Remarketing Agent) will be made only to institutional    
investors or other entities or individuals that customarily purchase commercial 
paper or tax-exempt securities in large denominations.                          

        We must notify the Insurer, the Issuer, the Bond Registrar, the Tender
Agent and the Remarketing Agent of any such sales of Purchased Bonds and must   
notify the transferee in writing (i) that such Bond is no longer one of the     
bonds that we are required to purchase under the Standby Agreement as long as it
remains a Purchased Bond, (ii) such Bond may be transferred only according to   
the terms of the Standby Agreement as long as the Bond is a Purchased Bond and  
(iii) that such Bond is subject to sale and may cease to be a Purchased Bond if 
remarketed by the Remarketing Agent.                                            

In connection with any sale of Purchased Bonds outside of the 
remarketing of the 1995 Bonds by the Remarketing Agent, we will provide the     
Tender Agent and Bond Registrar with the written agreement from the purchaser of
such Bond that (i) acknowledges the terms of the Standby Agreement relating to  
the Purchased Bonds, (ii) agrees not to sell the Purchased Bonds or beneficial  
interest therein except to us, or pursuant to the remarketing efforts of the    
Remarketing Agent or to institutional investors as described above, (iii)       
acknowledging the fact that such Purchased Bondholder has no right to tender    
such bond at its option under the Bond Resolution and that the short-term rating
on such bond may no longer be applicable, (iv) acknowledging that if such       
Purchased Bondholder fails to give notice of its decision whether or not to sell
any Purchased Bond or beneficial interest therein to any purchaser located by   
the Remarketing Agent, such Purchased Bondholder shall be deemed to have        
determined to sell such Purchased Bond or beneficial interest, (v) acknowledging
that if such Purchased Bondholder delivers notice that it will not sell such    
Purchased Bond or beneficial interest, such 1995 Bonds shall no longer be       
Purchased Bonds as of the date on which the Bond would otherwise have been sold 
and (iv) specifying the name, nominee name, address, tax identification number, 
telecopy and telephone numbers, to whose attention notices should be directed   
and account information for purposes of all notices and payments to such        
Purchased Bondholder.                                                           

SALES OF PURCHASED BONDS BY REMARKETING AGENT                                   

       The Remarketing Agent may sell Purchased Bonds received by the Tender
Agent on our behalf (and on the behalf of any subsequent purchaser of such      
Purchased Bonds from us) pursuant to the Bond Resolution, at a price equal to   
the aggregate principal amount of such Purchased Bonds plus accumulated interest
thereon at the interest rate applicable to Purchased Bonds. We and any          
subsequent purchaser from us may elect not to sell the Purchased Bonds or any   
portion of them after receipt of notice from the Remarketing Agent. After any   
such sale by the Remarketing Agent or any election not to sell by us or a       
subsequent purchaser, the 1995 Bonds will no longer be classified as Purchased  
Bonds and will bear the weekly interest rate as determined by the Remarketing   
Agent.                                                                          

COMMITMENT FEE                                                                  

       The Issuer has agreed to pay to us a commitment fee under the Standby
Agreement of 0.25% per annum commencing on the date on which the Standby        
Agreement is delivered to the Tender Agent and continuing for as long as we are 
committed to purchase 1995 Bonds tendered for purchase. The amount of the       
commitment fee is calculated based on the average daily amount of aggregate of  
the Available Principal and Available Interest Commitments during the relevant  
commitment payment period. This fee will be paid in immediately available funds 
in arrears on the first business day of each January, April, July and October.  

EVENTS OF DEFAULT; TERMINATION                                                  

Each of the following is an event of default under the Standby
Agreement:                                                                      

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a)   any principal or interest due on the 1995 Bonds is not paid by the 
   Issuer when due and such principal or interest is not paid by the
      Insurer when, as, and in the amounts required to be paid pursuant to
the terms of the Financial Guaranty Insurance Policy from MBIA
Insurance Corporation, which we refer to as the "Policy";     

   b)   nonpayment of the commitment fee or the purchase demand fee (a nominal
       amount) payable under the Standby Agreement within five Business Days
        after the Insurer and the Issuer have received notice from us that the
same were not paid when due;                                  

  c)   nonpayment of any other fees, or any other amount, when due under the
       Standby Agreement, if such failure to pay when due shall continue for
       30 days after written notice thereof to the Issuer and the Insurer by
us;                                                           

d)   any representation or warranty made by the Issuer under or in      
    connection with the Standby Agreement or any of the Bond Documents
    shall prove to be untrue in any material respect on the date as of
which it was made;                                            

e)   the breach by the Issuer of certain of the terms or provisions of  
negative covenants in the Standby Agreement;                  

f)   a proceeding is instituted in a court having jurisdiction over the 
         Issuer, any of its activities or any of its properties seeking an order
       for relief, rehabilitation, reorganization, conservation, liquidation
       or dissolution in respect of the Issuer under applicable law and such
     proceeding is not terminated for a period of 60 consecutive days or
such court enters an order granting the relief sought in such 
       proceeding or the Issuer shall institute or take any corporate action
    for the purposes of instituting any such proceeding; or the Issuer
     shall become insolvent or unable to pay its debts as they mature or
         shall commence a voluntary case under applicable bankruptcy, insolvency
       or other similar law now or hereafter in effect, shall consent to the
        entry of an order for relief in an involuntary case under any such law
  or shall consent to the appointment of or taking possession by a
        receiver, liquidator, assignee, trustee, custodian or sequestrator (or
       other similar official) of the Issuer, or for any substantial part of
     its property, or shall make a general assignment for the benefit of
       creditors, or shall fail generally to pay its debts or claims as they
         become due, or shall take any corporate action in furtherance of any of
the foregoing;                                                

    g)   the Issuer shall default (1) in any payment of principal of or interest
  on any obligation for borrowed money (or of any obligation under
conditional sale or other title retention agreement or of any 
    obligation secured by purchase money mortgage or of any obligation
   under notes payable or drafts accepted representing extensions of
       credit) payable from the Revenues (as defined in the Bond Resolution)
         beyond any period of grace provided with respect thereto; or (2) in the
     performance or observance of any other agreement, term or condition
       contained in any agreement under which any such obligation is created
      (or if any other event of default thereunder or under such agreement
        shall occur and be continuing) and the effect of such event of default
        is to cause, or to permit the holder or holders of such obligation (or
a trustee on behalf of such holder or holders) to cause, such 
obligation to become due prior to its stated maturity;        

  h)   the failure on the part of the Issuer to perform or observe any other
         material term, covenant or agreement contained in the Standby Agreement
   or any of the other Bond Documents on its part to be performed or
       observed and (a) with respect to any such term, covenant or agreement
         contained in the Standby Agreement, any such failure remains unremedied
 for 30 days; and (b) with respect to any such term, covenant or
  agreement contained in any of the other Bond Documents, any such
        failure remains unremedied after any applicable grace period specified
in such Bond Document;                                        

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 i)   the Bond Resolution shall terminate or cease to be of full force and
        effect, other than as a result of any redemption or defeasance in full
       of the 1995 Bonds; or the Issuer shall in writing to the Trustee, the
       Insurer or the Tender Agent claim that its obligations under the 1995
        Bonds, the Bond Resolution, or the Standby Agreement are not valid and
    binding on the Issuer or repudiate such obligations; or the Issuer
       shall initiate any legal proceedings to seek an adjudication that any
        such obligations are not valid and binding on the Issuer; or any court
        or governmental authority with jurisdiction to rule on the validity of
         such obligations shall announce, find or rule that any such obligations
are not valid and binding on the Issuer;                      

j)   the occurrence of any "Event of Default" as defined in the Bond    
Resolution;                                                   

k)   the occurrence of an Insurer Event of Insolvency as defined in the 
Standby Agreement;                                            

 l)   the President or an Executive Vice President of the Insurer shall in
  writing to the Trustee claim that the Policy with respect to the
        payment of principal of or interest on the 1995 Bonds is not valid and
      binding on the Insurer, and repudiate the obligations of the Insurer
         under the Policy with respect to payment of principal of or interest on
        the 1995 Bonds, or the Insurer shall initiate any legal proceedings to
      seek an adjudication that the Policy, with respect to the payment of
         principal of or interest on the 1995 Bonds, is not valid and binding on
the Insurer; or                                               

 m)   any court or governmental authority with jurisdiction to rule on the
        validity of the Policy shall announce, find or rule that the Policy is
not valid and binding on the Insurer.                         

        "Bond Documents" means the Bond Resolution, the Standby Agreement, the
Tender Agency Agreement, the Custody Agreement, the Liquidity Guaranty, the Swap
Agreement, the Remarketing Agreement and the Policy (each as defined in the Bond
Resolution).                                                                    

        Our obligation to purchase 1995 Bonds under the Standby Agreement will
be immediately suspended in the event that an event of default listed under     
paragraphs (l) or (m) above should occur. We must notify the Tender Agent, the  
Trustee and the Remarketing Agent of the suspension promptly upon obtaining     
knowledge of such a default event. Failure to provide such notice, however, will
not affect our right to suspend our obligations to purchase the 1995 Bonds. If a
court with valid jurisdiction then issues a non-appealable judgment that the    
Policy is not valid then our obligations will be immediately terminated without 
notice or demand. Our obligations to purchase tendered 1995 Bonds will be       
reinstated in the event that a court with valid jurisdiction issues a judgment  
that the Policy is valid and enforceable. If, however, after three years,       
litigation is still pending and no final non-appealable judgment has been       
entered by a court with competent jurisdiction then our obligation to purchase  
tendered 1995 Bonds will terminate without notice or demand.                    

  Our obligation to purchase tendered 1995 Bonds under the Standby
Agreement will be immediately terminated without notice or demand if an event of
default listed under paragraphs (a) or (k) above should occur. We must give     
prompt written notice to the Issuer, the Tender Agent, and the Remarketing Agent
after gaining knowledge of the occurrence of such events. Our failure to provide
such notice, however, will not affect the termination of our obligation to      
purchase the 1995 Bonds.                                                        

   In the event of an occurrence of an event of default described in
paragraphs (b) or (c) above, we may give written notice to the Issuer, the      
Tender Agent, the Insurer and the Remarketing Agent designating such event as   
triggering a mandatory tender of the 1995 Bonds, designating the date on which  
our obligations to purchase tendered 1995 Bonds would terminate. Such date shall
not be less than 25 days in the case of an event under paragraph (b) above and  
not less than 5 days in the case of an event under paragraph (c).               

        Upon the occurrence of any of the events specified above, we will also
have all remedies provided at law or equity, providing however, that we may     
terminate our obligations to purchase tendered 1995 Bonds only as specified     
above.                                                                          

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THE AIG GUARANTEE                                                               

       AIG has issued an unconditional and irrevocable guarantee in favor of
the Tender Agent guaranteeing prompt payment of our payment obligations under   
the Liquidity Facility Obligations. The Tender Agent may proceed against AIG    
under the guarantee whether or not it has proceeded against us with respect to  
our obligations. AIG's guarantee will apply to any successors and assigns of the
Tender Agent and will remain in effect until all of our applicable obligations  
have been paid. AIG may apply a set-off of any amounts owed to us by the Tender 
Agent against any amounts owed by AIG under the guarantee.                      

VALIDITY OF LIQUIDITY FACILITY OBLIGATIONS AND AIG GUARANTEE OBLIGATIONS        

        The validity of the Liquidity Facility Obligations will be passed upon
for us by Sullivan & Cromwell LLP, New York, New York and the validity of the   
Guarantee Obligations will be passed upon for AIG by Kathleen E. Shannon, Senior
Vice President and Deputy General Counsel of AIG.                               

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LIQUIDITY FACILITY OBLIGATIONS
 AND
 CREDIT FACILITY OBLIGATIONS
OF
 AIG LIQUIDITY CORP.
 AND
 GUARANTEE OBLIGATIONS
OF
AMERICAN INTERNATIONAL GROUP, INC.

      We may from time to time enter into standby bond purchase agreements
with issuers, ultimate obligors, Trustees or tender agents in respect of one or 
more series of variable rate or short-term municipal bonds, referred to as the  
Bonds. The Bonds of each series, including any Bonds remarketed by a remarketing
agent as described herein, will be subject, at the option of the holder of the  
Bonds, to tender for purchase and, under certain circumstances, will be subject 
to mandatory tender for purchase, at the times and on the terms and conditions  
set forth in the Indenture for such Bonds. Under the terms of any such standby  
bond purchase agreement, referred to as a Standby Agreement, we will be         
obligated to purchase tendered Bonds which have not been remarketed by a        
remarketing agent as described in, and subject to any conditions described in,  
the applicable Prospectus Supplement. Any tendered Bonds so purchased by us     
would again be subject to tender for purchase at the option of the holder if    
such Bonds are remarketed by the remarketing agent.                             

       Instead of, or in addition to, entering into a Standby Agreement with
respect to a series of Bonds, we may from time to time issue direct-pay letters 
of credit, referred to herein as a Letter of Credit, in respect of such series  
of Bonds. Each Letter of Credit will be issued in favor of the Trustee under the
Indenture under which the Bonds are issued for the benefit of the holders of the
Bonds. Pursuant to any such Letter of Credit, the Trustee will be authorized to 
draw directly on us from time to time to fund payments of principal of and      
interest on the Bonds and, in certain cases, to fund the purchase by the tender 
agent of tendered Bonds which have not been remarketed by a remarketing agent in
each case as described in, and subject to any conditions described in, the      
applicable Prospectus Supplement. In conjunction with issuing a Letter of       
Credit, we and the Issuer of the applicable series of Bonds will enter into a   
reimbursement agreement under which we will be entitled to reimbursement of all 
credit drawings at such times and on such terms as provided in a reimbursement  
agreement and described in the applicable Prospectus Supplement.                

   Our payment obligations under each Standby Agreement or Letter of
Credit will be unconditionally guaranteed pursuant to a general guarantee       
relating to all Standby Agreements or letters of credit or a specific guarantee 
relating to the relevant Standby Agreement or Letter of Credit issued by        
American International Group, Inc., which we refer to herein as AIG.            

         The Prospectus Supplement with respect to a Standby Agreement or Letter
of Credit and a guarantee will set forth the title of the relevant series of    
Bonds, the name of the Issuer and any insurer, a summary of certain terms of the
Bonds relevant to the operation of the Standby Agreement or Letter of Credit and
the guarantee, and specific terms of such Standby Agreement or Letter of Credit 
and guarantee, including whether and under what circumstances the obligations   
under the Standby Agreement or Letter of Credit and guarantee may be suspended  
or terminated.                                                                  

      This Prospectus and the Prospectus Supplement together constitute an
offering of our obligations under the relevant Standby Agreement, which we refer
to as our Liquidity Facility Obligations or the relevant Letter of Credit which 
we refer to as the Credit Facility Obligations, and the obligations of AIG under
the relevant Guarantee, which we refer to as our Guarantee Obligations. We will 
refer to our Liquidity Facility Obligations, our Credit Facility Obligations and
the Guarantee Obligations as the Obligations.                                   

This Prospectus and the Prospectus Supplement together do not 
constitute an offering of the Bonds related to the Obligations, which have been 
or will be offered pursuant to a separate offering                              

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document called an Official Statement. We and AIG undertake no responsibility   
with respect to the accuracy or completeness of any Official Statement or any   
information set forth therein. The Obligations may not be traded separately from
the Bonds to which they relate. This Prospectus and the Prospectus Supplement   
may be delivered at the time of initial issuance of the Bonds of a series or the
remarketing thereof in connection with the replacement by the Obligations of    
another liquidity facility or credit facility in effect with respect to such    
Bonds and, when appropriately supplemented, if required, may also be delivered  
in connection with a remarketing of any Bonds purchased by us or any of our     
affiliates.                                                                     

        Payment of principal of and interest on the Bonds of a series to which
our Liquidity Facility Obligations relate is solely the obligation of the Issuer
of the Bonds and is not insured or guaranteed by us, AIG or any affiliate of    
either us or AIG. Although Credit Facility Obligations issued by us with respect
to a series of Bonds will serve to support payment of principal of and interest 
on such Bonds, payment of such amounts will be primarily the obligation of the  
Issuer, as described in the Official Statement for such Bonds, notwithstanding  
the existence of such Credit Facility Obligations.                              

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES         
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A     
CRIMINAL OFFENSE.                                                               

 FOR NORTH CAROLINA RESIDENTS ONLY

THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA HAS NOT APPROVED  
OR DISAPPROVED OF THE OFFERING, NOR HAS THE COMMISSIONER PASSED UPON THE        
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.                                        

THIS PROSPECTUS MAY NOT BE DELIVERED UNLESS ACCOMPANIED BY THE PROSPECTUS       
SUPPLEMENT.                                                                     

 The date of this Prospectus is September 19, 2003

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 NOTICE TO INVESTORS

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. WE HAVE NOT        
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT CONTAINED 
IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE ARE OFFERING TO SELL THE    
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 SECURITIES.                

 WHERE YOU CAN FIND MORE INFORMATION

      We are required to file annual, quarterly and current reports, proxy
statements and other information with the SEC. These reports, proxy statements  
and other information can be inspected and copied 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.

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 under the symbol "AIG."                

 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     The SEC allows us to "incorporate by reference" the information AIG
files with the SEC, which means that we can disclose important information to   
you by referring you to those documents. When post-effective amendment no. 2 to 
the Registration Statement of which this prospectus is a part became effective, 
the following documents were incorporated by reference.                         

     -        Annual report on Form 10-K for the year ended December 31,
1995.                                       

        -        Quarterly report on Form 10-Q for the quarter ended March 31,
1996.                                       

         All of AIG's filings made with the SEC under Sections 13(a), 13(c), 14,
or 15(d) of the Securities Exchange Act of 1934 since the effective date of     
post-effective amendment no. 2 to the Registration Statement have been          
incorporated by reference in this prospectus and all of AIG's future filings    
with the SEC under such sections will be incorporated by reference until the    
termination of the offering of the Obligations. The information incorporated by 
reference in this prospectus is considered to be part of this prospectus, and   
later information that AIG has filed or files in the future with the SEC will   
automatically update and supersede that information as well as the information  
included in this prospectus. This Prospectus does not contain all of the        
information set forth in the Registration Statement, of which this Prospectus is
a part, and exhibits thereto which AIG-LC and AIG have filed with the Commission
under the Securities Act of 1933, to which reference is hereby made.            

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        We will provide without charge a copy of these filings, other than any
exhibits unless the exhibits are specifically incorporated by reference into    
this prospectus.                                                                

     Requests for such documents should be directed to AIG's Director of
Investor Relations, 70 Pine Street, New York, New York 10270, telephone (212)   
770-6293.                                                                       

This Prospectus constitutes a prospectus with respect to the  
Obligations of AIG-LC and AIG specified in the Prospectus Supplement. No        
Registration Statement has been filed under the 1933 Act with respect to the    
Bonds specified in the Prospectus Supplement.                                   

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DESCRIPTION OF THE OBLIGATIONS

GENERAL                                                       

         We may enter or issue Standby Agreements or letters of credit from time
to time the obligations of which will be guaranteed by AIG, with respect to one 
or more series of Bonds specified in the applicable Prospectus Supplement. The  
Bonds of each series and any municipal Bond insurance policy purchased by the   
Issuer with respect to such Bonds have been or will be described in a separate  
Official Statement of the Issuer. We and AIG undertake no responsibility with   
respect to the accuracy or completeness of any Official Statement or any        
information set forth therein.                                                  

      Our obligations under each Standby Agreement or Letter of Credit and
the obligations of AIG under each guarantee will rank equally with all other of 
our and AIG's general unsecured and unsubordinated obligations. The Obligations 
are not being issued pursuant to an indenture.                                  

         In connection with each Standby Agreement or Letter of Credit, AIG will
agree to provide, or cause to be provided, by means of capital contributions,   
purchases of assets, loans or otherwise, funds to us to the extent necessary to 
enable us to meet our obligations under the Standby Agreement or Letter of      
Credit. Any such agreement to provide or cause to be provided funds will be     
solely for the benefit of and enforceable by us and AIG.                        

     AIG depends on its subsidiaries for cash flow in the form of loans,
advances and dividends. Some AIG subsidiaries, namely those in the insurance    
business, are subject to regulatory restrictions on the amount of dividends     
which can be paid to AIG. These restrictions vary by state. For example, unless 
permitted by the New York Superintendent of Insurance, general insurance        
companies domiciled in New York may not pay dividends to shareholders which in  
any twelve month period exceed the lesser of 10 percent of the company's        
statutory policyholders' surplus or 100 percent of its "adjusted net investment 
income," as defined. Generally, less severe restrictions applicable to both     
general and life insurance companies exist in most of the other states in which 
AIG's insurance subsidiaries are domiciled. Certain foreign jurisdictions have  
restrictions which generally cause only a temporary delay in the remittance of  
dividends. There are also various local restrictions limiting cash loans and    
advances to AIG by its subsidiaries. Largely as a result of the restrictions,   
approximately 72 percent of consolidated capital funds were restricted from     
immediate transfer to AIG at December 31, 2002.                                 

    Each Standby Agreement or Letter of Credit will be entered into or
issued at the same time of or after the original issuance of the Bonds described
in the Prospectus Supplement, in either case as set forth in the Prospectus     
Supplement, and will expire on the stated termination date set forth in the     
Prospectus Supplement unless extended or earlier terminated upon the conditions 
described in the Prospectus Supplement.                                         

   The Prospectus Supplement will describe the specific terms of the
Obligations in respect of which this Prospectus is being delivered, including   
among other things: (1) the timing, terms and method of purchase of Bonds to    
which the Liquidity Facility Obligations relate under the Standby Agreement; (2)
the timing, terms and method of making credit drawings to which Credit Facility 
Obligations relate under the Letter of Credit and the timing, terms and method  
of reimbursing us for such credit drawings under the related reimbursement      
agreement; (3) whether and under what circumstances such Obligations will be    
terminable without, prior to, or after a mandatory tender for purchase or       
acceleration of the related Bonds; (4) any limitations on our rights to resell  
Bonds we purchase; (5) the commitment fee payable to us; and (6) any other      
relevant terms of the Standby Agreement, the Letter of Credit, the reimbursement
agreement and the guarantee, as the case may be. The term of each Standby       
Agreement or Letter of Credit shall be set forth in the Prospectus Supplement,  
and generally will be at least 360 days, unless the final maturity of the Bonds 
occurs prior to the end of such 360 day period, in which case the term of the   
Standby Agreement or Letter of Credit would end on the date of such final       
maturity of the Bonds as described in the next section of this Prospectus.      

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        The Prospectus Supplement will also specify the following terms of the
Bonds to which the Obligations relate: (1) the Issuer and title of such Bonds;  
(2) the aggregate principal amount of such Bonds; and (3) certain other terms of
the Bonds or any insurance policy relevant to the operation of the Standby      
Agreement, the Letter of Credit, the reimbursement agreement or the guarantee.  

        Payment of principal of and interest on the Bonds of a series to which
our Liquidity Facility Obligations relate is solely the obligation of the Issuer
and is not insured or guaranteed by us, AIG, or any affiliate of us or AIG.     
Although Credit Facility Obligations issued by us with respect to a series of   
Bonds will serve to support payment of principal of and interest on such Bonds, 
payment of such amounts will be primarily the obligation of the Issuer, as      
described in the Official Statement for such Bonds, notwithstanding the         
existence of such Credit Facility Obligations. Under certain circumstances, the 
Obligations with respect to the purchase of Bonds of any series may be          
terminated or suspended upon an Event of Default (as defined in the relevant    
Standby Agreement or reimbursement agreement and described in the Prospectus    
Supplement).                                                                    

       Each holder of Bonds will be responsible for acting individually with
respect to, among other things, the giving of notices, responding to any        
requests for consents, waivers or other amendments pertaining to the Bonds,     
enforcing covenants and taking action upon a default.                           

    During the period that the Bonds are owned by us or by a qualified
purchaser from us (including AIG), such Bonds will bear interest at a rate based
on a reference rate or an index as described in the Prospectus Supplement,      
subject in certain cases to a maximum rate, or will bear interest as otherwise  
described in the Prospectus Supplement. We or our affiliates may hedge our      
interest rate exposure in connection with Bonds we purchase, by entering into   
interest rate swaps or similar transactions that would have the effect of       
converting interest on the purchased Bonds into a LIBOR based rate (subject in  
certain cases to no such maximum rate or to a different maximum rate). Unless   
otherwise set forth in the Prospectus Supplement, the remarketing agent will    
have a continuing obligation to use its best efforts to find purchasers for any 
Bonds owned by us or a qualified purchaser who purchased the Bonds from us.     

  The following descriptions under "Tender of Bonds," "The Standby
Agreements," "The Letters of Credit," "Amount of Commitment" and "The           
Guarantees" are general in nature and qualified in their entirety by reference  
to, and may be superseded to the extent described in, the Prospectus Supplement 
relating to any particular series of Bonds.                                     

TENDER OF BONDS                                               

Tender Option                               

       The Bonds of each series will be subject, at the option of the holder
of the Bonds, to tender for purchase with funds available to the tender agent.  
The terms of the Bonds of a series may permit such tenders at any time upon     
notice or at specified times relating to the reset of the interest rate with    
respect to the Bonds of such series. On the date on which the Bonds of any      
series are issued and on each interest reset date for such Bonds, in general,   
the remarketing agent will determine the interest rate for the Bonds which is   
necessary to remarket tendered Bonds at a price equal to 100% of the principal  
amount thereof plus any accrued interest. The Bonds will bear interest at such  
rate for the next succeeding interest rate period. Tenders of the Bonds will be 
made to the tender agent for purchase at a price equal to 100% of the principal 
amount thereof plus any accrued interest to the date of tender (the "purchase   
price").                                                                        

Mandatory Tender                            

       Bonds with respect to which the interest rate period has been changed
or which have been converted to a fixed rate may be subject to mandatory tender 
to the tender agent for purchase. In addition, the Bonds may be subject to      
mandatory tender for purchase immediately prior to the termination or           
expiration, and in some circumstances the replacement of the relevant Standby   
Agreement or Letter of                                                          

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Credit. Unless otherwise provided in the Prospectus Supplement, if such Bonds   
are not delivered when due for tender, they will nevertheless be deemed to be   
tendered and purchased at the purchase price designated relevant in the         
Indenture with funds available to the tender agent.                             

THE STANDBY AGREEMENTS                                        

     The following paragraphs under the caption "The Standby Agreements"
apply to any series of Bonds with respect to which we have entered into a       
Standby Agreement.                                                              

Method of Purchase of Bonds by AIG-LC       

       On the purchase date for the Bonds of any series, the tender agent or
the Trustee as set forth in the Prospectus Supplement shall give us notice of   
the aggregate purchase price of that portion of the tendered Bonds of such      
series that remain unsold. After we receive such notice, we will (unless our    
obligations have been terminated or suspended and subject to any conditions,    
including the maximum amount we are committed to provide, described in the      
Prospectus Supplement) by the time set forth in the Prospectus Supplement, make 
the requested amount available to the party so designated in the Prospectus     
Supplement, in immediately available funds or such other funds as shall be      
permitted as described in the Prospectus Supplement. As soon as practicable     
thereafter, but in any event not later than the time set forth in the Prospectus
Supplement on each purchase date, the tender agent will be required under the   
applicable Indenture to purchase such Bonds, for our account, at the purchase   
price. The tender agent will be required to remit to us such funds which are not
so used to purchase tendered Bonds.                                             

         The Indenture will in general provide that if sufficient funds are duly
deposited on such date, then such Bonds shall be deemed to have been purchased  
for all purposes under the related Indenture and that thereafter such holder    
will have no further rights under the related Indenture, except to receive the  
purchase price from the funds so deposited upon surrender thereof. Neither we   
nor AIG will have any liability to a holder for the failure by the tender agent 
to apply funds received by it to the purchase price of the related Bonds.       

Events of Default and Nature of Obligations 

Unconditional Obligations 

       If the Liquidity Facility Obligations are unconditional, as described
in the Prospectus Supplement, the occurrence and continuance of certain Events  
of Default (as defined in the Standby Agreement and described in the Prospectus 
Supplement) shall, except as otherwise described in the Prospectus Supplement,  
give us the right to terminate our obligations under the Standby Agreement upon 
written notice to the Issuer and tender agent specifying a date on which the    
Standby Agreement will terminate. In such event, a mandatory tender of the Bonds
may take place pursuant to the Indenture prior to the date specified for        
termination and we will be obligated, subject to the terms and conditions of the
Standby Agreement and except as otherwise described in the Prospectus           
Supplement, to provide funds for the payment of the purchase price of tendered  
Bonds that are not remarketed.                                                  

Conditional Obligations   

        If the Liquidity Facility Obligations are conditional, as described in
the Prospectus Supplement, the occurrence and continuance of certain Events of  
Default will, except as otherwise described in the Prospectus Supplement, result
in either immediate suspension or termination of our obligations to purchase    
without further action by us or give us the right to suspend or terminate its   
obligations under the Standby Agreement. In such event, except as otherwise     
described in the Prospectus Supplement, either no mandatory tender of Bonds will
take place prior to such a suspension or termination or if a mandatory tender   
does occur the Standby Agreement will have terminated prior to the purchase     
date. Except as otherwise described in the Prospectus Supplement, neither we nor
AIG will be obligated to provide funds                                          

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for the payment of the purchase price of tendered Bonds during such a suspension
or following such termination.                                                  

                          Obligation of Tender Agent to Obtain Funds Under the
Standby Agreement         

         The tender agent will be entitled under the Standby Agreement to demand
funds for the payment of purchase price and the Standby Agreement will expressly
provide that the Standby Agreement is for the benefit of the tender agent. The  
Indenture will provide that the tender agent is obligated to take such actions  
as may be necessary to obtain immediately available funds on each purchase date 
under the Standby Agreement sufficient in amount to enable the tender agent to  
pay the purchase price on such purchase date.                                   

THE LETTERS OF CREDIT                                         

    The following paragraphs under the caption "The Letters of Credit"
apply to any series of Bonds with respect to which AIG-LC has issued a Letter of
Credit.                                                                         

  Method of Payment of Credit Drawings by AIG-LC

     The Trustee shall give to us notice of credit drawings from time to
time up to the initial amount stated in the Letter of Credit. After receipt of  
such notice, we shall (unless our obligations have been terminated or suspended 
and subject to any conditions, including the maximum amount we are obligated to 
provide, described in the Prospectus Supplement), by the time set forth in the  
Prospectus Supplement, make such amount available to the Trustee, in immediately
available funds or such other funds as shall be permitted as described in the   
Prospectus Supplement. The Trustee will apply such credit drawings to pay       
principal of and interest on the Bonds or to purchase at the purchase price     
tendered Bonds which have not been remarketed by a remarketing agent. If the    
credit drawing is made to purchase tendered Bonds, the Trustee will be required 
to remit to us such funds which are not so used to purchase tendered Bonds.     

        Neither we nor AIG will have any liability to a holder for the failure
by the Trustee or any other person to apply funds received by us or AIG under   
the Letter of Credit to payments of principal of, interest on or purchase price 
of, as the case may be, the related Bonds.                                      

Method of Reimbursement of Credit Drawings  

 Pursuant to the reimbursement agreement, we will be entitled to
reimbursement by the Issuer of the Bonds of all credit drawings at such times   
and on such terms as provided in the reimbursement agreement and described in   
the Prospectus Supplement. If any such reimbursement obligation of an Issuer is 
not paid on the same day on which credit drawings are made, the Issuer will be  
obligated to pay us interest on the unpaid amount thereof.                      

Events of Default                           

        The default by the Issuer of its obligation to reimburse us for credit
drawings, or the occurrence and continuance of certain other events of default  
(as provided in the relevant reimbursement agreement and described in the       
Prospectus Supplement), shall, except as otherwise described in the Prospectus  
Supplement, give us the right to terminate our obligations under the Letter of  
Credit upon written notice to the Issuer or the Trustee specifying a date on    
which the Letter of Credit shall terminate. In such event, a mandatory tender or
acceleration of the Bonds may take place pursuant to the Indenture prior to the 
date specified for termination and we will be obligated, subject to the terms   
and conditions of the Letter of Credit and except as otherwise described in the 
Prospectus Supplement, to make credit drawings available to the Trustee for the 
acceleration of the Bonds or the payment of the purchase price of tendered      
Bonds.                                                                          

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             Obligation of Trustee to Obtain Funds Under the Letter of
Credit                                      

       The Trustee will be entitled under the Letter of Credit to draw funds
for the payment of principal of and interest on the Bonds and, in certain cases,
to purchase tendered Bonds which have not been remarketed by a remarketing      
agent, and the Letter of Credit will expressly provide that the Letter of Credit
is for the benefit of the Trustee. The Indenture will provide that the Trustee  
is obligated to make credit drawings as necessary to obtain immediately         
available funds for the payment of principal of and interest on the Bonds or to 
purchase tendered Bonds which have not been remarketed by a remarketing agent,  
in each case as such amounts become due and payable.                            

AMOUNT OF COMMITMENT                                          

  Except as otherwise described in the Prospectus Supplement, each
Standby Agreement and Letter of Credit will have an initial stated amount which 
is equal to the sum of (a) the aggregate principal amount of the Bonds and (b)  
an amount at least equal to the interest that would accrue on the Bonds during  
the period specified on the Prospectus Supplement, computed as though the Bonds 
bore interest at the maximum rate of interest permitted to be borne by the Bonds
for such period as set forth in the related Prospectus Supplement.              

        Upon the purchase of any Bonds under a Standby Agreement, and upon the
payment and reimbursement of credit drawings under a Letter of Credit, the      
initial stated amount described above will be adjusted as described in the      
Prospectus Supplement.                                                          

THE GUARANTEES                                                

         The Liquidity Facility Obligations and Credit Facility Obligations will
be unconditionally guaranteed by AIG pursuant to a guarantee. The applicable    
guarantee will terminate upon the termination of our obligations pursuant to the
relevant Standby Agreement or Letter of Credit.                                 

 AIG LIQUIDITY CORP.

     We were incorporated on June 29, 1992 in the State of Delaware. All
outstanding capital stock of AIG-LC is owned by AIG. AIG-LC's principal         
executive offices are located at 50 Danbury Road, Wilton, Connecticut           
06897-4444, Telephone No. (203) 222-4700.                                       

     Our business consists of providing liquidity for the payment of the
tender price of certain variable rate municipal securities through Standby      
Agreements, providing credit support for the payment of principal of, interest  
on and tender price of certain variable rate municipal securities through       
Standby Agreements, Letters of Credit and certain related activities.           

AMERICAN INTERNATIONAL GROUP, INC.

     AIG, a Delaware corporation, is a holding company which through its
subsidiaries is engaged in a broad range of insurance and insurance-related     
activities in the United States and abroad. AIG's primary activities include    
both general and life insurance operations. Other significant activities include
financial services, and retirement savings and asset management.                

      AIG's principal executive offices are located at 70 Pine Street, New
York, New York 10270, and its telephone number is 212-770-7000.                 

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     The following table sets forth the historical ratios of earnings to
fixed charges of AIG and its consolidated subsidiaries for the periods          
indicated:                                                                      

                                                        [Enlarge/Download Table]

                                    Six months                                         
                                      Ended                                            
                                     June 30,              Year Ended December 31,     
                                    -----------------  --------------------------------
                                       2003      2002  2002   2001   2000   1999   1998
                                    -------      ----  ----   ----   ----   ----   ----
                                                                                       
Ratio of earnings to fixed charges     4.05      3.97  3.10   2.92   3.59   3.96   3.57
                                       ----      ----  ----   ----   ----   ----   ----

The ratios shown are significantly affected as a result of the
inclusion of the fixed charges and operating results of AIG Financial Products  
Corp. and its subsidiaries (AIGFP). AIGFP structures borrowings through         
guaranteed investment agreements and engages in other complex financial         
transactions, including interest rate and currency swaps. In the course of its  
business, AIGFP enters into borrowings that are primarily used to purchase      
assets that yield rates greater than the rates on the borrowings with the intent
of earning a profit on the spread and to finance the acquisition of securities  
utilized to hedge certain transactions. The pro forma ratios of earnings to     
fixed charges, which exclude the effects of the operating results of AIGFP, are 
6.99 and 6.05 for the second quarter and 6.62 and 6.26 for the first six months 
of 2003 and 2002 respectively, and 4.46, 4.16, 5.06, 5.51, and 4.76 for the     
years 2002, 2001, 2000, 1999 and 1998, respectively. As AIGFP will continue to  
be a subsidiary, AIG expects that these ratios will continue to be lower than   
they would be if the fixed charges and operating results of AIGFP were not      
included therein.                                                               

   Excluding $900 million with respect to the World Trade Center and
related losses and $2.02 billion with respect to the acquisition, restructuring 
and related charges, the ratio of earnings to fixed charges was 3.62 for 2001.  

 USE OF PROCEEDS

        In consideration for issuing the Liquidity Facility Obligations or the
Credit Facility Obligations, we will receive fees from the Issuer described in  
the relevant Prospectus Supplement. We expect that any such fees so received    
will be transferred to AIG or a subsidiary of AIG by means of dividends, loans  
or otherwise and used by AIG or such subsidiary for general corporate purposes. 
Except as otherwise described in the Prospectus Supplement relating to a        
particular series of Bonds, AIG will not receive separate fees from the Issuer  
of such Bonds in consideration for issuing the Guarantee Obligations.           

PLAN OF DISTRIBUTION

      The Obligations will be offered from time to time in connection with
the initial issuance of the Bonds of any series or the remarketing thereof in   
connection with the replacement by the Obligations of another liquidity facility
or credit facility in effect with respect to such Bonds. The Obligations may    
also be offered in connection with Bonds bought by us. The Obligations may not  
be traded separately from the Bonds specified in the Prospectus Supplement. Such
Bonds have been or will be offered pursuant to a separate Official Statement    
through any underwriters or agents named therein. We and AIG undertake no       
responsibility with respect to the accuracy or completeness of any Official     
Statement or any information set forth therein.                                 

 VALIDITY OF OBLIGATIONS

         Unless we state otherwise in any prospectus supplement, the validity of
the securities will be passed upon for us by Sullivan & Cromwell LLP, New York, 
New York or by Kathleen E. Shannon, Senior Vice President, Secretary and Deputy 
General Counsel of AIG. Partners of Sullivan & Cromwell LLP involved in the     
representation of AIG beneficially own approximately 11,360 shares of AIG common
stock. Ms. Shannon is regularly employed by AIG, participates in various AIG    
employee benefit plans under which she may receive shares of AIG common stock   
and currently beneficially owns less than 1% of the outstanding shares of AIG   
common stock.                                                                   

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 EXPERTS

       The consolidated financial statements of AIG and its subsidiaries and
the related financial statement schedules included in its Annual Report on Form 
10-K for the year ended December 31, 2002, incorporated herein by reference, are
so incorporated in reliance upon the report of PricewaterhouseCoopers,          
independent accountants, given on the authority of that firm as experts in      
accounting and auditing.                                                        

CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

  We have included or incorporated by reference in this prospectus
statements that may constitute "forward-looking statements" within the meaning  
of the safe harbor provisions of the Private Securities Litigation Reform Act   
off 1995. These forward-looking statements are not historical facts but instead 
represent only our belief regarding future events, many of which, by their      
nature, are inherently uncertain and outside of our control. It is possible that
our actual results may differ, possibly materially, from the anticipated results
indicated in these forward-looking statements.                                  

         Information regarding important factors that could cause actual results
to differ, perhaps materially, from those in our forward-looking statements is  
contained under the caption "Item 7: Management's Discussion and Analysis of    
Financial Condition and Results of Operations -- Cautionary Statement Regarding 
Forward-Looking Information" in AIG's Annual Report on Form 10-K for the year   
ended December 31, 2002, which is incorporated in this prospectus by reference. 
See "Where You Can Find More Information" above for information about how to    
obtain a copy of this annual report.                                            

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B5’ Filing		Date		First		Last			Other Filings
		11/11/04		1
		11/12/03		3		5
		11/11/03		5					4
Filed on:		11/3/03							4
		10/29/03		1
		9/19/03		1		11			4
		12/31/02		14		20			10-K,  13F-HR,  NT 11-K
		3/31/96		12					10-Q
		12/31/95		12					10-K,  10-K/A
		2/8/95		3
		2/7/95		3
		1/30/95		3
		1/28/93		3
		6/29/92		18
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