TRANSITION SERVICES AGREEMENT dated as of June 4, 2009 between AMERICAN INTERNATIONAL GROUP, INC. and TRANSATLANTIC HOLDINGS, INC

Exhibit 10.3

TRANSITION SERVICES AGREEMENT

dated as of June 4, 2009

between

AMERICAN INTERNATIONAL GROUP, INC.

and

TRANSATLANTIC HOLDINGS, INC.

TABLE OF CONTENTS

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TRANSITION SERVICES AGREEMENT

                    This TRANSITION SERVICES AGREEMENT, dated as of June 4, 2009 (this “ Agreement ”), is entered into by and between American International Group, Inc., a Delaware corporation (“ AIG ”), and Transatlantic Holdings, Inc., a Delaware corporation (the “ Company ”).

RECITALS

                    WHEREAS, AIG, American Home Assurance Company, a New York domiciled insurance company and the Company have entered into that certain Master Separation Agreement, dated as of May 28, 2009 (as amended, modified or supplemented from time to time in accordance with its terms, the “ Separation Agreement ”), relating to the separation of the Company from AIG; and

                    WHEREAS, in connection with the Separation Agreement, AIG shall provide or cause to be provided to the Company Entities certain services, access to facilities, equipment, software and other assistance on a transitional basis commencing immediately following the First Time of Delivery and in accordance with the terms and subject to the conditions set forth herein.

                    NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

                    Section 1.01. Certain Defined Terms.

                    (a) Unless otherwise defined herein, all capitalized terms used herein shall have the same meanings as set forth in the Separation Agreement.

                    (b) The following capitalized terms used in this Agreement shall have the meanings set forth below:

                    “ AAA ” shall have the meaning set forth in Section 8.08(b) .

                    “ Additional Facilities ” shall have the meaning set forth in Section 2.03 .

                    “ Additional Services ” shall have the meaning set forth in Section 2.03 .

                    “ Agreement ” shall have the meaning set forth in the Preamble.

                    “ AIG ” shall have the meaning set forth in the Preamble.

                    “ AIG Contract Manager ” shall have the meaning set forth in Section 2.15(a)(ii) .

                    “ AIG Entities ” means AIG and its Affiliates, excluding the Company Entities.

                    “ AIG Indemnified Person ” means each AIG Entity and its Representatives.

                    “ AIG Provider ” means AIG or a Provider that is an Affiliate of AIG after the First Time of Delivery.

                    “ Archived Files ” shall have the meaning set forth in Section 2.10(a) .

                    “ Company ” shall have the meaning set forth in the Preamble.

                    “ Company Contract Manager ” shall have the meaning set forth in Section 2.15(a)(i) .

                    “ Company Entities ” means the Company and the Company Subsidiaries.

                    “ Company Indemnified Person ” means the Company and each Company Subsidiary, their respective Affiliates and their respective Representatives.

                    “ Confidential Information ” shall have the meaning set forth in Section 8.01(a) .

                    “ Dispute ” shall have the meaning set forth in Section 8.08 .

                    “ Facilities ” shall have the meaning set forth in Section 2.02 .

                    “ Force Majeure ” means, with respect to a Party, an event beyond the control of such Party or any Person acting on its behalf, including acts of God, storms, floods, riots, fires, earthquakes, sabotage, civil commotion or civil unrest, strikes, lockouts or other labor difficulties, interference by civil or military authorities, riots, insurrections or other hostilities, embargo, fuel or energy shortage, acts of Governmental Authorities (including bank closings and seizures and other Governmental Orders), acts of war (declared or undeclared) or armed hostilities or other national or international calamity or one or more acts of terrorism or failure or interruption of networks or energy sources.

                    “ Indemnified Person ” means an AIG Indemnified Person or a Company Indemnified Person.

                    “ IRS ” means the US Internal Revenue Service.

                    “ Knowledge ” of a Person means in the case of the Company, the actual knowledge of any Person listed on Annex I, subject to the subject matter limitations set forth on such schedule.

                    “ Licensee ” shall have the meaning set forth in Section 2.12(a) .

                    “ Licensor ” shall have the meaning set forth in Section 2.12(a) .

                    “ Migration Services ” shall have the meaning set forth in Section 2.14(a) .

                    “ Migration Services Charges ” shall have the meaning set forth in Section 2.14(a) .

                    “ Migration Services Provider ” shall have the meaning set forth in Section 2.14(a) .

                    “ Migration Services Recipient ” shall have the meaning set forth in Section 2.14(a) .

                    “ Notice of Dispute ” shall have the meaning set forth in Section 8.08(a) .

                    “ Party ” means AIG and the Company individually, and, in each case, their respective successors and permitted assigns. “ Parties ” means AIG and the Company collectively, and, in each case, their respective successors and permitted assigns.

                    “ Pass-Through Charges ” shall have the meaning set forth in Section 3.01(b) .

                    “ Provider ” means AIG and any Person that AIG causes to provide to any Recipient a Service or access to a Facility under this Agreement, in its capacity as the provider of such Service or access to such Facility, other than any Person who provides any Company Entity any Service or access to any Facility under a separate transition services agreement or similar Contract.

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                    “ Recipients ” means the Company Entities, in their capacity as the recipients of the Services and access to the Facilities under this Agreement.

                    “ Required Technology ” shall have the meaning set forth in Section 2.10(b) .

                    “ Separation Agreement ” shall have the meaning set forth in the Recitals.

                    “ Service Charge ” shall have the meaning set forth in Section 3.01(a) .

                    “ Services ” shall have the meaning set forth in Section 2.01 .

                    “ VAT ” means the tax imposed in accordance with Directive 2006/112/EC and any permitted derogations therefrom, as well as any equivalent or similar tax imposed under the laws of any jurisdiction that is not a Member State of the European Union. For the avoidance of doubt, the term “VAT” shall not include any sales or use tax imposed by any state or political subdivision of the United States.

                    “ Virus(es) ” means any malicious computer code or instructions that have a material adverse effect on the operation, security or integrity of (a) a computing, telecommunications or other electronic operating or processing system or environment, (b) software programs, data, databases or other computer files or libraries or (c) computer hardware, networking devices or telecommunications equipment, including (i) viruses, Trojan horses, time bombs, back door devices, worms or any other software routine or hardware component designed to permit unauthorized access, disable, erase or otherwise harm software, hardware or data or perform any other such harmful or unauthorized actions and (ii) similar malicious code or data.

ARTICLE II

SERVICES AND ACCESS TO FACILITIES

                    Section 2.01. Services . On the terms and subject to the conditions set forth in this Agreement, from and after the First Time of Delivery and for the periods set forth in Schedule 2.01 , AIG shall provide or cause to be provided to the Company Entities the services set forth in Schedule 2.01 (collectively with any Additional Services, the “ Services ”).

                    Section 2.02. Access to Facilities . On the terms and subject to the conditions set forth in this Agreement, from and after the First Time of Delivery and for the periods set forth in Schedule 2.02 , AIG shall provide or cause to be provided to the Company Entities access to the facilities, equipment and software set forth in Schedule 2.02 (collectively with any Additional Facilities, the “ Facilities ”).

                    Section 2.03. Additional Services and Access to Additional Facilities . Services or access to facilities, equipment or software not agreed upon in a Schedule attached hereto but provided prior to the First Time of Delivery by an AIG Entity to a Company Entity can be requested in writing within ninety (90) calendar days of the First Time of Delivery by the Company upon reasonable notice to AIG. Upon the mutual agreement of the Parties as to (a) the provision of any such Additional Services or access to any such Additional Facilities and (b) the terms and conditions thereof (including the appropriate Service Charges related thereto), AIG shall provide or cause to be provided to the Company Entities (i) such additional services (the “ Additional Services ”) and (ii) access to such additional facilities, equipment and software (the “ Additional Facilities ”).

                    Section 2.04. Exception to Obligation to Provide Services or Access to Facilities . Notwithstanding anything to the contrary contained herein, including Section 2.01 and Section 2.02 , AIG shall not be obligated to (and shall not be obligated to cause any Provider to) provide (a) any Services or (b) access to any Facilities, if the provision of such Services or access to such Facilities would (i) violate any Law or any agreement or license to which the AIG Entities or the Company Entities are subject,

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including any Master Lease (as such term is defined in the Separation Agreement) or (ii) result in the disclosure of information subject to any applicable privileges (including the attorney-client or similar privilege); provided , however , that AIG and the Company shall use commercially reasonable efforts to obtain or cause to be obtained such agreements, waivers and licenses necessary to provide such Services or access to such Facilities and if AIG and the Company are unable to obtain such agreements, waivers and licenses, AIG and the Company shall use reasonable efforts to agree to the modification of the terms of the Services or access to any Facilities so that the provision of the Services or the access to Facilities by AIG would not result in the circumstances described in clauses (i) and (ii) above; and provided , further , that neither AIG nor the Company (nor any of their respective Affiliates) shall be required to pay any fees or make other payments or incur any obligations (unless the Recipient agrees to pay AIG or its Affiliates for such fees or make such other payments or incur such obligations) to obtain any such agreements, waivers or licenses.

                    Section 2.05. Standard of the Provision of Services or Access to Facilities . AIG shall provide or cause to be provided the Services and access to the Facilities at all times in a manner and at a level that is substantially consistent with similar services and access to facilities, equipment and software provided by AIG to the Recipient during the one year period immediately prior to the First Time of Delivery. The Company agrees that all of the Services and access to all of the Facilities shall be for the sole use and benefit of the Company Entities and not any other Affiliates of the Company and solely for the purpose of conducting the business of the Company Entities in a manner substantially consistent with the manner in which it was conducted immediately prior to the First Time of Delivery. No Provider shall have any obligation to purchase, lease or license or renew a lease or license applicable to any facility, equipment or software or to pay any costs related to (a) the transfer or conversion of a Recipient’s data to any alternative provider of any Services or (b) the Recipient’s access to any Facilities.

                    Section 2.06. Change in Services or Access to Facilities . A Provider may, from time to time, reasonably supplement, modify, substitute or otherwise alter the Services and access to the Facilities; provided , however , that such supplement, modification, substitution or alteration shall (a) result in the quality of the Services or access to Facilities being substantially consistent with or greater than the Services or access to Facilities provided prior thereto and (b) subject to Section 6.01(d)(iv) , not increase the cost of using such Services or accessing such Facilities.

                    Section 2.07. Services and Access to Facilities Provided by Other Persons . AIG may cause any Person, including any Affiliate of AIG, to provide any Services or access to any Facilities or any portion thereof; provided , however , that such Person shall be subject to service standards and confidentiality provisions at least equivalent to those set forth herein and that AIG shall remain primarily responsible for the performance by such Person of all of its obligations hereunder with respect to the Services or access to the Facilities provided by such Person so that such performance is in accordance with the terms and conditions hereof.

                    Section 2.08. Personnel .

                    (a) AIG shall, and shall cause the Provider of any Service or access to any Facility to, make available to the Recipient of such Service or access to such Facility such personnel as may be necessary to provide such Service or access to such Facility; provided , however , that the Provider shall have the right, in its reasonable discretion, to (i) designate which personnel it will assign to perform such Service or provide access to such Facility and (ii) remove and replace such personnel at any time. Subject to Section 2.05 , nothing in this Agreement shall obligate a Provider (or AIG to cause any Provider) to hire any additional employees or provide any incentives to employees in addition to those in effect immediately prior to the First Time of Delivery or to retain the employment of any particular employee or retain the services of any particular consultant, contractor or agent.

                    (b) The Provider of any Service or access to any Facility shall be solely responsible for all salary, employment and other benefits of and liabilities relating to the personnel of such Provider assigned to perform such Service or provide access to such Facility. In performing their respective duties hereunder, all such personnel of a Provider shall be under the direction, control and supervision of such

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Provider, and, subject to Section 2.05 , such Provider shall have the sole right to exercise all authority with respect to the employment (including termination of employment), assignment and compensation of such personnel.

                    Section 2.09. Cooperation . Each Recipient and its Affiliates shall use its reasonable best efforts to (a) cooperate with the applicable Provider and its Affiliates with respect to the provision of any Service and access to any Facility and (b) enable the applicable Provider and its Affiliates to provide the Services and access to the Facilities in accordance with this Agreement. No Recipient or its Affiliates shall take any action that would materially interfere with or materially increase the cost of a Provider’s providing any of the Services or access to any of the Facilities.

                    Section 2.10. Electronic and Other Access .

                    (a) As of the First Time of Delivery, except as otherwise expressly provided in this Agreement or any other Transaction Agreement, (i) the Company Entities shall cease to use and shall have no further access to, and AIG shall have no obligation to otherwise provide or make available, any business or other services, including any AIG Entity’s intranet and other owned, licensed, leased or used computer software, networks, hardware or technology of an AIG Entity, provided or made available to the Company Entities by any AIG Entity prior to the First Time of Delivery, and (ii) the Company Entities shall have no access to, and the AIG Entities shall have no obligation to otherwise provide, any AIG Entity’s computer-based resources (including third-Person services, e-mail and access to its computer networks, databases and equipment), whether or not such resources require a password or are available on a secured access basis or on a non-secured access basis. Notwithstanding anything to the contrary contained in this Agreement or any other Transaction Agreement, to the extent that AIG or any Affiliate of AIG has retained hard copies of files and electronic files, tapes, software, electronic data, hardware, storage devices or other electronic information that are not used in the operation of the business of the Company Entities or required by the Company Entities for regulatory purposes (“ Archived Files ”) pursuant to a Litigation Hold or otherwise, the Company acknowledges and agrees that the Archived Files are solely the property of AIG. AIG agrees that it will retain the Archived Files that relate to the Company Entities for no less than three (3) months after the First Time of Delivery after which AIG may recycle or discard such Archived Files.

                    (b) To the extent that the performance or receipt of Services or access to Facilities hereunder requires a Company Entity to have access to any AIG Entity’s intranet or other computer software, networks, hardware, technology or computer-based resources (including third-Person services, e-mail and access to computer networks, database and equipment) owned, licensed, leased or used by any AIG Entity and any AIG Entity’s computer based resources (including third-Person services, e-mail and access to its computer networks, databases and equipment), whether or not such resources require a password or are available on a secured access basis or on a non-secured access basis (“ Required Technology ”), AIG shall provide or cause to be provided limited access to such Required Technology, subject to the security, use, Virus protection, disaster recovery, confidentiality and other policies, procedures and limitations of the AIG Entities, consistent with past practice, as they may be amended from time to time in a manner that does not unreasonably interfere with any Company Entity’s receipt of Services or access to Facilities hereunder. The Company shall, and shall cause each Recipient and all of their personnel having access to the Required Technology to, (a) comply with all the AIG Entities’ security guidelines and procedures (including physical security, network access, internet security, confidentiality and personal data security guidelines and procedures), consistent with past practice, as they may be amended from time to time in a manner that does not unreasonably interfere with any Company Entity’s receipt of Services or access to Facilities hereunder, and (b) use commercially reasonable Virus protection, disaster recovery and other policies, procedures and limitations of the AIG Entities that are applicable to the provision of any Service or access to any Facility, consistent with past practice, as they may be amended from time to time in a manner that does not unreasonably interfere with any Company Entity’s receipt of Services or access to Facilities hereunder.

                    (c) While Services are being provided hereunder, each Party shall take commercially reasonable measures to ensure that, in connection with the provision of any Services or access to any

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Facilities, no Virus or similar items are coded or introduced into either its own (including its Affiliates) or the other Party’s (including its Affiliates) computer networks or databases. If, in connection with the provision of any Services or access to any Facilities, a Virus is found to have been introduced into such computer networks or databases, each Party shall use commercially reasonable efforts to cooperate and to diligently work together with the other Party to eliminate the effects of such Virus. The Parties shall, and shall cause their respective Providers and Recipients to, exercise commercially reasonable care to prevent unauthorized Persons from accessing the Services, or the computer and technology systems or networks of any of the Providers.

                    Section 2.11. No Agency . Nothing in this Agreement shall be deemed in any way or for any purpose to constitute any Party acting as an agent of another unaffiliated Party in the conduct of such other Party’s business. A Provider of any Service or access to any Facility hereunder shall act as an independent contractor and not as the agent of any Recipient or its Affiliates in performing such Service or providing access to such Facility. Nothing contained in this Agreement shall be deemed or construed to create a partnership or joint venture, to create the relationships of employee/employer or principal/agent or otherwise create any other association of any kind, each Party being individually responsible only for its obligations set forth in this Agreement.

                    Section 2.12. Ownership of Intellectual Property .

                    (a) Except as otherwise expressly provided in this Agreement or in any other Transaction Agreement, each of AIG and the Company and their respective Affiliates shall retain all right, title and interest in and to their respective Intellectual Property and any and all improvements, modifications and derivative works thereof. Solely to the extent required for the provision or receipt of the Services or access to the Facilities in accordance with this Agreement, each of AIG and the Company, for itself and on behalf of their respective Affiliates, hereby grants to the other (and their respective Affiliates) a non-exclusive, revocable, non-transferable (except as provided in Section 8.05 ) license during the term of this Agreement to access and use such Intellectual Property that is provided by the granting Party (“ Licensor ”) to the other Party (“ Licensee ”) in connection with this Agreement, but only to the extent and for the duration necessary for the Licensee to provide or receive the applicable Service or access to the applicable Facility as permitted by this Agreement. Upon the expiration of such time, or the earlier termination of such Service or access to such Facility in accordance with Section 6.01(d) , the license granted hereunder by the Licensor to the Licensee to the relevant Intellectual Property will terminate; provided , however , that all licenses granted under this Agreement shall terminate immediately upon the expiration or earlier termination of this Agreement in accordance with the terms hereof. The foregoing license is subject to the terms of any licenses granted by others with respect to Intellectual Property not owned by AIG, the Company or their respective Affiliates that is required for or used in the provision or receipt of the Services or access to the Facilities in accordance with this Agreement. No license or right, express or implied, is granted under this Agreement by any Licensor to any Licensee or their respective Affiliates in or to their respective Intellectual Property except as expressly provided above in this Section 2.12(a) , and all other rights are expressly reserved by each Licensor.

                    (b) Subject to the limited license granted in Section 2.12(a) , in the event that any Intellectual Property is created by a Provider in the performance of the Services or provision of access to the Facilities, all right, title and interest throughout the world in and to all such Intellectual Property shall vest solely in such Provider unconditionally and immediately upon such Intellectual Property having been developed, written or produced, unless the Parties agree otherwise in writing.

                    (c) Except as otherwise expressly provided in this Agreement or in any other Transaction Agreement, no Party (or its Affiliates) shall have any rights or licenses with respect to any Intellectual Property (including software), hardware or facility of the other Party. All rights and licenses not expressly granted in this Agreement or in such other Transaction Agreement are expressly reserved by the relevant Party. Each Party shall from time to time execute any documents and take any other actions reasonably requested by the other Party to effectuate the intent of this Section 2.12 .

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                    Section 2.13. Divestitures . If AIG sells or divests any AIG Provider that provides Services or access to Facilities hereunder, AIG shall use commercially reasonable efforts to provide or to cause another AIG Provider to provide for the continuity of Services and access to Facilities on the same price, terms and conditions as are in effect immediately prior to such sale or divestiture, and in a manner which does not cause a degradation in the service standards set forth herein and without requiring a material change to the Recipient’s business processes or operations. If such measures are not reasonably acceptable to the Company, the Parties shall cooperate reasonably and in good faith to attempt to find an alternative arrangement reasonably acceptable to the Company that meets the foregoing standards. If the Parties are unable to find an alternative arrangement reasonably acceptable to the Company that meets the foregoing standards, AIG will give the Company thirty (30) days’ prior written notice to enable it to develop and implement alternative services or obtain such alternative services from third parties. Upon expiration of such thirty (30) day notice period, notwithstanding anything to the contrary contained herein, including Section 2.01 and Section 2.02 , AIG shall be relieved of its obligation to (and shall not be obligated to cause any Provider to) provide such Services or access to such Facilities hereunder and the Company shall be relieved of its obligation to pay any Services Charges or any other costs, expenses, fees and other amounts otherwise payable pursuant to this Agreement in connection with such terminated Services or access to Facilities.

                    Section 2.14. Migration .

                    (a) AIG agrees to use, and to cause the AIG Entities that are Providers to use, and the Company agrees to use, and to cause the Company Subsidiaries to use, their reasonable good faith efforts to cooperate with and assist each other in connection with the migration of the business of the Company Entities from the AIG Entities to the Company Entities, in each case and to the extent reasonably agreed by the Parties, including the migration from the performance of any Service or provision of access to any Facility by a Provider to the performance of such Service and provision of access to such Facility by the Company Entities, their Affiliates or a third Person (“ Migration Services ”), taking into account the need to minimize both the cost of such migration and the disruption to the ongoing business activities of AIG, the AIG Entities that are Providers and the Company Entities. The Parties acknowledge that Migration Services may include the provision of services requested by the Company Entities in connection with their migration to non-AIG Entity systems, including the transfer of records, segregation and migration of historical data, migration-specific enhancements and cooperation with and assistance to third-Person consultants engaged by the Company Entities in connection with the foregoing. Migration Services shall be agreed upon by the Parties and shall be charged to the Company or any Affiliate of the Company that is receiving Migration Services (the “ Migration Services Recipient ”) on a time and materials basis at the then current rates for the personnel of the AIG Entities providing such Migration Services (the “ Migration Services Provider ”) and shall include actual out-of-pocket costs and expenses (less any VAT recoverable by the Migration Services Provider or any of its Affiliates) incurred by a Migration Services Provider in the provision of Migration Services (collectively, the “ Migration Services Charges ”).

                    (b) The applicable Party shall cause the applicable Migration Services Recipients to pay the Migration Services Charges to the applicable Migration Services Providers. Any Migration Services Charges shall be reasonably calculated and invoiced by the applicable Migration Services Providers (or by AIG on behalf of the applicable Migration Services Providers) and shall be paid to the applicable Migration Services Providers in immediately available funds within twenty (20) days of the receipt by the applicable Migration Services Recipients of an invoice therefor from the applicable Migration Services Providers (or from AIG on behalf of the applicable Migration Services Providers). Each invoice for Migration Services Charges shall be accompanied by (i) a reasonably detailed document showing the calculation of the Migration Services Charges and (ii) all receipts or invoices from third parties (or copies thereof) relating to out-of-pocket costs and expenses included in the Migration Services Charges. Any amount required to be paid under this Section 2.14 and not paid by the due date for payment shall be subject to late charges at an interest rate of three percent (3%) over the London Inter-Bank Offered Rate for a one (1) year period, as published by the eastern edition of The Wall Street Journal on the date on which the payment was due.

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                    (c) Section 3.01(c) shall apply to the payments payable pursuant to this Section 2.14 , except that (i) each reference to the “Provider(s)” and the “Recipient(s)” shall be changed to refer to the “Migration Services Provider(s)” and the “Migration Services Recipient(s)”, respectively, (ii) each reference to “Service(s) or access to Facilities/Facility”, or any substantially similar construction or derivation thereof, shall be changed to refer to the “Migration Service(s)” and (iii) each reference to “hereunder” or “under this Agreement” shall be changed to refer to “under this Section 2.14.”

                    (d) The applicable Party shall cause the applicable Migration Services Recipients to pay to the applicable Migration Services Providers the full amount of the Migration Services Charges and not to set-off, counterclaim or otherwise withhold any amount owed or claimed to be owed to any Migration Services Recipient under this Agreement on account of any obligation owed by any Migration Services Provider, whether or not such obligation has been finally adjudicated, settled or otherwise agreed upon in writing. In the event that a Party disputes any amount on an invoice, such Party shall (i) give notice of such disputed amount to either AIG or the applicable Provider pursuant to the provisions of Section 8.08 and (ii) cause the Migration Services Recipient to pay any undisputed amounts on such invoice, in each case within twenty (20) days from the Migration Services Recipient’s receipt of such disputed invoice.

                    Section 2.15. Primary Points of Contact for this Agreement .

                    (a) Each Party shall appoint an individual to act as the primary point of operational contact for the administration and operation of this Agreement, as follows:

                    (b) The Parties shall ensure that the AIG Contract Manager and the Company Contract Manager shall meet in person or telephonically as frequently as necessary or advisable for the performance of the Parties’ obligations hereunder.

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ARTICLE III

COSTS AND DISBURSEMENTS

                    Section 3.01. Costs and Disbursements .

                    (a) As consideration for providing the Services and access to the Facilities, the Company shall cause the Recipient to pay to the Provider the amount specified next to each Service set forth in Schedule 2.01 and each Facility set forth in Schedule 2.02 , as such may be amended from time to time pursuant to Section 6.01(d)(iv) (with respe