In a regulatory filing, the company said the CEO may use the corporate aircraft if the personal use is incidental to a business trip, but would have to reimburse the company for any incremental costs.
Firms such as AIG, Goldman Sachs Group Inc and Morgan Stanley , which have taken part in U.S. taxpayer funded bailouts, have been under close scrutiny for being lenient with executive pay and perks.
Once the world's largest insurer, AIG nearly collapsed from credit default swaps, a type of derivative that had been sold by its financial products business.
AIG was left on the hook for tens of billions of dollars in payouts to some of the biggest U.S. and European financial institutions, forcing the U.S. government to step in with a $182.3 billion aid package.
(Reporting by Archana Shankar in Bangalore; Editing by Anil D'Silva)