AIG record $62b loss prompts lifeline

American International Group Inc, the insurer deemed too important to fail, will get as much as $30 billion in new government capital in a revised bailout after posting a record fourth-quarter loss.

The loss widened to $61.7 billion from $5.29 billion in the year-earlier period, the New York-based insurer said yesterday in a statement. The government will also exchange its $40 billion in preferred stock for new shares that "resemble common equity", the Treasury and Federal Reserve said. AIG was paying a 10 percent dividend on the preferred stock.

The insurer, first saved from collapse in September with a package that grew to $150 billion last year, had to ask for help again after failing to sell enough subsidiaries to repay the US. Firms including banks relied on AIG to back more than $300 billion of assets through derivative contracts as of Sept 30, making the company a "systemically significant failing institution" that has to be propped up, the Treasury said.