Bankruptcy on stand-by for biggest ever US corporate loss

Bailed out US insurer AIG is seeking further state help and may convert the government preferred shares into non-dividend paying stock when it announces a $60bn loss next week, US sources report.

CNBC said it was seeking more Federal aid and would post the $60bn loss and Bloomberg reported its restructuring.

“Paying a huge dividend on the preferred only makes you bleed slowly over time, so this would help,” Robert Haines, an analyst at CreditSights told Bloomberg.

It said the insurer was facing a “huge potential loss on their investment portfolio” which could also lead to credit-rating downgrades..

AIG said: “We continue to work with the Federal Reserve Bank of New York to evaluate potential new alternatives for addressing AIG’s financial challenges.”

AIG is also said to be exploring bankruptcy with its lawyers.