US insurance shares fell sharply yesterday after warnings from AIG and Chubb that fuelled fears about a rising tide of legal claims.
AIG said it would take a $2.8bn (£1.7bn) charge, mostly to boost reserves for casualty claims and protect directors from lawsuits.
Chubb also revealed that it was increasing reserves for claims against directors and officers as well as asbestos liabilities.
The size of AIG's charge led Moody's to change its outlook on the company's 'AAA' rating to negative from stable.
The insurance sector's problems dragged down US stocks, with the Dow Jones down 96.81 to 8013.
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