AIG Shares Sink As It Tries To Shore Up Books

(AP Photo/Jin Lee)
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NEW YORK - Shares of American International Group Inc. are falling sharply as investors grew increasingly pessimistic the world's largest insurer would find funding to avoid a liquidity crunch that could touch off even more global financial turmoil.

AIG shares were down $3.02, or 63 percent, to $1.74 in early trading Tuesday. Shares have traded as high as $70.13 during the past year.

Late Monday night, S&P, Moody's and Fitch all cut their ratings on AIG, which could require the insurer to post billions of dollars in collateral on derivatives contracts.

The insurer has been working with regulators to create a financing plan. New York has already relaxed its regulations to allow AIG to use $20 billion of assets held by its subsidiaries to provide cash needed to remain in business.