AIG HIT BY RECORD $61.7BN SHORTFALL

The fourth-quarter results came as AIG confirmed it would give the US government a large stake in its two largest divisions as part of a $30bn-plus rescue package that could lead to a break up of the 90-year-old insurer.

AIG's huge shortfall, which pushed its total net loss for 2008 to nearly $100bn, was partly driven by substantial write-downs on its commercial mortgage-backed securities (CMBS).

“AIG's results . . . were negatively affected by continued severe credit market deterioration, particularly in CMBS,” the company said.

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