Shares in AIG fall to 10-year-low

AIG reported record three month losses on 9 May

American International Group (AIG) shares fell to their lowest level for a decade on news that it is to raise more money than had been expected.

The world's biggest insurer is raising $20bn (£10bn) through the sale of shares, convertible shares and bonds.

AIG reported its biggest ever three month loss two weeks ago, having written off an extra $9.1bn from its US mortgage-backed investments.

AIG is the worst performer in the Dow Jones Industrial Average this year.

There has been some surprise among analysts that AIG has raised so much money despite having increased its dividend by 10%.

"We believe it would have made more sense to suspend the annual dividend expense of $2.2bn and reduce the capital raised to minimize dilution to shareholders," Jay Gelb from Lehman Brothers said in a research note.

AIG shares fell to $37.88 on the New York Stock Exchange, a level not seen since 1998, but came back slightly to close at $38.12.