AIG policy holders in Singapore queue to seek advice
Concerns are mounting about the future of US insurance giant AIG as investors fear a domino effect in the aftermath of Lehman Brothers' collapse.
Credit ratings agencies, which assess the riskiness of debt, have downgraded AIG - making it more difficult for the firm to borrow money.
New York Governor David Paterson said AIG had one day to raise up to $80bn to stave off bankruptcy.
AIG shares declined 70% in early trade, but ended 21% lower.
Talks between financial firms and officials aimed at helping the struggling insurer are taking place.
"We're in the moment right now as to whether or not they can put something together," Mr Paterson said.
On Monday, the insurer was thrown a $20bn (£11.2bn) lifeline from New York state authorities.
But analysts said it may need further capital for its business to survive:
"While there is a chance the company can work its way through its liquidity problems if it can secure substantial bridge financing, we think this will be challenging to execute it in the current onerous credit environment," said Thomas Gallagher, an analyst at Credit Suisse.
AIG is under pressure to raise money after posting three quarterly losses in a row totalling $18.5bn (£10.3bn).
Talks between AIG, financial services and officials firms will continue on Tuesday, a spokesperson for the New York Federal Reserve said.
About 100 worried customers of an AIG subsidiary, American International Assurance (AIA), queued outside its Singapore office to check the status of their policies.
AIG - KEY FACTS
Employs 116,000 people in more than 100 countries
Employs more than 2,000 people in the UK
Founded in 1919 in Shanghai
Now based in New York
Sponsors Manchester United
Sells insurance policies through Argos and Boots
Tan Peng Hock, 60, said he did not mind surrendering a policy worth about $42,000 despite possible losses.
"I prefer to hold cash for the time being. It's better to be safe than sorry," Mr Tan told the Reuters news agency.
Singapore's central bank tried to reassure investors. It said that AIA "had sufficient assets in its insurance funds to meet liabilities to policy holders".
Ratings agencies Moody's and Standard & Poor's downgraded credit ratings on AIG debt on Monday.
AIG is much more than an insurance company. It also has a financial products division that is at the heart of many of the firm's current problems.
"Its tentacles reach into every part of the economy," Matthew Bishop of the Economist told the BBC.
He said the consequences of the firm's collapse would be devastating for the financial system.
"It's worse than insurance policies not being valid. They are writing derivative contracts and these have the potential to leave a lot of other banks holding massive losses that they will have to deal with."
Many of AIG's problems are thought to stem from credit default swaps, which insure against companies going bust.
Sir Howard Davies, former chairman of the Financial Services Authority in the UK and a board member of Morgan Stanley, said that the US would be reluctant to let AIG collapse.
"AIG is absolutely enormous. It would create knock-on consequences in insurance markets," he said.
"It is huge in China for example. That would export the American financial crisis there so it would have all kinds of political consequences."
In the UK, AIG is best known as the sponsor of Manchester United.