This compares to a $5.3 billion loss in the corresponding period in 2007. In the full calendar year 2008 the company lost $99.3 billion.
In a statement by the company, chief executive Edward Liddy commented: "We have made meaningful progress in addressing liquidity issues related to AIG Financial Products and our securities lending activities and have announced several divestitures. However, the economy and capital markets remain in turmoil, and we are taking additional steps to preserve the value of our business and maximise the ultimate proceeds for the benefit of all stakeholders, including taxpayers."
In what will be the fourth bailout plan for the insurance giant, the US Treasury has developed a new equity capital facility that allows the company to access up to $30 billion in government funds in exchange for preferred stock.
The Treasury will also convert the existing $40 billion in preferred shares that it holds into new preferred shares that more closely resemble common stock, allowing the company to improve the quality of its equity and financial leverage.
The new plan also reduces the $60 billion revolving credit facility that the US Federal Reserve established for the company in September of last year to no less than $25 billion, and will eliminate its interest rate by removing the existing 3.5% floor on the interest rate.
Under the new terms, the government will hold a 77.9% equity interest in AIG. In addition to softening the financial burden on the embattled insurer, the additional government assistance also serves to protect its credit rating, eliminating the need for it to post additional collateral to its counterparties.
Following the announcement, Moody's reaffirmed AIG's senior debt at A3 today, while downgrading its subordinated debt to Ba2 from Ba1. Bruce Ballentine, New York-based lead analyst for AIG at Moody's, said: "The rating confirmation for AIG and its core P&C operations reflects the benefits to policyholders and senior creditors from the restructuring steps announced today, as well as our expectation that the government will provide incremental support as needed to ensure that AIG can meet its obligations through this period of severe economic recession and market turmoil."