AMERICAN International Group Inc Chief Executive Officer Martin Sullivan said the insurer will raise a total of about US$20 billion after two quarterly losses tied to the subprime mortgage collapse.

AIG raised more than US$13 billion through last week in the publicly offered portion of its plan, and a sale of hybrid bonds is ongoing, Sullivan told analysts and investors at a conference in London yesterday.

AIG, the world's largest insurer by assets, is issuing stock and debt after posting a record US$7.81 billion loss in the first quarter as it wrote down the value of contracts that protect fixed-income investors. The New York-based insurer is the biggest decliner this year through yesterday in the Dow Jones Industrial Average, dropping 33 percent.

The capital raising reflects the "desire to position AIG with flexibility to take advantage of opportunities," including expanding the company's existing businesses, Sullivan said. Last week the insurer said it expected to raise more than US$17 billion. Sullivan, who has said some of the writedowns will reverse, has the support of the board of directors, Chairman Robert Willumstad told reporters last week after the company's annual meeting. Investors, including former CEO Maurice "Hank" Greenberg, have faulted Sullivan, 53, after more than US$19 billion of losses on the contracts, known as credit-default swaps.

AIG has units that originate, insure and invest in home loans. The insurer wrote down its investment portfolio in the first quarter by US$6.09 billion as borrower defaults forced down the value of mortgage-backed securities.

Returns from private equity and hedge funds declined 84 percent from a year earlier to US$197 million because of gridlock in the credit markets, Bloomberg News said. AIG had US$29.4 billion in so-called alternative holdings as of March 31, about 3.5 percent of its investment portfolio. The assets back AIG insurance policies.