( dpa )- Share prices for American International Group Inc (AIG) Monday fell the most in two decades after it disclosed it had overstated the value of contracts which protect investors against losses.
AIG, the world's largest insurer by assets, said the worth of its credit-default swaps declined by 4.88 billion dollars, four times greater than had been forecast for October and November, Bloomberg financial news agency reported.
The report was contained in a regulatory filing.
AIG said it had a "material weakness" in its financial reporting as of December 31 and it could not yet determine the "fair value" of its holdings for year-end financial statements.
The company has different units that originate subprime mortgages as well as insure and invest in them.
The roiling crisis in subprime mortgages has played havoc with worldwide financial markets and seen tens of thousands of US homeowners forced to sell their homes. The defaults have rippled back to the lenders, who are criticized for having made low-interest loans to people with high credit risks, then increasing the rates after a year or two.
Among AIG's financial products are contracts that promise to reimburse investors - many of them on fixed income - for losses in securities tied to subprime mortgages.