The US government will provide another US$30 billion to American International Group (AIG) to stave off collapse of the troubled insurance giant, the Treasury Department and the Federal Reserve (Fed) announced Monday in a joint statement.

The announcement came the same day as AIG, once the world's largest insurer, reported it lost US$61.7 billion in the fourth quarter of 2008, the biggest quarterly loss in US corporate history.

For all of last year, the insurer posted a net loss of US$99.3 billion.

In an effort to avert a potentially catastrophic collapse of AIG, the US government had already pumped some US$150 billion into the ailing company.

"The company continues to face significant challenges, driven by the rapid deterioration in certain financial markets in the last two months of the year and continued turbulence in the markets generally," the statement said.

"The additional resources will help stabilize the company, and in doing so help to stabilize the financial system," it added.

According to the statement, the Fed will take up to a US$26-billion stake in two international units -- Asia-based American International Assurance Co. and American Life Insurance Co., which operates in 50 countries.

The Fed also will make US$8.5 billion in new loans to benefit the domestic life insurance subsidiaries of AIG.

The statement said that the fresh US$30 billion will come from the government's US$700-billion financial bailout package approved by Congress in October and that AIG will be allowed to draw the money "as needed over time."

Meanwhile, AIG will be allowed to reduce the interest payments it has to pay on its government loans. Government officials estimated that would save the company between US$900 million and US$1 billion a year.

The Treasury also will exchange its existing US$40 billion in AIG stock to new preferred shares with revised terms that more closely resemble common equity, providing a quick boost to AIG's capital position.

"The US government is committed to continuing to work with AIG to maintain its ability to meet its obligations as they come due," the statement said.

(Xinhua News Agency March 3, 2009)