AIGlosses dwarf damage from Katrina

Bloomberg

AIG, which posted a record third-quarter loss, accounts for about half the insurance industry total as of Monday. The losses are three times as costly as Hurricane Katrina, the worst natural disaster in U.S. history.

The falling value of holdings tied to U.S. mortgages contributed to net losses at 15 of the 24 companies in the KBW Insurance Index in the third quarter, and prompted North American insurers to raise more than $80 billion to replenish capital. New York-based AIG helped increase the total of losses among financial companies worldwide to more than $919 billion.

"We have a really big investment base, and if those assets continue to deteriorate in value, we could continue to suffer losses," AIG Chief Executive Officer Edward Liddy said in a Bloomberg Television interview Monday. "We don't think that will happen, but you just never know what will happen in the marketplace."

AIG took writedowns on mortgage-backed securities and credit-default swaps, guarantees protecting investors from losses on fixed-income holdings. AIG got a new $150 billion government rescue package this week, supplanting its initial $85 billion bailout.