AIG took $13B in write-downs in past year

American International Group Inc. has been hit by $13 billion in write-downs during the past year stemming from the securities lending accounts of 12 of its insurance units. AIG increased its commitment to support its insurance company subsidiaries who participate in the Securities Lending program from $500 million to $5 billion for losses that could be incurred by those subsidiaries. AIG of New York intends to insert new capital into its subsidiaries, according to a report from Bloomberg News. The write-downs were cited by Moody’s Investors Service of New York when the decision was made to downgrade the ratings of the insurer in May, according to the report. State regulatory filings indicated that the company used almost two-thirds of its $78 billion in cash to purchase mortgage-backed securities, which plummeted in value following the subprime mortgage crisis last summer.