The U.S. government will provide another 30 billion U.S. dollars 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 61.7 billion dollars in the fourth quarter of 2008, the biggest quarterly loss in U.S. corporate history.

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

In an effort to avert a potentially catastrophic collapse of AIG, the U.S. government had already pumped some 150 billion dollars 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 26-billion-dollar 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 8.5 billion dollars in new loans to benefit the domestic life insurance subsidiaries of AIG.

The statement said that the fresh 30 billion dollars will come from the government's 700-billion-dollar 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 900 million dollars and 1 billion dollars a year.

The Treasury also will exchange its existing 40 billion dollars 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 U.S. government is committed to continuing to work with AIG to maintain its ability to meet its obligations as they come due," the statement said.

Source:Xinhua