The United States government on Monday provided new financial assistance to troubled insurance giant American International Group, including pouring US$40 billion into the company in return for partial ownership.

The action was announced jointly by the Federal Reserve and the Treasury Department. All told, the moves boost aid to the company to around US$150 billion.

The $40 billion infusion comes from the recently enacted US$700 billion financial bailout package. The government is buying preferred shares of AIG stock, giving it an ownership stake in the company.

The assistance came as the company announced continued financial market turmoil resulted in a large third-quarter loss.

Pre-tax losses

It said it lost US$24.47 billion, or US$9.05 per share, after a profit of US$3.09 billion, or $1.19 per share, a year ago. Results included pre-tax losses of US$18.31 billion tied to the declining value of AIG's investment portfolio.

As part of the new arrangement, the Federal Reserve is reducing a US$85 billion loan it had made available to AIG to US $60 billion.

The Fed also is replacing a separate US$37.8 billion loan to the insurance company with a US$52 billion aid package.

The government said the actions were needed to "keep the company strong and facilitate its ability to complete its restructuring process successfully."

It marked the first time money from the US$700 billion bailout-package Congress enacted last month has gone to any company other than a bank.

- AP