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American International Group Inc. shares plummeted in early trading Tuesday after the insurer’s credit ratings were cut, jeopardizing efforts to raise cash necessary for its survival.

In pre-market trading, ÌìÃÀÍøÕ¾´«Ã½´«Ã½ shares were down $1.83, or 38.4 percent, at $2.93. They closed at $22.76 as recently as Sept 8.

Late Monday, Standard & Poor’s cut New York-based ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s long-term credit rating three notches to “A-minus” from “AA-minus,” citing “reduced flexibility in meeting additional collateral needs and concerns over increasing residential mortgage-related losses.”

Moody’s Investors Service on Monday cut ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s rating two notches to “A2” from “Aa3,” while Fitch cut its rating two notches to “A” from “AA-minus.” Those agencies’ new ratings are the equivalent of one notch higher than S&P’s new rating.

The downgrades will make it much more difficult for ÌìÃÀÍøÕ¾´«Ã½´«Ã½ Chief Executive Robert Willumstad to raise cash. The company suffered $18 billion of losses in the last three quarters tied to guarantees it wrote on mortgage-linked derivatives.

ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s struggles are mounting a day after Lehman Brothers Holdings Inc filed for Chapter 11 bankruptcy protection because of its own losses tied to mortgages and real estate.

JPMorgan Chase & Co and Morgan Stanley are examining putting together a $70 billion to $75 billion credit facility for ÌìÃÀÍøÕ¾´«Ã½´«Ã½, a person familiar with the matter said on Monday.

Those efforts are supported by the Federal Reserve, which received a request for help from ÌìÃÀÍøÕ¾´«Ã½´«Ã½ on Sunday.

On Monday, New York Gov. David Paterson said the state would allow some of ÌìÃÀÍøÕ¾´«Ã½´«Ã½’s regulated insurance units to provide the parent company with $20 billion of liquid investments to address immediate liquidity needs.

(Reporting by Jonathan Stempel; editing by John Wallace)

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