NEW YORK (Bloomberg) — American International Group Inc., the insurer bailed out by the US, may need to borrow more than the $122.8 billion already offered by the government if capital markets don't improve, said chief executive officer Edward Liddy.

AIG, which averted collapse last month with a Federal Reserve loan, is dependent on "what happens to the capital markets," Liddy, 62, said late on Wednesday on PBS's "The News-Hour With Jim Lehrer." AIG needed cash after credit downgrades forced the insurer to post more than $10 billion in collateral to clients who purchased guarantees on bonds that lost value.

"To the extent they continue to go down and we have to keep posting collateral, as it's called in the vernacular of the industry, it's possible it may not be enough," Liddy said.

Liddy, the former Allstate Corp. CEO appointed by the government to run AIG last month, is selling businesses including US life insurance, plane leasing and consumer finance to repay the loan. The New York-based company had tapped $82.9 billion, two-thirds of its total Fed credit line, as of last week and may reveal new figures today.

"This emphasises the uncertainty for anyone trying to put a number" on AIG's cash needs, said Bill Bergman, an analyst at Morningstar Inc. in Chicago. The financial products unit responsible for most of the firm's losses "is a big black hole."

Liddy said in the interview that US Treasury efforts to spur lending and increase confidence in banks "seem to be working" and he thinks AIG "should be OK."