new york (Bloomberg) — American International Group Inc., the largest US insurer, fell to the lowest in New York trading since 1995 after Credit Suisse Group said mortgage write-downs may cause a $2.41 billion third-quarter loss.

Credit Suisse analyst Thomas Gallagher changed his estimate for AIG to an 86 cents-a-share deficit from a profit of 13 cents, citing possible losses on credit-default swaps. His prediction is the most pessimistic of 15 analysts surveyed by Bloomberg, whose average estimate is for earnings of 65 cents.

Profit may be wiped out for the fourth straight quarter because AIG sold credit-default swaps to fixed-income investors as insurance in case debt issuers fail to pay. That triggered about $25 billion in write-downs on the swaps in the last three quarters. Chief executive officer Robert Willumstad has said he will announce the results of a strategic review on September 25.

AIG has "uncertainty regarding ratings, the size of a potential capital raise and the ultimate cost of" Willumstad's turnaround plan, Gallagher said.

The insurer slid $1.09, or 5.5 percent, to $18.78 in New York Stock Exchange composite trading. AIG has declined 67 percent this year, the worst performance in the Dow Jones Industrial Average.

The AIG unit that sold the swaps may post a $6.5 billion loss in the third quarter, compared with a previous estimate of $2.6 billion, Gallagher said. Fixed-income indexes for sub-prime and other kinds of mortgage-backed securities have declined, he said. AIG's swaps guaranteed $441 billion of assets at June 30, including $57.8 billion in securities tied to sub-prime mortgages.

Gallagher rates New York-based AIG "neutral" and cut the company's target price to $22 from $30.

Willumstad hasn't ruled out seeking more capital after AIG raised $20.3 billion in May by selling debt and equity. He said in an August 7 conference call that the company is "obviously dependent on the condition of the US housing market".

Fitch Ratings, Moody's Investors Service and Standard & Poor's have said AIG's credit ratings may be cut if results don't improve. The firms cut AIG's ratings in May after the company posted a record $7.81 billion first-quarter loss.

AIG, the biggest US insurer by assets, faces collateral calls, higher borrowing costs and lower insurance premiums if the ratings are cut, Citigroup Inc. analyst Joshua Shanker said in an August 20 note.

Insurers that sell credit-default swap protection on companies pay the buyer face value in exchange for the underlying securities or the cash equivalent should the company fail to adhere to its debt agreements. The value of the contracts falls as investor perceptions of creditworthiness declines.

The cost to protect companies against default using credit- default swaps has more than doubled during the past year.

Contracts on the Markit CDX North America Investment Grade Index, a benchmark gauge of credit risk linked to the bonds of 125 companies in the US and Canada, has soared 80 basis points the past year to about 143.4 basis points, according to composite prices from CMA Datavision.