NEW YORK (Bloomberg) — American International Group Inc. saw its stock price fall by the most since going public in 1969 after writing down more than $11 billion of holdings and saying it won't rule out raising capital.

"It's very hard to predict right now when and if we'll need more capital," chief executive officer Robert Willumstad said yesterday in a conference call with analysts. "Future losses can change that assumption and we're obviously dependent on the condition of the US housing market."

Willumstad faces increasing pressure to turn around AIG, which employs around 200 people in Bermuda, after the insurer posted more than $18 billion in losses over the past three quarters. The second quarter's $5.36 billion loss, reported on Wednesday, was worse than analysts predicted and renewed concern that AIG may need to raise cash by selling shares. Willumstad called current capital "satisfactory".

AIG slid $5.25, or 18 percent, to $23.84 in New York Stock Exchange composite trading at 4 p.m., its biggest one-day drop in 39 years, according to Los Angeles-based Global Financial Data, which keeps records on historical share prices. The stock has plunged 59 percent this year. AIG's quarterly loss was driven by $5.56 billion in pre-tax write-downs tied to credit-default swaps.

Willumstad, 62, took over at New York-based AIG in June after investors including former CEO Maurice (Hank) Greenberg called for the ouster of Martin Sullivan. Willumstad, who said AIG made too many bets on the US housing market, has promised to deliver a turnaround plan by late September.

AIG held $112.2 billion in capital at June 30, the insurer said in a slide presentation, more than the $102.7 billion at the end of the first quarter. The company raised $20.3 billion in May by selling debt and equity.

The losses, tied mostly to the worst US housing slump since the Great Depression, "suggest that despite $20 billion of recently raised fresh capital, AIG's financial position and the company's ratings may be questionable", Bijan Moazami, analyst at Friedman Billings Ramsey Group Inc., said yesterday in a research note cutting AIG to "market perform" from "outperform".

Credit-default swap contracts, which are guarantees AIG sold to protect fixed-income investors, caused record losses in the two previous periods and accounted for about $25 billion in write-downs over nine months.

The financial products unit responsible for the swaps guaranteed $441 billion of assets at the end of June including $57.8 billion in securities tied to sub-prime mortgages, compared with $469.5 billion and $60.6 billion on March 31. AIG tripled its forecast of possible payments on the swaps to $8.5 billion, according to a presentation on its website. The insurer said it hasn't made any payments on the contracts and has posted $16.5 billion of collateral as of July 31 demanded by investors who purchased protection through the swaps.

"When counterparties start requiring that you post collateral, the best-case scenario is you don't have use of the cash for quite some time," said Donn Vickrey, analyst at research firm Gradient Analytics Inc., who has the equivalent of a "sell" rating on AIG. "In the worst-case scenario, this is probably a pretty good estimate" of what the insurer will have to pay on the contracts.