American International Group Inc, the insurer bailed out by the US, may restructure its $150 billion rescue package for a second time in four months as the recession and slumping stock market cut the value of its assets.

AIG may convert the government's preferred shares into common stock to reduce pressure on the company's cash flow, a person familiar with the situation said yesterday. New York-based AIG pays a 10 percent dividend on preferred stock, and none on common shares. AIG declined in German trading.

"Paying a huge dividend on the preferred only makes you bleed slowly over time, so this would help," said Robert Haines, an analyst at CreditSights Inc in New York. AIG is facing a "huge potential loss on its investment portfolio," which could lead to credit-rating downgrades, he said.