American International Group, the US insurer that was saved by taxpayers in an $85 billion (£49 billion) bailout last month, is facing an investigation for "unwarranted and outrageous expenditures" after paying hefty executive bonuses and spending £50,000 on a UK shooting trip. 

In a letter to AIG's board of directors, New York Attorney General Andrew Cuomo demanded the company stop "extravagant" expenditures and recover millions of dollars in unreasonable payments, or face legal action.

He cited a $5 million bonus and a $15 million golden parachute awarded to Essex-born former chief executive Martin Sullivan in March. Cuomo said AIG also spent hundreds of thousands of dollars on "luxurious retreats" for executives.

His probe followed newspaper reports that a group of top European executives from AIG spent £50,000 on a shooting trip to Dorset.

"The party is over," Cuomo said. "No more hunting trips. No more luxury resorts. They are not going to have the party and leave the hangover for the taxpayers."

New York-based AIG had already been castigated by officials for hosting a $440,000 conference in California last month after agreeing to the federal bailout to avoid bankruptcy. As well as the $85 billion loan, the company may access $37.8 billion from the Federal Reserve Bank of New York to improve liquidity.

Cuomo has also demanded an accounting inspection of AIG's executive compensation and benefits since January 2007. He said the government's financial rescue of AIG made the expenditures "even more irresponsible".

It has also emerged that AIG is spending money on lobbying against new anti-fraud controls on the mortgage industry.