Struggling insurance giant American International Group was today heading for the biggest quarterly loss in corporate history - losing a massive $60 billion (£41.4 billion).

The result may force the company -twice rescued by the US taxpayer already - to go cap in hand to Washington for more.

If AIG, once one of the biggest insurance employers in London, does lose $60 billion it would overtake the previous record, Time Warner's $54 billion single-quarter loss in 2002 and dwarf the $24.5 billion loss AIG posted in the third quarter.

The losses, to be announced next Monday, are believed to be due to writedowns on commercial property and other assets.

The insurer's board is expected to meet on Sunday to work out an agreement with the government. In case they do not reach a deal, AIG's lawyers are reportedly preparing for the possibility of bankruptcy, CNBC said.

So far taxpayers have injected $150 billion to prop up the group that took a dive after branching out from its traditional insurance markets into derivatives and insuring securities and debt products.

The Serious Fraud Office in London is working with the US authorities on a major investigation into the firm's financial products business, which took disastrous bets on derivatives. The probe is looking at how AIG publicly stated the value of its contracts insuring credit default swaps, which pay out in the event of a company defaulting on its debts. The division is now being disbanded.

Thousands of jobs have already been lost at the group around the world and Manchester United is looking for a new shirt sponsor after AIG recently announced it would not renew sponsorship when the deal expires in 2010.

AIG operates many businesses in the UK including a stand-alone insurer AIG UK.

New chief executive Edward Liddy, appointed by the government after the rescue, is seeking to sell as much as two-thirds of AIG's businesses and is in talks with officials about its future.

Discussions are understood to include the possibility of extra funds for the insurer and trading debt for equity.

The situation is fluid and other options are being discussed and insiders say it is not clear where the talks would lead. AIG may look to convert preferred shares held by the government into common stock, Bloomberg reported, citing an unnamed source.

Commenting on the speculation, AIG said it would "continue to work with the US government to evaluate potential new alternatives for addressing AIG's financial challenges".

The company said it would provide an update when it reports its results.

AIG was first rescued last September after bad mortgage bets left it on the verge of collapse. The government stepped in with $85 billion financing. That was increased in November when AIG posted its then largest loss, hurt by writedowns on assets linked to subprime mortgages and capital losses.