AIG will reinstate its annual financial reports for the majority of the last five years and will reduce its net worth by around $US2.7 billion due to “accounting errors”.

The amount is $US1 billion more than earlier estimates. The company will restate its results from 2000 and delay filing its 2004 annual report for the third time in six weeks.

The probe began with an examination of a type of reinsurance that can be misused to understate losses. AIG said it also improperly accounted for items including asset write-downs and hedge fund transactions.