AIG shares dropped 11% last week after the company revealed auditor concern about its financial reporting methods.

In a filing to the US Securities and Exchange Commission, AIG said auditor PricewaterhouseCoopers found "material weakness" in certain valuation methods.

Of prime concern is AIG's investment in credit swaps involving collateralised debt obligations, which are groups of securities traded as a form of insurance. These are held in the AIG Financial Products super senior credit default swap portfolio.

Values have declined as the subprime mortgage crisis forces up home loan insurance claims.

The company is expected to write down $US4.88 billion ($5.4 billion) as a result, meaning a decline in the portfolio of around four times that previously disclosed.