Washington, March 2 (IANS) As American International Group (AIG) reported a stunning $61.7 billion quarterly loss - the biggest quarterly loss in corporate history, the US government agreed to pump in another $30 billion to rescue the insurance giant.

Monday’s agreement, which marks the third revision to the government’s rescue efforts for AIG - now totalling $162.5 billion - also included key revisions to the terms of the $60 billion credit facility that was created by the Federal Reserve Bank of New York.

The government has extended over $130 billion to AIG since September. Regulators have feared that the bankruptcy of AIG would roil world markets since the firm has $1.1 trillion in assets and 74 million clients in 130 countries, including India.

“Given the systemic risk AIG continues to pose and the fragility of markets today, the potential cost to the economy and the taxpayer of government inaction would be extremely high,” the Treasury Department said in its announcement.

The revamped rescue plan emerged as hit by ongoing deterioration in the credit markets and charges related to its restructuring, AIG’s losses overwhelmed the firm during the fourth quarter. Its $61.7 billion loss amounted to $22.95 per share.

AIG’s loss for the full year was even more dramatic - $99 billion. In 2007, the company reported a profit of $9.3 billion.

One main goal of the revamped government rescue plan is to help boost AIG’s financial position by, among other things, reducing the interest it pays the government on its loans.

Key components of the plan included the government’s decision to commit another $30 billion to the firm in exchange for cumulative preferred stock.

The payment, which will come from the second half of the $700 billion rescue package enacted last fall, will not be a one-time payment but AIG will be able to draw down the funds as needed to help strengthen its capital base.

At the same time, the Treasury Department, which has spearheaded efforts to keep the insurer from collapsing, will exchange its existing $40 billion preferred shares stake for shares that more closely resembles common stock.

The change is expected to spare AIG from paying a large dividend to the Treasury.