May 13 (Bloomberg) -- American International Group Inc., the world's largest insurer by assets, is set to exceed plans by raising more than $17 billion in stock and debt to bolster its balance sheet after two record quarterly losses.

AIG sold $11.9 billion in common stock and units that can be converted into shares, the company said yesterday in a statement, and may offer $1.5 billion more of both to meet demand. A bond sale of as much as $5 billion is under way today, spokesman Chris Winans said.

Chief Executive Officer Martin Sullivan is raising a third more cash than the $12.5 billion the New York-based company said last week it needed to protect the insurer against further writedowns. The insurer said its capital cushion became ``too low for comfort'' after housing slump-related declines that led to a $7.81 billion first-quarter loss.

``They're taking advantage of the fact that the environment for raising capital has improved in the last week,'' said Mark Rouck, a Fitch Ratings analyst in Chicago. ``There's still uncertainty at this point, so maybe they're raising a bit more than they'd planned to build a cushion.''

AIG climbed 79 cents, or 2.1 percent, to $39.16 in New York Stock Exchange composite trading at 4:15 p.m. The company has slumped 33 percent this year.

New investors ``supported a larger offering, and it made sense for us to take the opportunity to build a bigger cushion in such uncertain times,'' Winans said.

AIG sold $6.5 billion of common stock at $38 a share, about 1 percent below yesterday's closing price of $38.37, and $5.4 billion in equity units. It said last week that after selling stock the company would also offer fixed-income securities.

Writedowns

The world's largest financial institutions reported at least $335 billion in asset writedowns and credit losses tied to the U.S. housing slump. Banks and securities firms have raised or announced plans to seek $246 billion since July to replenish capital depleted by the collapse of the U.S. subprime market, according to Bloomberg data.

AIG has announced about $20 billion in writedowns on contracts sold to protect debt investors after Sullivan told investors in December that losses tied to the housing market and subprime mortgage collapse would be ``manageable.''

Citigroup Inc. and JPMorgan Chase & Co. are handling the offerings. The underwriters may purchase as many as 25.7 million more shares and 6.4 million more equity units to satisfy demand, AIG said today.

To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

Last Updated: May 13, 2008 17:03 EDT