Sept. 14 (Bloomberg) -- American International Group Inc., the insurer seeking to stave off credit downgrades, may seek help from the Federal Reserve, the Wall Street Journal said.

The insurer has turned down a private-equity investment because it would have meant turning over control of the company, the Journal said on its Web site, citing unnamed people familiar with the situation.

Chief Executive Officer Robert Willumstad, 63, is under pressure to raise capital after three quarterly losses totaling $18.5 billion and a 79 percent stock slide this year. Investors are concerned the New York-based insurer can't raise enough cash to cushion against future writedowns from credit-default swaps, which are contracts AIG sold to protect fixed-income investors.

A ratings cut may have ``a material adverse effect on AIG's liquidity'' and trigger more than $13 billion in collateral calls from debt investors who bought the swaps, the insurer said in an Aug. 6 filing. AIG has already posted $16.5 billion in collateral through July 31. A downgrade could also set off early termination of swaps that may cause $4.6 billion in payments, AIG said.

AIG spokesman Nicholas Ashooh didn't immediately return a phone call seeking comment.

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

Last Updated: September 14, 2008 21:37 EDT