AIG, the troubled US-based insurer that sits at the heart of the financial system, had its key credit ratings cut, potentially triggering billions of dollars of collateral payments on its many derivatives trades.

The firm is the parent of AIG Private Bank.

The ratings cuts come after US authorities moved to fight this latest fire in the crisis on Wall Street, throwing a $20 billion lifeline to AIG while convening a fresh set of emergency talks at the Federal Reserve in New York to find potential sources of funds for the insurer.

The ratings cut by Standard & Poor’s, which downgraded AIG’s long-term credit rating to A minus from AA minus late in New York yesterday, reflects the large losses AIG is expected to make on mortgage-related investments and credit derivatives.

S&P warned the insurer could face further ratings cuts - perhaps even into the lower BBB category - unless it is able to "implement further liquidity options” and ”the successful sale of at least a portion of its business assets”.

Meanwhile Moody’s cut AIG’s rating to A2 from AA3 and Fitch Ratings downgraded AIG to A from double A minus.