American International Group sent tremors through the markets on Monday when the insurance company raised its estimate of losses in October and November from insuring mortgage-related instruments from about $1bn to nearly $5bn.

The announcement came as a number of companies are preparing to release audited accounts for 2007. Auditors have been trying to encourage a common approach to valuation, amid predictions that this will shed new and harsh light on the full scale of the financial damage caused by the subprime crisis.