AIG, the world’s largest insurer, is planning a $20 billion (£11 billion) asset sell-off as it fights to correct a record slump in its share price and braces for the impact of Hurricane Ike.

Details of the plans could come as early as tomorrow. On Friday the insurer appointed investment bank JP Morgan to work on a rescue plan after its shares fell a record 31% in a single day.

Assets under the hammer include Transatlantic Holdings, its New York-listed reinsurance group. Swiss Re and Munich Re, two giants of the European reinsurance business, are understood to be potential buyers. Other assets on the block are AIG’s consumer finance, reinsurance and plane-leasing units, according to analysts at Citigroup.

AIG shares have been pummelled by worries over a possible credit downgrade and the continued chaos on Wall Street. The shares plunged 46% last week. AIG said: “We are working with a number of firms on a variety of options.” It could not comment on whether the firm would be making further announcements tomorrow.

The move comes as AIG and other insurers brace themselves for the cost of Hurricane Ike in the Caribbean. Thousands of homes have been destroyed and 2.9m people left without power by the storm that is ravaging southeast Texas. Authorities have no idea how many people have perished in the storm.

AIG shares have slumped as the cost of insuring its debt has risen and concerns have grown that the company may be the next big American financial firm to run short of cash.

Last weekend the US government stepped in to bail out Fannie Mae and Freddie Mac, the American mortgage giants.

Washington Mutual, America’s largest savings and loans company - the equivalent of a building society in the UK – is also struggling under a collapsing share price.

AIG has been hit hard by credit crunch because its derivatives unit sold guarantees on securities tied to the American mortgage market.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive