Savers were frantically trying to withdraw their money from AIG yesterday because of fears that the American insurance giant might go bust.

Financial advisers who sell AIG bonds, mostly to people with millions to invest, said that customers had called seeking to cash in their investments. Advisers suspended the sale of AIG investment bonds and cancelled any recent applications that were still within the insurer’s cooling-off period.

Colin Jackson, of Baronworth Investments, one of the biggest distributors of bonds in Britain, said: “We are not processing investments until we hear more from AIG. It would be irresponsible to continue investing in it.” Danny Cox, of Hargreaves Lansdown, an independent financial adviser, said: “About three quarters of our AIG investors called this morning, many of whom wanted to cash in.”

AIG, the third-biggest insurer in Britain, put a bar on investors in its Premier Access Bond from withdrawing their money, and is understood to have told advisers that it “does not have enough back-office support to cope with the withdrawal requests”.

Best known in Britain as Manchester United’s shirt sponsor, AIG sold bonds through private banks such as Coutts and financial advisers like David Middleton, head of strategy at Towry Law. He said: “AIG was an AAA-rated company, making it very attractive. Now it seems it is not as safe as we thought.”

Guaranteed bonds, in effect a loan to a company over a set term for a fixed rate of return, have been popular because of a quirk that results in higher-rate taxpayers paying less tax than they would on bank and building society accounts. Some of the guaranteed bonds required an investment of at least £100,000, with no upper limit.

Bonds have proved even more attractive in recent months because they offer more security than banks or building societies if a company went bust. Instead of capping compensation at £48,000 – the maximum investors can receive – guaranteed income bonds are classified as insurance contracts, which offer more generous compensation. Investors would receive the first £2,000, plus 90 per cent of everything else – so someone with £1 million in an AIG bond could reclaim £898,200. Savers who want to cash in a bond before it matures must pay a penalty and will get back only get a proportion of their money.

Mr Cox said: “Private banks have been shovelling millions of clients’ money into them. Now, these investors are choosing between either taking a chunk of money, now minus a penalty, or risking losing more of their investment if AIG goes bust. Many investors will be willing to take the smaller hit than wait and put 10 per cent at risk.”

AIG UK told advisers that because it is separate from its US parent and registered independently with the Financial Services Authority, its funds are ring-fenced and bondholders should be safe.

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