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NEW YORK — Insurer American International Group Inc. said Wednesday that it purchased $16 billion of complex financial instruments in an effort to further reduce its exposure to insurance guarantees written against them.
AIG bought about $16 billion in investments known as collateralized debt obligations, or CDOs, through a financing company set up by the insurer and the government to help relieve AIG of its exposure to the riskiest portion of the credit markets.
By purchasing the CDOs, AIG has eliminated its exposure to insurance-like contracts, called credit default swaps, written to cover defaults on the CDOs.
