AIG sees uptick in defaults in more credit categories. European investors feel the pain too.
NEW YORK (CNNMoney.com) -- Another rough day on the subprime front. AIG, the world's largest insurer and one of the biggest mortgage lenders, said residential mortgage delinquencies and defaults are becoming more common among borrowers in the category just above subprime.
France's biggest listed bank, BNP Paribas, froze $2.2 billion worth of funds, citing subprime woes. And the European Central Bank felt it had to inject $130.5 billion into euro-zone money markets to help calm jittery markets.
AID said total delinquencies in its $25.9 billion mortgage insurance portfolio were 2.5 percent.
It said 10.8 percent of subprime mortgages were 60 days overdue, compared with 4.6 percent in the category with credit scores just above subprime, indicating that the threat to the mortgage market may be spreading.
While maintaining that it is "comfortable" with its mortgage exposure, AIG gave a gloomy assessment of the market in a presentation to investors and analysts.
It said delinquency rates for first mortgages had risen to 3.98 percent in June from 3.56 in April and a low of 3.08 in July 2005. First mortgages represent 90 percent of AIG's domestic mortgage business.
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