US insurer AIG has decided to shut down its Premier Bond enhanced money market fund in December, warning that people withdrawing funds at that point are unlikely to get back the current value of their investment.

In a letter to investors following its decision to suspend withdrawals from the fund, AIG said: "In order to meet the requests we will need to sell some of the fund's assets before they mature. The prices we are likely to receive in current markets are poor. This will mean that policyholders leaving the fund on December 15 are very likely to receive less than the current value of their enhanced fund holding." It confirmed that the withdrawal requests represent "a large portion of the fund." A spokeswoman for AIG could not confirm the potential size of the shortfall.