Shares of American International Group Inc. (AIG) fell 3 percent Thursday, a day after the insurance company admitted to a series of accounting errors that overstated its book value by as much as $1.7 billion.

Concerns that even more improper accounting may be uncovered at AIG pushed its stock price down as low as $55.24 on the New York Stock Exchange (search), adding to losses that have wiped more that $40 billion from its market capitalization since investigations of the insurer picked up steam in mid-February.

"I think it is impossible to know the extent of the accounting irregularities that could come out of AIG," said analyst Ann Northrop of Zacks Research. "The stock price continues to decline as investors are realizing that the extent of the alleged fraud may be much wider than investors had initially anticipated."

Another analyst, Alain Karaoglan at Deutsche Bank, cut the 2005 and 2006 earnings estimate for AIG and cautioned investors in a note about more "red flags" the board of directors should review.

"Beyond the insurance transaction the regulators are scrutinizing, we believe there are many more issues that the board needs to address, including increased financial transparency especially of international operations, relationships with other entities, reserves and investment income," the note said.

AIG's disclosure that it improperly accounted for a deal with Warren Buffett's (search) Berkshire Hathaway Inc. and that several other transactions "appear to have been structured for the sole or primary purpose of accomplishing a desired accounting result" came amid intensifying probes by federal and state authorities.

Already this week, Chairman Maurice "Hank" Greenberg (search) announced his retirement from a company he built into a powerhouse but has lately been under investigations by the Justice Department, the Securities and Exchange Commission and New York Attorney General Eliot Spitzer's office.

What's more, Standard & Poor's has cut AIG's "AAA" debt rating, a blow to the prestige of what had been one of only a handful of U.S. companies to bear a top rating from the agency. Fitch Ratings said Wednesday it may also cut some of its debt ratings for AIG, citing the insurer's disclosures.

The SEC, meanwhile, has subpoenaed 12 executives at AIG and plans to speak with Buffett about the deal the suspicious deal the insurer struck with Berkshire Hathaway Inc. unit General Re.

Sources said Thursday the SEC has also subpoenaed PricewaterhouseCoopers, the auditor of AIG. The SEC declined to comment and a PWC spokesman said it was against policy to comment on individual client issues.

Accounting experts have said that if it was proved that PWC's auditing at AIG was below standard, it could deal a blow to the auditing firm's reputation.