American International Group Inc's financial-products division has come under scrutiny in government probes, The Wall Street Journal reported on Friday.

The probes, by the Securities and Exchange Commission and the U.S. Justice Department, are investigating whether the insurer intentionally overstated the value of subprime mortgage-linked contracts.

The financial-products division specializes in credit-default swaps, contracts that are at the heart of the mortgage crisis.

The Journal said regulators are focused on an investor presentation held on December 5 which both AIG Chief Executive Martin Sullivan and former financial-products chief Joseph Cassano said risks from the roiling subprime crisis were set to not cause the insurer major damage.

U.S. residential housing exposures are manageable given AIG's size, financial strength and diversified global businesses, Sullivan said at the investor presentation, adding that the possibility that his AIG financial products unit would sustain a loss was close to zero.

AIG raised $20 billion of capital in May. Citigroup said in a research report that the funds were largely geared towards shoring up the division, which had admitted to violating accounting rules.