Shares in AMP, Australia's biggest life insurer, have fallen by over 4% to record lows after Monday's drop by the FTSE index cause concerns about its ability to meet claims.

AMP has a high exposure to the UK market, with A$7bn (�2.53bn; $4bn) invested through its Pearl Assurance, NPI, London Life and Henderson Global Investors units.

On Monday the FTSE fell for an unprecedented eleventh day to close 3.4% lower at 3,480.8, to its lowest level since October 1995, which brings its losses for January to 11.7%.

AMP stock closed 43 cents, or 4.4% lower, at A$9.37 on the Australian Stock Exchange after falling to A$9.10, the lowest level since it floated in June 1998.

Poor results

The stock market slump could force insurers around the world to sell-off parts of their share portfolios to shore up their capital reserves to meet claims on policies.

AMP has warned that its earnings in the UK would be a third lower than forecasts and that it expects a full-year loss of about A$900m when it reports results on 26 February.

The insurer's shares have fallen by about a quarter since new chief executive Andrew Mohl took over last September.

At the time the insurer injected �500m into its Pearl unit and said it would remain solvent even if the FTSE fell to 3,000.

In November AMP announced 4,700 job cuts, a third of its global workforce, and that it would write down A$1.2bn off its assets.