NEW YORK (Reuters) - American International Group Inc (AIG.N: Quote, Profile, Research), the world's largest insurer, on Monday raised $11.9 billion to help strengthen its balance sheet, after suffering record losses in the past two quarters driven by write-downs of derivatives linked to subprime mortgages.

AIG priced 171,052,631 common shares priced at $38 per share, raising $6.5 billion, according to an underwriter.

An offering of convertible securities that will require holders to eventually buy shares raised an additional $5.4 billion. The 72 million units, priced at $75 each, will pay a coupon of 8.5 percent and have a 20 percent conversion premium.

The combined sale fell short of AIG's target last Thursday, when it announced plans to raise $12.5 billion. The insurer last week reported a $7.8 billion first-quarter loss, its largest ever, surpassing its record $5.3 billion loss in the fourth quarter.

The stock and convertible offerings were led by Citigroup and JPMorgan. At a later date, AIG says it intends to raise about $5 billion more through the sale of fixed-income securities.

(Reporting by Joseph A. Giannone; Editing by Gary Hill)