Catastrophes will hurt AIG

AIG will be more exposed to catastrophes after divesting life insurance units to repay its government bailout, Bloomberg reports.

Catastrophe losses have the potential to drain AIG’s government bailout funds, the New York-based firm said in a February regulatory filing.

Earnings from life units, plane-leasing and consumer finance used to balance volatile revenue and claims costs from property-casualty operations. But AIG had to sell businesses to repay the 2008 government rescue needed after losses tied to home loans.

“They definitely will be affected by storms in the future,” said Terry Leone, senior insurance analyst at SNL Financial in New York. “Their overall business will be more tied to the property-casualty cycle than it was in the past.”