Financial Business Report: AIG & Others Face Higher RESERVES, AFG & Others Face DROUGHT

Regulation modifications that could come from some states would require insurers like American International Group Inc. (NYSE:AIG) and MetLife, Inc. (NYSE:MET) to increase the reserves they maintain against the riskier mortgage bonds they’ve recently purchased by billions of dollars. The National Association of Insurance Commissioners could implement the changes later in 2012, in a move which would lessen interest in the assets.

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Insurers such as American Financial Group Inc. (NYSE:AFG), QBE Insurance Group (QBEIF.PK), and Wells Fargo’s (NYSE:WFC) rural communities with large exposure to effects of the drought will likely see their biggest agricultural loss ever, with gross indemnities totaling some $30 billion along with an underwriting loss of $18 billion. However, the government will pay for $14 billion of the amount through reinsurance programs and private firms will provide between $4 billion and $5 billion.

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