American International Group Inc.’s Brian Duperreault spent his first year as chief executive officer on a rebuilding effort, and his biggest acquisition is the one that can magnify the insurance giant’s exposure to losses from catastrophes like Hurricane Michael.

AIG bought Bermuda-based Validus Holdings Ltd. in July for more than $5 billion to enter the business of writing reinsurance, which helps backstop primary insurers in areas such as property catastrophe risk. Meyer Shields, an analyst at Keefe, Bruyette & Woods Inc., said that while Validus has been adept at managing risk long-term, it remains vulnerable to big storms.

“By its DNA, Validus was founded as a catastrophe reinsurer,” Shields said in an interview. “Any individual quarter, their results would depend on whether the wind blew or the Earth shook. But if you look over their entire tenure, their results were very strong.”

Michael, the strongest storm to hit the continental U.S. in 14 years, made landfall on the Florida Panhandle Wednesday with winds of 155 miles an hour. Disasters like big storms, tornadoes and floods can drive covered losses that ultimately hit reinsurers such as Validus. Duperreault, an industry veteran who has also led companies including Ace Ltd. and insurance brokerage Marsh & McLennan Cos., has said Validus knows the market.

“I like businesses that have some extreme to them provided you get paid for that,” Duperreault told investors in September at a KBW conference. “You guys don’t like it because it’s volatile, but it builds book value over time. So if you have one bad year, 10 great years, life is good, right?”

For insurers, 2017 was one of those bad years as Hurricanes Harvey, Irma and Maria pounded the U.S. and Caribbean. The storms helped drive $3 billion in pretax third-quarter catastrophe costs at AIG, one of the biggest U.S. property and casualty insurers. Validus’s catastrophe losses in the period were $367 million.

Reinsurance can attract money managers seeking another area to put capital to work. The problem is that it’s become almost too attractive. Investors keep piling in, lured by the potential for higher returns and risks that are less connected to financial markets.

Even after last year’s string of storms, the rates on reinsurance policies didn’t rise as much as some had expected or hoped, according to Wells Fargo & Co. analyst Elyse Greenspan.

“It’s a diversifying investment in the insurance industry and also you’ve seen lack of returns elsewhere,” Greenspan said in an interview. “The jury’s still out on that. Can losses really bring pricing power to the reinsurance sector?”

Estimates of Validus’s costs from Hurricane Michael will have to await an accounting of damage and insured losses. Many reinsurers protect themselves by spreading risk through other agreements, and AIG can probably absorb any loss tied to Hurricane Michael, Greenspan said. An AIG representative declined to comment on Wednesday.

AIG has been working on a strategy to reduce loss volatility. Peter Zaffino, who leads the company’s general insurance business, said in February that the firm expects maximum 2018 losses from catastrophes to decline even with the Validus acquisition.

Wind-related risk could be a larger part of this week’s storm compared with the flooding that came with Hurricanes Harvey, which ravaged the Gulf Coast of Texas last year, and Florence, which pummeled North Carolina in September, according to insurance analyst Mark Dwelle at RBC Capital Markets.

In Florida, the largest home insurers include Universal Insurance Holdings Inc., State Farm Mutual Automobile Insurance Co. and Towers Hill Insurance Group LLC, according to data compiled by A.M. Best. AIG could also be exposed through its commercial coverage, RBC’s Dwelle said.

Imperial Capital LLC credit analyst David Havens said he expects Michael to be manageable for insurers because the Panhandle is less populated than other areas of Florida.

It’s too early to tell whether Michael and Florence, as well as 2018’s other catastrophes, will prompt reinsurers to raise rates. Those companies have some important market factors pushing against them with investors seeking to put loads of alternative capital to work.

“It’s easily replenished from a really, really big pot,” KBW’s Shields said. “Unless that mindset changes, which I think is very, very unlikely, then storms like Florence and Michael won’t change that either.”